After decades of showing promise, Vietnam’s economic moment may have finally arrived. It was the fastest-growing economy in Asia last year (8 per cent growth) and one of only a handful globally to achieve two consecutive years of growth since the Covid-19 pandemic. The south-east Asian nation has become a major beneficiary of manufacturers’ efforts to “de-risk” their exposure to China as geopolitical tensions between Beijing and the west mount. Foreign direct investment soared to a decade high in 2022. Big names including Dell, Google, Microsoft and Apple have all shifted parts of their supply chain to the country in recent years, and are looking to do more as part of a “China plus one” strategy.

The allure is obvious. Since the late 1980s, its communist government has overseen a transition from a controlled economy to a more open and capitalist model. In turn, its proximity to China and vast young, cheap and well-educated workforce has attracted manufacturers. Though “Made in Vietnam” was initially synonymous with apparel such as Nike shoes, it is now increasingly associated with higher-end electronics such as Apple’s AirPods.

Businesses have grasped the opportunity to diversify their supply chains, as rising labour costs and political risks erode China’s relative advantage as a business destination. Over $20bn in FDI flowed in last year mainly from Japan, Singapore, and China. The US share of imports from Vietnam has also risen almost 2 percentage points since US-China trade tensions began to flare in 2018.