Bac Ninh, a city in northern Vietnam, is experiencing a significant transformation as it becomes a manufacturing hub in the wake of factories relocating from China. This shift has been accelerated by various factors, including tariffs imposed by former U.S. President Donald Trump and the ongoing trade tensions between the United States and China. The influx of foreign investment, particularly from South Korea and China, has reshaped Bac Ninh from a region once known for its rice fields and traditional folk music into one of Vietnam’s busiest industrial zones.
The city saw its first major manufacturing boom around 2008 when Samsung established its first phone factory there, eventually turning Vietnam into its largest offshore manufacturing base. In recent years, as tensions between Washington and Beijing escalated, Vietnamese cities like Bac Ninh have attracted a new wave of Chinese investment. Companies are diversifying their manufacturing locations to circumvent U.S. tariffs, which has further solidified Vietnam’s position as a global manufacturing hub.
Despite this rapid growth, Bac Ninh now faces challenges such as rising labor costs, worker shortages, and insufficient infrastructure. Labor costs have reportedly increased by 10% to 15% since 2024, making it more difficult for companies to recruit workers. These developments raise concerns about the long-term sustainability of Bac Ninh’s industrial growth as competition from countries like Indonesia and the Philippines intensifies.
Strategic Developments and Infrastructure Investments
To address these challenges, Vietnam’s government is investing heavily in infrastructure. Plans are underway to build a new highway to the Chinese border, significantly reducing travel time. Additionally, a railway will connect Hanoi to Haiphong, Vietnam’s largest seaport, enhancing logistics capabilities. On December 19, 2025, Bac Ninh broke ground on the expansion of an industrial zone focused on high-tech manufacturing, including electronics, pharmaceuticals, and clean energy.
Vietnam’s broader economic strategy includes launching 234 major projects worth over $129 billion in anticipation of the pivotal National Party Congress in January. Local businesses are adapting to the evolving landscape, with Chinese–Vietnamese language schools opening to facilitate communication between local and Chinese firms. Convenience stores in the area are even bearing names associated with Chinese brands, signifying the growing integration of Chinese investment.
While Bac Ninh continues to attract significant foreign investment—cumulative foreign investment reached $28.5 billion by September 2025—companies are cautious. Concerns about Vietnam becoming a hub for tariff-dodging transshipments have led some manufacturers to diversify their operations across multiple countries. For instance, a U.S.-based customer of logistics firm SEKO has shifted some production to India, wary of over-reliance on Vietnam.
Future Outlook and Economic Goals
Vietnam aims to become a significant player in the global economy, aspiring to achieve high-income status by 2045. The government is focused on moving up the value chain, transitioning from low-cost assembly work to manufacturing higher-value products. This includes electronics and clean energy equipment. To support this shift, Vietnam is offering incentives such as tax breaks on imported machinery and discounted rents to encourage factory upgrades.
As the global manufacturing landscape evolves, Vietnam recognizes the need to reduce dependence on the U.S. market. The country is actively seeking to expand its export markets to regions such as the Middle East, Latin America, Africa, and India. This diversification strategy is essential to maintaining momentum in the face of rising costs and competition.
In summary, Bac Ninh’s transformation reflects Vietnam’s broader ambitions. The city is at a crossroads, balancing between rapid growth and the challenges of a changing global economy. With strategic investments and a focus on higher-value manufacturing, Bac Ninh is poised to play a crucial role in Vietnam’s economic future. Prime Minister Pham Minh Chinh has emphasized the importance of reaching new heights: Vietnam must “reach far into the ocean, delve deep underground and soar high into space.”