Vietnam is witnessing a notable shift in its manufacturing and export landscape, driven in part by geopolitical tensions and evolving trade dynamics. Data from the first quarter of this year indicates a 14 percent decrease in container traffic from China to the United States, while Vietnam’s shipments to the U.S. increased by 19 percent. Industry experts attribute this growth to both genuine expansion of Vietnamese exports and to Chinese companies establishing factories in Vietnam, partly as a strategy to bypass U.S. tariffs.

Despite initial concerns that the disruption of the Strait of Hormuz amid conflicts in Iran would threaten manufacturing and logistics, Vietnam has found resilience through strengthened economic partnerships, notably with South Korea and China. South Korea, the largest source of foreign investment in Vietnam, increased refined petroleum exports to the country by 60 percent in March and April compared to earlier months. Meanwhile, China supplied 120 million tons of refined petroleum to Vietnam in March, despite official bans. Additionally, imports of liquefied petroleum gas from China more than doubled during the same period, compensating for nearly halted energy supplies from the Middle East.

However, these energy supply shifts have had uneven effects across Vietnam’s economy. Large, high-tech industrial parks, particularly in the north, have largely maintained stable operations, but smaller, family-run businesses reliant on energy-intensive production have faced challenges. Many, including local rice mills and Ms. Mui’s bedding factory near Hanoi, have been forced to reduce operations or increase prices due to rising electricity costs, material expenses, and transportation fees since the onset of the Iran war.

Ms. Mui’s factory is also dealing with government plans to repurpose farmland for a stadium and urban development, intensifying financial pressures. Despite significant personal investments and loan commitments, she reported difficulty accessing government support programs aimed at domestic enterprises. “We’re small, we’re supposed to get more support,” she said, highlighting a perceived preference for larger firms receiving favorable loans and tax incentives.

Economists point to a broader trend in Vietnam’s economic development, where state-affiliated conglomerates and foreign investors often receive priority. Large projects, such as the $35 billion stadium and adjacent urban district funded through a mix of state and private debt, are largely spearheaded by conglomerates like Vingroup. Despite considerable losses at VinFast, Vingroup’s electric vehicle unit, the company continues to secure major infrastructure and lending roles, raising concerns that its borrowing capacity may crowd out funding to more productive domestic industries.

Meanwhile, Vietnamese manufacturers like Techcom Industry, which produces heavy-duty vacuum systems for international brands, exemplify the ambitions for domestically grown high-tech industry. Founded by Tran Thi Thuy, the company has grown to more than 100 employees and integrates into global supply chains. Yet, it has faced declining orders amid tariff uncertainties and rising input costs linked to geopolitical instability. Ms. Thuy described challenges in securing financing, citing stringent collateral demands from banks and opaque access to government credit funds designed for small and medium enterprises.

Vietnam’s Ministry of Finance has pledged to improve support by encouraging banks to link loans to business performance rather than collateral alone. Still, the economic spotlight remains on large foreign investors. Samsung recently announced plans to invest approximately $1.5 billion in a semiconductor testing facility near Hanoi, marking its first such site in Vietnam, with operations expected to begin by 2027.

Vietnam’s economic trajectory highlights the complex balance between fostering foreign investment, supporting large state-linked enterprises, and enabling smaller domestic firms to thrive amid shifting global trade and energy landscapes.