LG has announced its decision to relocate a smartphone production base in Pyeongtaek, an area in the suburb of Seoul, to Hai Phong City in the northern of Vietnam.
With the decision, LG has become the third mobile phone manufacturer, after Samsung and Apple, which has chosen Vietnam for their competition strategies in the future. The factory in Hai Phong will have the capacity of 11 million products.
In 2018, LG sold 40 million smartphones all over the globe, accounting for 3 percent of the world’s smartphone market share. However, it reported a loss in the fourth quarter of the year. The factory relocation is hoped to increase productivity.
Nguyen Tri Hieu, a respected economist, commented that LG’s new move once again showed the trend of South Korean corporations relocating their factories to Vietnam.
Many of them are running production lines in Vietnam to cut production costs and increase sales in the host country.
The presence of major South Korean manufacturers in Vietnam can bring big benefits. The words ‘made in Vietnam’ shown on the world’s flagship products reflect prestige.
An analyst commented that setting up production facilities in Vietnam is the plan of many large foreign corporations. In the face of the strong rise of Chinese mobilephone brands, organizing production in Vietnam to cut costs and improve competitiveness is a good choice.
Local newspapers earlier this year reported that Foxconn, a large company specializing in assembling Apple’s iPhones, wanted to pay $16.5 million to a company to obtain the right to use 250,000 square meters of land in an IZ in Bac Giang province.
Samsung has reaffirmed its strategy for Vietnam to be its biggest production base. Samsung Electronics deputy chair Lee Jae-yong, during his working visit to Vietnam late last year, committed to continue expanding investment in Vietnam.
Samsung Electronics is running smartphone production lines in Bac Ninh and Thai Nguyen which put out 150 million mobile phone products, or half of total output of Samsung. The giant is planning to build a third factory in Vietnam with capacity of 100 million products a year.
The ForeignInvestment Agency reported that FDI in Vietnam witnessed a significant yearly increase of 81 percent to US$14.59 billion in the first four months of the year.