Vietnam domestic market gaining a foothold in high tech
(VOV) - Samsung, Intel, LG Electronics, Panasonic and Microsoft's handset units are just a few of the leading global tech firms to have relocated manufacturing to Vietnam over the past few years.
The movement represents one of the fastest economic transformations ever, as shipments of smartphones and computer parts have begun to overtake exports of coffee, garments and shrimp.
It marks a definite shift away from China and comes about as a result of tax benefits and a relatively lower cost labour force that makes Vietnam an appealing alternative to its northern neighbour.
Microsoft, which took over Nokia in a US$7.2 million deal last April, closed all its plants in Hungary, contracted production in China and Mexico, and shifted the bulk of phone manufacturing to Bac Ninh province.
Microsoft Mobile Vietnam Limited Liability Company began production of smartphones in August 2014 and has since exported more than 5 million Lumia phones to markets around the globe.
To date, Microsoft has moved 39 production lines from Komarom (Hungary), Beijing, Guangdong (China) and Reynosa (Mexico) to Bac Ninh province and the Vietnamese plant has become a key factor in its global supply chain.
Last November Samsung Electronics revealed a plan to invest up to US$3billion to create a new smartphone factory in the Yen Binh industrial zone in Thai Nguyen province.
The announcement came a month after Samsung Electronics revealed is set to construct a US$1.4 billion factory in Ho Chi Minh City, where it intends to make TVs, washing machines and air conditioners.
The new facility in Thai Nguyen would operate alongside another US$2 billion plant the company already runs in the country, which began production in March 2014.
Other divisions from the South Korean company are also expanding in the country, including Samsung Display and Samsung Electro-Mechanics.
According to the Yonhap news agency, the conglomerate as a whole has invested about $11 billion to date in Vietnam.
LG Electronics Vietnam Co. Ltd meanwhile has begun operation of its new US$1.5 billion plant located in the Trang Due industrial zone in Haiphong city where it produces washing machines, microwaves, vacuum cleaners, televisions and smartphones.
Vietnam has advantages of taxes and human resources along with a Government that places high priority on assisting hi-tech enterprises, says General Director of LG Electronics Vietnam Co. Ltd Ko Tae Yeon.
Many Chinese companies have been moving into essentially higher value design and manufacture work in the high tech industry and, Chinese smartphone maker Xiaomi has also announced plans to shift some of its production to the Vietnamese market.
World’s large smartphone maker Apple has also announced it would cooperate with one of technology trademarks in Vietnam to increase its presence and competitiveness in over 90-million market.
Nguyen Mai, FDI Business Association President, says he hopes that Vietnam will become a key place in the world producing tablets, mobile phones, home electric appliances, and electronic chips.
Currently the sector accounts for about 16% of the nation's total exports, in terms of value - making it bigger than its textile and garment industry.
Korean giant Samsung alone accounts for more than 10% of Vietnam’s exports and the transformation sees no signs of abating in 2015.