Vietnam is emerging as an ideal venue for such big internationalgroups Samsung, Intel and LG thanks to its lower-cost labour, geographiclocation and strong retail market with a population of over 90 millionpeople, radio The Voice of Vietnam (VOV) reported on July 29.
Adecade ago, Vietnam played only a minor role in the global electronicsupply chain. However last year, according to statistics by theInternational Trade Centre (ITC), the country’s gross revenue fromelectronic exports exploded to 38 billion USD.
Although themodest revenue may at first blush seem to pale in significance toChina’s revenue of 560 billion USD, it has helped on the one hand getVietnam ranked among the top 12 electronic exporters in the world.
Onthe other hand, it demonstrates that the Southeast Asian nation is aneconomically viable alternative to China in the eyes of the electronicsmanufacturers in the global marketplace and that the country is fullycapable of competing in the international arena.
In fact, manyelectronic producers are openly expressing their fondness for theVietnamese market due to less favourable macroeconomic conditions inChina, such as aging population and rising labour costs.
Althoughleading market analysts predict China will continue to be the world’sleading producer of electronics, they say the country is no longer thetop venue and Vietnam offers competitive advantages in lower-costmanufacturing and assembling.
Other Southeast Asian countries,including Indonesia, Thailand and the Philippines, are also competinghead on with China by providing numerous other incentives.
Thishas resulted in many large electronic businesses shifting theirinvestment trend towards these emerging and promising markets,particularly Vietnam, which is said to have achieved the highestelectronic export growth in the world.
Currently, Samsung is oneof the largest investors in Vietnam. The firm has invested tens ofbillions of USD in smartphone plants. Intel and LG have also pouredalmost 1 billion USD into the domestic electronic industry, which hasalso been the recipient of hundreds of millions of USD from otherforeign companies.
Foreign companies say Vietnam has a moreconvenient geographical position than other Southeast Asian nations.They also cite as pluses Vietnam’s proximity to China which allows themto better utilize preexisting supply chains and the fact that Vietnamfaces fewer natural disasters.
Growing domestic demand alsoentices manufacturers. “Many electronics manufacturers seek more thanlow-cost labour when they choose a location for production. They alsolook for countries that can emerge as large domestic markets. Vietnamseems to have all the right ingredients for that to happen,” said GlennMaguire, chief economist for the Asia-Pacific region at ANZ Bank.
Maguirebelieves that Vietnam offers other advantages as well, including a goodelectrical supply and improving transport infrastructure. The countryalso appears stable politically. The recent spate of anti-China riotsgenerated dramatic headlines and caused concerns among many investors,but their actual impact was limited and the situation cooled downquickly.
Cheap workers, however, remain the primary attractionfor many electronics manufacturers. Those in Vietnam command some of thelowest wages in the region. Only people in Cambodia, Laos, and Myanmarearn less, but those countries lack many of Vietnam’s other advantages.
Boomingelectronics production will help lift Vietnam’s economy, but questionsremain about how evenly benefits will be spread. Right now, mostfactories focus on relatively low-value production and assembly work.Although setting up and running those factories require skilledmanagers, technicians, and engineers, most workers will be stuck on anassembly line screwing things together for the foreseeable future.
Long-termgrowth depends on whether Vietnam can ultimately move up theproductivity value chain and create more skilled jobs. The influx offoreign electronics manufacturers gives the country a unique opportunityto absorb foreign technology and expertise. It also provides capital tofund much-needed improvements in infrastructure and education.
IfVietnam can continue to develop its tech talent at home, a newgeneration of skilled workers will allow the country to exportprogressively higher-value products. It will also expand the base ofhigh-income professionals, fueling greater demand at home for those samegoods. If that doesn’t happen, however, the country will probablyattract new investments only until cheaper locations emerge somewhereelse.-VNA
Adecade ago, Vietnam played only a minor role in the global electronicsupply chain. However last year, according to statistics by theInternational Trade Centre (ITC), the country’s gross revenue fromelectronic exports exploded to 38 billion USD.
Although themodest revenue may at first blush seem to pale in significance toChina’s revenue of 560 billion USD, it has helped on the one hand getVietnam ranked among the top 12 electronic exporters in the world.
Onthe other hand, it demonstrates that the Southeast Asian nation is aneconomically viable alternative to China in the eyes of the electronicsmanufacturers in the global marketplace and that the country is fullycapable of competing in the international arena.
In fact, manyelectronic producers are openly expressing their fondness for theVietnamese market due to less favourable macroeconomic conditions inChina, such as aging population and rising labour costs.
Althoughleading market analysts predict China will continue to be the world’sleading producer of electronics, they say the country is no longer thetop venue and Vietnam offers competitive advantages in lower-costmanufacturing and assembling.
Other Southeast Asian countries,including Indonesia, Thailand and the Philippines, are also competinghead on with China by providing numerous other incentives.
Thishas resulted in many large electronic businesses shifting theirinvestment trend towards these emerging and promising markets,particularly Vietnam, which is said to have achieved the highestelectronic export growth in the world.
Currently, Samsung is oneof the largest investors in Vietnam. The firm has invested tens ofbillions of USD in smartphone plants. Intel and LG have also pouredalmost 1 billion USD into the domestic electronic industry, which hasalso been the recipient of hundreds of millions of USD from otherforeign companies.
Foreign companies say Vietnam has a moreconvenient geographical position than other Southeast Asian nations.They also cite as pluses Vietnam’s proximity to China which allows themto better utilize preexisting supply chains and the fact that Vietnamfaces fewer natural disasters.
Growing domestic demand alsoentices manufacturers. “Many electronics manufacturers seek more thanlow-cost labour when they choose a location for production. They alsolook for countries that can emerge as large domestic markets. Vietnamseems to have all the right ingredients for that to happen,” said GlennMaguire, chief economist for the Asia-Pacific region at ANZ Bank.
Maguirebelieves that Vietnam offers other advantages as well, including a goodelectrical supply and improving transport infrastructure. The countryalso appears stable politically. The recent spate of anti-China riotsgenerated dramatic headlines and caused concerns among many investors,but their actual impact was limited and the situation cooled downquickly.
Cheap workers, however, remain the primary attractionfor many electronics manufacturers. Those in Vietnam command some of thelowest wages in the region. Only people in Cambodia, Laos, and Myanmarearn less, but those countries lack many of Vietnam’s other advantages.
Boomingelectronics production will help lift Vietnam’s economy, but questionsremain about how evenly benefits will be spread. Right now, mostfactories focus on relatively low-value production and assembly work.Although setting up and running those factories require skilledmanagers, technicians, and engineers, most workers will be stuck on anassembly line screwing things together for the foreseeable future.
Long-termgrowth depends on whether Vietnam can ultimately move up theproductivity value chain and create more skilled jobs. The influx offoreign electronics manufacturers gives the country a unique opportunityto absorb foreign technology and expertise. It also provides capital tofund much-needed improvements in infrastructure and education.
IfVietnam can continue to develop its tech talent at home, a newgeneration of skilled workers will allow the country to exportprogressively higher-value products. It will also expand the base ofhigh-income professionals, fueling greater demand at home for those samegoods. If that doesn’t happen, however, the country will probablyattract new investments only until cheaper locations emerge somewhereelse.-VNA
