Vietnamese electronics enterprises have low, small position in export supply chain

Workers at an electronics company. (Photo: vneconomy.vn)

Hanoi (VNS/VNA) - Vietnamese electronics businesses participate in the supply chain but with unstable order positions which are low and small in the chain, with too few opportunities.

That was the remark made by Do Thi Thuy Huong, member of the Executive Committee of the Vietnam Electronics Business Association, at a roundtable discussion within the framework of the 2024 Summer Economic Forum on July 15.

In the first five months of 2024, the contribution of Vietnam's electronic businesses to export turnover reached 31.61%, equivalent to 49 billion USD. The industry had a trade surplus of more than 5 billion USD.

“These are telling numbers, showing the huge role of the electronics industry. Vietnam's electronics industry also exports to large markets with consumer capacity. Vietnam's electronics industry is in a valuable export position globally, ranking second in mobile phone exports and fifth in computer and component exports,” said Huong.

However, due to weak global consumption, the last months of 2023 and especially the first five months of 2024, Vietnam's electronics industry faced many difficulties.

According to Huong, the main products of exported electronics are mainly consumer goods, so many Vietnamese electronics enterprises had to cut labour by up to 70%, forcing them to lay off long-time and skilled workers.

“Many businesses have tried to find new orders, but the proportion of the value of new orders is not equal to old orders. Along with that comes uncertainty and instability," Huong said.

Also according to Huong, in the supply chain, Vietnamese electronics businesses are being squeezed for orders. With the same number of orders, FDI enterprises are always given priority. When there are orders, they are also the 'most skeletal' orders, payment terms and payment requirements are also stricter than FDI enterprises.

"This is a disadvantage for Vietnamese businesses," said Huong. “Vietnamese businesses participate in the supply chain with precarious and unstable order positions. The position of Vietnamese businesses in the supply chain is too low and small, with too few opportunities."

She explained that the Vietnamese electronics industry included mainly small and medium enterprises, lacking skilled labour and capital and advanced technologies. They also had many difficulties in accessing loans and grants.

Also at the event, Deputy Regional Managing Director of the US-ASEAN Business Council Vu Tu Thanh said that although Vietnamese electronics businesses had a lower position than FDI enterprises, they still had the opportunity to make strategic products such as light drones (close-range drones) and security cameras.

According to Thanh, there are not many countries in the world that can produce this product, other than China. The global close-range drone market in 2023 is worth more than 63 billion USD, of which China accounts for 80%.

“We know that 80% in the future will not be exported to the US or other countries that feel it is a sensitive product and needs control. That would be an opportunity for Vietnam. Vietnamese engineers and Vietnamese businesses can fully design and produce this product. There are even businesses that can produce without depending on China's supply chain, completely meeting the US's NDAA standards, that is, the US's National Defense Act," said Thanh.

In addition to China, only the US, Israel, Russia, Turkey and Iran can produce drones.

As for security cameras integrated with artificial intelligence (AI), Thanh said that Vietnamese electronics businesses were completely capable of producing and filling in the vacant land left by China after several countries refused to import this product.

"These are some examples where we can create new growth space," said Thanh.

The 2024 Summer Economic Forum was organised by the Party Central Committee’s Commission for Economic Affairs together with the Vietnam Economic Magazine. With the theme 'Expanding growth space in the new context', the forum was an opportunity for experts to discuss mid-year economic issues and propose recommendations for the future./.

VNA