Foreign electronic part manufacturers will head for Vietnam in the next two to three years as a result of a switch made by giant firms from many countries around the globe, an expert said this week on the sidelines of a press conference to introduce coming support industry exhibitions.
Big names like Samsung, LG, Microsoft, and Intel have already picked Vietnam as their production bases for the near future, and relocated their technologies and equipment elsewhere, such as China, Malaysia, Thailand, and Costa Rica, to the Southeast Asian country, according to Duangdej Yuaikwarmdee, deputy managing director of Thailand-based Reed Tradex that specializes in organizing industrial exhibitions and conventions.
The remark was delivered at the press conference in Ho Chi Minh City on Thursday to introduce three international exhibitions on support industries that will be organized in the city this October.
It will need around two to three years for other international electronic component manufacturers to follow the footstep of the big brands and set up their production facilities in Vietnam to supply parts to electronics makers, said Yuaikwarmdee, who is also the general manager of Reed Tradex in the country.
The move will include the establishment of new facilities or the relocation of bases from other regional countries to the Southeast Asian nation, he added.
Many electronics manufacturers may come to Vietnam due to the advantage of low labor costs, but they will only stay if they see that they can buy almost all of what they need locally, he said.
Among the three major regional countries – Vietnam, Thailand, and Malaysia – where many international electronics manufacturers have established their production bases in recent years, Vietnam has relatively cheaper labor costs, the Reed Tradex executive commented.
Another advantage of Vietnam is its position, as the country neighbors China, which is currently the world’s biggest electronic part maker.
LG Electronics Inc., the world's second largest television maker, in March said it would shift its TV production in Thailand to Vietnam this year for efficiency, logistics, and costs, as it would take much shorter time for the firm to import parts from China into Vietnam, instead of into Thailand, for assembling.
Vietnam is now the mobile phone powerhouse of Southeast Asia, Yuaikwarmdee said.
Also at the event, a Japan Foreign Trade Promotion Organization (JETRO) representative said support industries in Vietnam have been lately improved, as reflected by the significantly increased ratio of domestic supply for Japanese firms.
Hirotaka Yasuzumi, managing director of the JETRO office in Ho Chi Minh City, said that the latest survey by his organization showed the domestic supply rate in Vietnam has improved, rising from 22 percent four years ago to 32 percent in 2014.
However, the improvement is mainly based on foreign businesses investing in Vietnam, while the contribution of domestic enterprises is still relatively small, Yasuzumi said.
In the same period, the rate was still higher in Vietnam though other Southeast Asian countries posted insignificant growth or even a slight decline in comparison with that of the previous years, he said.