Vietnamese electronics manufacturing services (EMS) market will grow at a CAGR of 5% between 2020 and 2026. According to Vietnam’s General Statistics Office, the country’s consumer electronics sector recorded its highest ever production at 369.6 million units in October 2020, followed by the electronic components sector at 325.7 million units.
Given the exponential growth in itsmanufacturingsector along with growing domestic demand and exports, primarily in electronics and automobiles, the EMS business is projected to scale new heights in the country. Many global OEMs and EMS providers like Samsung, LG and Foxconn (Apple’s contract manufacturer) are investing in the production of printed circuit boards, camera modules, printers, servers, phones, networking equipment, televisions and other electronics equipment in the country.
Samsung, which in 2020 held almost 70% of the handset market share inVietnam最大的外国直接投资,也是一个球员有限公司untry. Vietnam has one of Samsung’s largestsmartphone productionbasesoutside South Korea. By 2022, Samsung is also projected to complete its $220-million research and development centre in Vietnam.
Investment climate in Vietnam
Despite the setback caused by COVID-19, Vietnam is one of the few countries in Asia that managed to record a positive GDP growth in 2020.
The constant improvement in investment and business policies, participation inbilateral and multilateral free trade agreements, increased FDI and geographical proximity to China have all been active factors in making Vietnam afavourable destinationfor manufacturers.
Pegatron has pegged almost $1 billion worth of investment in its Vietnamese plant that will be rolled out in three phases, targeting investments in computing, communication andconsumer electronicsfacilities, by 2027.
Foxconnis also moving some parts of its iPad and MacBook assemblies to Vietnam from China against the backdrop of rising US-China tensions, thus seeking to derisk its production. It has also been awarded a licence to build a $270-million plant to produce laptops and tablets in Vietnam.
Googletoo is moving production of its smartphone brand Pixel for the US market to Vietnam. It is also likely that the company may end up moving its hardware production to Vietnam. Similar plans are underway at companies like Samsung, itel and Microsoft.
Xiaomi too is aimingto take advantage of cheap labour and other favourable market conditions in Vietnam. Most recently, the company opened its first phone assembly factory in Vietnam.
Successful absorption from China
与中国一样,越南全面而闻名and mostly five- to ten-year strategies, like ‘Made in Vietnam 2025: Industrial Policy and Strategy 2025’ and Vision for 2035. These policies have not only helped in changing Vietnam’s growth story which started 30 years ago but have also facilitated absorption ofindustry from China, including the shifts triggered by trade wars.
Its unprecedented pursuit for business-friendly policies, liberalisation of its economy, low wages, favourable demographics and successful pushing of its infrastructural capacities are all catalysts in making Vietnam a suitable ‘China Plus One’destination in theglobal supply chain. As economies around the world look to derisk the heavily integrated supply chain ecosystem in the post-COVID-19 era, along with a heated US-China trade war, foreign investors like Google, Microsoft and Samsung feel better diversifying their risks.
Government strategy for future development
The Vietnamese government aims to have over 10 strategic locations in the IT segment by 2025 with revenues of more than $1 billion. Under its IT and Made in Vietnam programs, it aims to have over 100,000 tech firms to make Vietnam among top 30 countries inIT development in the coming years.
Vietnam’s growing capacity under the ‘China Plus One’ policy reflects the following trends:
- With its 2025 vison, Vietnam aims to target fields with high value-addition and export potential.
- The electronic equipment and automobile sectors, along with other industries like textile, seem to be gaining a lot of traction.
- Vietnam wants to develop its supporting industries, especially mechanical goods,chemicals and telecommunications, to significantly leverage its position in the global supply chain.
- The aim is to develop priority industries in key economic zones and coastal zones along with processing industries and supporting industries.
- Vietnam is also aiming to get FDI from companies that could transfer technology and capacity tolocal industries and talent.
Conclusion
With Vietnam’s recent ascension to the ranks of the global supply chain hubs, it is easy to overlook the fact that Vietnam is still expanding and growing its infrastructure. With more companies moving their operations to Vietnam, the leasing demand in Vietnam’s industrial zones is soaring.
However,Vietnam’s growing competitiveness, market reforms, and steady progress in ease of doing business (evident in its higher scores in the World Economic Forum’s competitiveness index) are making it rise above the rest.
In an era of protectionism where the jitters ofCOVID-19are still being felt by many economies, Vietnam is soaring to become one of the prime locations for export manufacturers. With its continuous and proactive efforts foropen border partnerships(全国十几个自由贸易ag)的一部分reements),Vietnam is a country that could possibly change the course of the tech era that lies ahead.