Apple’s major suppliers, producing devices such as Apple Watches, MacBooks, etc., are building large-scale factories in Vietnam and will absorb a large amount of workforce.
Symbol of success when opening the economy
At the factory of Hanpo Vina Company in Bac Ninh, Mr. To, the company’s owner, stands among long lines of large machines working at full capacity to produce plastic processing products according to the orders of Samsung and many other electronic businesses nearby.
He proudly holds a phone charger, which is expected to be exported to Brazil to show everyone, and on the back is a laser-printed line representing the current trend of globalization: Fabricado no Vietname.
The words “Made in Vietnam” have become a symbol of Vietnam’s success since the economy opened up and created momentum for private businesses in the late 80s.
Since 2000, Vietnam’s GDP has grown at a faster rate than any other Asian country, only after China, with a rate of 6.2% per year, thereby attracting many foreign businesses to look for investment opportunities. With the beginnings of apparel manufacturers such as Nike and Adidas, then the strong growth of the electronics manufacturing sector with high added value, demanding skilled workers, and a commensurate salary.
In 2020, electronic products contributed to 38% of Vietnam’s exports, up from 14% in 2010.
The US-China trade war, which started in 2018, led to some foreign companies shifting production as one of reasons. In 2019, Vietnam produced nearly half of the 31 billion USD worth of goods imported into the US as companies moved production from China to other Asian countries.
Major Apple suppliers, including Foxconn and Pegatron, which manufacture devices such as Apple Watches and MacBooks, are building large-scale factories in Vietnam and are expected to attract a large workforce. Many other big names are also moving a large part of their production from China to Vietnam, including Dell, HP, Google, or Microsoft.
All of these will contribute positively to Vietnam’s growth, and help millions of people improve their lives. The Vietnamese government has set a target that GDP per capita income will soon surpass 18,000 USD by 2045, significantly up from the current figure of 2,800 USD, and expects shift of production from low-value-added garments to complex technological products will help realize this.
Vietnam’s advantages
Vietnam currently has many advantages, including a young and highly skilled workforce. Besides, Vietnam is also a member of many free trade agreements, helping to access many major global markets. In addition, the Vietnamese government has rapidly shifted its anti-Covid-19 policy towards more flexibility and fully opened its borders since March.
In addition, the country with nearly 100 million people also has the advantage of 3,000 km of coastline. Thanks to massive investments in infrastructure, Vietnam’s electronics manufacturing hubs are just a 12-hour drive from Shenzhen, China’s tech capital. “You don’t have to shift the supply chain when investing in Vietnam,” said a representative of an industrial park management unit.
What Mr. To’s Hanpo Vina factory is doing shows the success of Vietnam and also the limitations that still exist when this is only one of the few companies supplying products to large multinational companies.
The plastic products company is making are among the simplest components in Samsung Galaxy phones. In addition, the production systems are all imported from Korea. These are just low-value production stages in the supply chain, which means modest profits.
The government is promoting the role
The government is promoting its role. In May, Prime Minister Pham Minh Chinh together with leaders of many Southeast Asian countries attended the Summit with President Joe Biden in Washington. The Prime Minister also later visited the headquarters of Apple, Google and Intel in Silicon Valley.
Next year, Samsung will open a research center in Hanoi, and also consider the possibility of setting up semiconductor factories here.
Besides, Vietnam also needs to strengthen its educational capacity at university level, or vocational training programs. Michael Nguyen, Boeing’s Vietnam director, said that multinational companies can work closely with universities to tailor curricula to better meet the needs of the job.
Foreign investments have had a positive effect, but this will take time. If Vietnam can follow the prosperity of Asian countries like China, Japan, and South Korea, large investments will not only focus on infrastructure but also people, The Economist commented.
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Source: Vietnam Insider