Vietnam is Asia’s New Tech Manufacturing Hub

photo via dientutieudung.vn

It all started in 2010. Intel built its $1 billion chip manufacturing plant in Ho Chi Minh city, Vietnam. Vietnam’s electronic manufacturing dream had arrived. Gone would be the days of textile and food exporting. People were saying hello to a hi-tech Vietnam.

But later in 2011 and early 2012, the dream was dwindling, as the economy was shot and there was an environment that didn’t play well for foreign investors, and that was turning people off.

The latter half of 2012 has seen a change, with electronics factories popping up everywhere as you can see in the list below (dollar figuress indicate amount each company has committed to its Vietnamese factory):

• Bujeon Electronics (from South Korea), $10 million, October 2012
• Brother Vietnam (Japan), $25 million, December 2012
• Nidec Seimitsu (Japan), $40 million, July 2012
• SOC Vietnam (Japan), $62.5 million, November 2012
• JBL (USA), $100 million, June 2012
• Terumo BCT (USA, Japan), $94 million, May 2012
• Fuji Xerox (Japan), $120 million, November 2013
• Nokia (Finland), $300 million, early 2013
• Samsung Electronics (South Korea), $2.2 billion by 2020, November 2012

Of course, the most significant newcomers in this list are Samsung and Nokia. Nokia is still the dominant player in the Vietnamese mobile market and Samsung contributes 10 percent of Vietnam’s exports.

Besides Nokia, most of these electronics manufacturers are from South Korea and Japan. The main draw for companies from these two countries is the low labor wages. In some cases, Vietnamese workers can be paid as little as one-third of Chinese labor costs. Cheap labor is Vietnam’s new brand.

And so armed with this low-cost labor, Vietnam will soon become known for hi-tech manufacturing. Textiles are no longer Vietnam’s biggest export. With small companies like Setech Viet building small consumer domestic products and bigger companies like TOSY building robots for the global market, we’re on the cusp of a hardware-oriented Vietnam. I wouldn’t be surprised if by 2016, a major Vietnamese hardware maker will build and operate its own factory.[1]

[1] This of course assumes that Japanese managers and technicians will transfer knowledge and experience to their Vietnamese counterparts.