Vietnam attractive destination for foreign manufacturing

Samsung Vietnam opened the largest new R&D Center in Southeast Asia in the presence of Prime Minister Pham Minh Chinh in the Tay Ho Tay urban area, Hanoi, last month.

With the new facility, Samsung plans to make Vietnam overcome its role as a global production hub for Samsung to become a strategic base for major research and development, thereby contributing to improving the industrial competitiveness of Vietnam in the Industry 4.0 era.

Nikkei Asia in December reported that Apple plans to move some MacBook production to Vietnam for the first time next year as the US tech group continues diversifying its production base away from China amid escalating tech tensions between Washington and Beijing.

On December 8, 2022, Lego Group signed an MoU with Vietnam Singapore Industrial Park (VSIP) to build a new factory in Binh Duong province. The project has the total investment of more than $1 billion, is expected to be deployed in the second half of 2022, and put in operation in 2024, creating about 4,000 jobs.

This is the project with the largest investment capital by a Danish enterprise in Vietnam. It will be Lego's sixth factory in the world and second in Asia, helping the group expand its global supply chain network, thereby flexibly and quickly responding to changing consumer demand.

Vietnam has witnessed an increasing wave of foreign companies shifting production in our country in the past year, which is expected to rise.

Ho Quoc Tuan, a lecturer at the University of Bristol (UK), said that Vietnam had benefited significantly from foreign manufacturers diversifying production. The process of shifting production out of China by foreign manufacturers will continue, no matter how China eases its COVID policy. Vietnam is expected to benefit greatly.

There are many reasons why large corporations shift electronic manufacturing plants to Vietnam, including lower labour costs, simpler supply chain integration, and better access to free trade, due to Vietnam's participation in 15 free trade agreements (FTAs).

Many experts also believe Vietnam is an attractive destination for foreign electronics manufacturing projects.

Le Hong Hiep, a senior fellow at the ISEAS - Yusof Ishak Institute, said that international companies had started to find ways to shift production to Vietnam.

Vietnam is an important partner in many FTAs, with more than 10 agreements signed, including with the major economies such as the EU with the EVFTA and the UK in the UVFTA.

So companies shifting to Vietnam benefit from continued exports to not only the United States but also other markets.

According to Burkhard Schrage, head of the Management and MBA programme, at RMIT University Vietnam, the strong commitment of technology firms and suppliers to pour in the capital shows growing confidence in Vietnam's ability to upskill the workforce, comply with global production standards, and implementing good governance in the supply chain.

“Many observers commented that foreign investment in complex manufacturing or R&D projects is a sign that Vietnam is capturing an increasingly large part of the global value-added production chain,” Burkhard said.

Foreign investors net purchased 14.8 million stocks, worth some 80 billion VND (3,42 million USD) during the week from August 8 – 12, showing that the Vietnamese securities market remained attractive to them.

Global chip shortages are set to bring Vietnam a chance to develop, acquire and invest in cutting-edge technological expertise and semiconductors, according to a group of academic experts at RMIT University.

Viatris Inc., a global healthcare company, announced on December 16 that it is broadening its partnership with Medochemie, a Cyprus-based pharma company, to manufacture its innovative products in Vietnam and improve patient access to high-quality locally manufactured medicines.