In the last few years, a number of technology big wigs have set up manufacturing facilities in Vietnam, with Microsoft, LG, Panasonic, and Intel being some of them. These new investments flowing into Vietnam are increasingly contributing toward a shift from China to other Asian countries.
The greatest motivator for companies to zero in on Vietnam has been a favorable combination of cheap workforce and tax subsidies and holidays from the Vietnamese government. These benefits are better than Vietnam’s northern neighbor.
As the world’s second-largest economy, China’s success has also led to steep rises in the price of labor, land, and other resources. This has prompted many manufacturers to look beyond the Asian powerhouse.
The manufacturers in China, forced to operate on very tight margins, regard countries such as Vietnam to be more cost-effective.
At the same time, more and more Chinese companies are now graduating to design and software product development. In this situation, low-value and low-skill jobs leaving the country may not be that bad after all.
Vietnam is already firmly placing its name on the smartphone manufacturing map globally, as in the first 10 months of 2014 alone, the country exported mobile phones and accessories worth US$19.2 billion. This marks an 8% YoY growth, according to the Statistics Office at Vietnam.