HANOI, Vietnam, Aug. 9 (Korea Bizwire) – Vietnam is becoming an increasingly attractive manufacturing location for Korean electronics makers.
“Labor costs in Vietnam are inexpensive, with a labor force more than 54 million strong. The conditions for industrial investment are still good,” said Park Byeong-guk, vice director of the Korea Trade-Investment Promotion Agency’s regional branch in Hanoi, Vietnam’s capital.
Vietnam’s monthly minimum wage is currently $155, approximately 59 percent of the minimum wage in China, it offers a stable economic and political environment, and it has grown into one of the more attractive Southeast Asian countries for electronics companies in recent years.
Samsung and LG recently chose Vietnam as a new major production hub, and other Korean electronics companies are also rushing to develop new facilities and business relationships.
According to an industry source, Seoul Conductor recently obtained approved from Hà Nam Province, south of Hanoi, to establish a semiconductor factory and an assembly line for LEDs. In its investment policy statement, Seoul Conductor revealed that it will invest $300 million to build a production facility on 75,000 square meters of land in the province, and is expecting to hire some 3,000 employees.
The move will help cut labor costs for Seoul Conductor, while the finished products will be supplied to nearby Samsung Electronics factories and other LED-essential businesses in and outside of Korea, said the source. About 40 to 50 percent of Samsung’s cellphone manufacturing currently takes place at its factories in northern Vietnam.
“We chose Vietnam to secure a competitive edge in production costs and to better meet the rising demand for LEDs around the world,” said a Seoul Conductor official.
LED manufacturer Lumens is also set to open a newly-built factory in Bình Dương Province, north of Ho Chi Minh City, the country’s economic capital, in September. Lumens, another Samsung supplier, manufacturers LEDs for electronic appliances like smartphones, TVs, and refrigerators.
Samsung is in the middle of establishing a new production complex at the Saigon Hi-Tech Park in Ho Chi Minh City. The electronics giant is investing $2 billion to develop a 700,000-square-meter complex devoted to home appliance production, and TV assembly lines have been churning out new products since earlier this year.
Meanwhile, Samsung’s biggest domestic competitor, LG Electronics, also plans to invest $1.5 billion to build an 800,000-square-meter industrial complex in Hải Phòng, Vietnam’s northern industrial center, to manufacture a wide range of products from smartphones to TVs and laundry machines.
Another LG Group affiliate, LG Display, is in the middle of building a $100 million module assembly facility in the region as well, which is expected to be completed in the second half of 2017. According to LG Display, Hải Phòng’s close proximity to China made the city a suitable location for the new facility.
As was the case for Samsung, LG’s business expansion in Vietnam is also likely to attract its suppliers to the region.
“If Korean textile and sewing companies were more prominent in the past, now it’s the more advanced industries like electronics that are expanding in Vietnam,” added Park.
By Joseph Shin (email@example.com)