Vietnam, the next global mobile manufacturing base?

Not long ago, Xiaomi phones made in Vietnam officially shipped, which would have been a pretty common thing, but Lei Jun managed to draw people's attention to the entire Vietnamese manufacturing base. Suddenly, we found that this sunny, humid place with a lot of poisonous mosquitoes had already attracted a large number of manufacturers, including some with big names like Samsung and Hon Hai. So much so that the arrival of millet has made Vietnam somewhat crowded. Xiaomi, which ranks third in sales, brings more than output value to Vietnamese manufacturing, but courage and confidence to face China and India. Eight years ago, Vietnamese manufacturing was still poor, and managers had to make a desperate change to create the most favorable investment environment in the world. For example, investment in Vietnamese enterprises was exempted from income tax in three years and halved in five years. They also abolished the household registration system and the "iron rice bowl" to make managers more efficient and serve customers to the greatest extent. At the time, these actions seemed capricious; Now, it seems, Vietnamese regulators have thought long and hard.
For a long time, overseas investment was a lifeline for Vietnam: managers simply grabbed it, soaked in plenty of sun and rain, and grew it into a towering tree. According to incomplete statistics, one out of every 10 mobile phones shipped in the world comes from Vietnam. Last quarter, Xiaomi accounted for more than 20% of global sales. Their strong entry into Vietnam is bound to raise the level of Vietnamese manufacturing again. Just these "raw seafood", Vietnam can really digest well?
Arrow through the clouds, Vietnamese mobile phone manufacturers gather
As mentioned above, Vietnamese managers are desperate to attract investment by showing enough sincerity to global investors. Now it seems that Vietnamese managers are more like standing on the gambling table of The Times, using themselves as chips, gathering various heroes and heroines, which can be said to be: a cloud arrow, thousands of horses to meet. Considering Vietnam's history, Samsung should be among the first to invest in the country. In 2008 Lee Kun-hee, Samsung's boss, set his sights on Vietnam, spending $670m to build a series of mobile-phone factories. In addition to the hardware push, Vietnamese managers have gone to great lengths to appease Samsung's management and technical staff, building lots of Korean-style buildings so that the Koreans can always "return" to their hometown, and hiring Korean chefs to make Korean food. In the face of such enthusiasm, Samsung has reciprocated: $74.2 billion in revenue in 2021, equivalent to 20 percent of Vietnam's GDP. That's thanks to its mobile phone business, which has long been the world's biggest, and the fact that 50 percent of Samsung's phones come from Vietnam, where it is closing factories in other countries to fill them.
In 2019, for example, they shut down China's last remaining cellphone factory; India's management situation is volatile, and order shifting is in the pipeline. In addition, Samsung will attract its upstream and downstream partners to set up factories in Vietnam, which will bring a series of economic benefits. Some say Lee Kun-hee is the economic President of South Korea, and he is a bit like the economic President of Vietnam.
When it comes to manufacturing, the world looks at Samsung and Samsung only looks at Hon Hai. Samsung may never hand over orders to Hon Hai, but that does not stop them from becoming contract manufacturers: working at the bottom of the electronics chain, making a lot of money from the power of systems and capital. Naturally, founder Terry Gou didn't miss out on making things in Vietnam, and he often encouraged his engineers: "It's a hero to open the frontier, do physical exercises, and cultivate the courage to be a global citizen." This big guy likes to enclosure land. In Vietnam, he acquired more than 400 hectares of land in the first batch, followed by large-scale recruitment. In just half a year, the vast army of 60,000 Hon Hai has already started to work overtime for Apple.
Hon Hai is a bellwether of the global manufacturing industry because its manufacturing system, built over decades, keeps its operating costs so low that many competitors find it hard to match it and are willing to follow its lead and try to recruit new employees. 'Wherever Hon Hai builds a factory, competitors come and poach our talent,' Liu Yangwei, its low-key chairman, said yesterday. In fact, including Goer, Lishen, BYD and so on, all came to Vietnam at the same time.
As Hon Hai landed in Vietnam, some companies began to bet on the land, and at the same time, they tried to find a way to quickly build up a decent manufacturing system. Perhaps the manufacturing industry is too complex, need a long time of precipitation and deposits, so that, want to hurry to make the results of the enterprise, can only rely on imitation and copy, at least follow the "boss" go, not wrong. Of course, some of them have achieved social status, such as Bigotry Acoustics. Since 2019, they have continued to expand their investment in Vietnam, and hired some of Hon Hai's managers and technical workers with double wages to build factories in Vietnam. Products such as iPhone acoustic components and AirPod are from Vietnam factories. Also, the rising Lishun, founder Wang Lai Chun is a loyal fan of Terry Gou, the workshop is full of quotations from Guo president, the industry is called Lishun "small Hon Hai", with a strong local background, they have become the foundry king's heart trouble.
Swallow orders, Vietnam can smoothly digest?
Now, Samsung's mobile phone production capacity has been transferred from India to Vietnam, and Hon Hai's 60,000 troops have flooded the streets of Vietnam, and the whole Apple industry chain has a trend of "flying southeast". As of 2021, Apple has 23 factories and more than 30 factories in Vietnam. Today, Vietnam still has a lot of land waiting to be developed. In addition, the epidemic has also inadvertently contributed to the development of Vietnamese manufacturing:
In the past two years, China had done very well in epidemic prevention and control, which was expected to attract investors. However, as the virulence of COVID-19 decreased and other countries around the world gradually opened up, China's epidemic prevention and control policy became increasingly strict, which brought a lot of inconvenience. That's why Apple has had to reinvent itself: it doesn't have to shut down, it can still be efficient, and Vietnam is a very attractive place.
Of course, Vietnam will also face digestive problems in the face of rising manufacturing orders.
In fact, anything that grows savagely has sequelae. For one thing, Vietnam's infrastructure resources are struggling to cope with the current demands on factories. You know, building a manufacturing factory is like building a new city. It not only needs production facilities such as electricity, energy and Internet, but also needs living facilities such as catering, entertainment, barber shops and Internet cafes. After all, labor-intensive enterprises must take good care of their employees. Second, one of Vietnam's advantages is its cheap labor force. A few years ago, the basic salary of workers was about 1,470 yuan, plus food subsidy and travel allowance, and the comprehensive income was only 2,150 yuan. However, with the development of society and the increasing number of investors, Vietnam's human resources began to be strained, and the wage of workers also increased, which has exceeded 4,000 yuan, far higher than India and only 30% lower than China. A bigger challenge is that products like Apple and Xiaomi are increasingly demanding quality, with many processes requiring automation. The factory that has just been built will be very difficult to carry.

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