Samsung has become the largest investor in Vietnam by setting up factory to produce electronics products in Vietnam and then export to more than 50 countries in the world.
According to Mr Hyun Woo Bang – Deputy General Director of Samsung Vietnam, the cheap and abundant labor source is not the main reason leading to the decision to expand Samsung’s investment in Vietnam.
In a recent meeting with the Ministry of Information and Communications, a leader of Samsung has revealed that each 100 employees in the mobile segment of Samsung, there are 80 Vietnamese. Currently, the corporation is employing around 130,000 employees in Vietnam.
In 1995, Samsung started to invest in Vietnam, so far has been 21 years. Since 2008, Samsung has formally invested in mobile phone manufacturing factory. Currently, Samsung has about 130,000 Vietnamese workers. There were so many people questioning if Samsung invested in Vietnam because of cheap labor. However, labor is not the most important factor. In terms of labor resources, Vietnam is not the richest country in comparison with India. Regarding labor costs, there are many other countries in the region also having cheaper labor costs than Vietnam. The quality of Vietnam’s labor is also not the best in comparison with surrounding countries.
Samsung invests in Vietnam is a strategic decision of the corporation based on the economic developments, tax policy, stable political factor, labor sources, the ability to import raw materials…
So far Samsung has invested nearly 15 billion USD in Vietnam. The two largest projects of Samsung in Vietnam are Samsung Electronics Vietnam (SEV) with an area of 110 ha in Yen Phong, Bac Ninh and Samsung Electronics Vietnam Thai Nguyen (SEVT) on an area of 170 ha in Pho Yen, Thai Nguyen. These two factories are producing and assembling mobile phone, tablet and phone components. Products from these factories will be exported to more than 50 countries and territories worldwide.
In addition, Samsung has recently invested more than 3 billion USD in Samsung Display (Bac Ninh); 300 million USD in R&D center specialized in researching and innovating new products.
In 2015, Samsung exported about 32.5 billion USD and two factories in Bac Ninh has provided 200 million mobile phones globally. In 2016, the factory in Ho Chi Minh City and Samsung Display will continue to go in operation with great outputs providing to the global market.
Vietnam has become the largest smart phone manufacturing headquarter in the world. Samsung has 9 factories and investing in many countries, but their investment in Vietnam is the largest.
In many countries around the world, the business environment of Vietnam is very stable. Perhaps because of large investments, Samsung always get the support from the Government and local authorities. Currently, there is a shift of capital flows of multinational corporations from one country to another. Therefore, Vietnam should base on the new context to offer attractive strategy accordingly.