Electronics grows on FDI sector
Electronics grows on FDI sector
VietNamNet Bridge – Vietnam’s electronics industry has grown by leaps and bounds in recent years owing largely to the foreign direct investment (FDI) sector, and the country is striving to boost supporting industries to further bolster the sector.
According to statistics of the Ministry of Information and Communications, the total export value of phones and phone parts amounted to US$10.6 billion in the January-May period, up 30.6% from last year’s same period. Meanwhile, exports of electronic devices, computers and components dropped nearly 5% to US$3.7 billion.
The Vietnam Electronic Industries (VEIA) noted that the country’s electronics industry has seen steady growth over the years in terms of export sales, obtaining US$3.4 billion in 2010, US$6.9 billion in 2011, US$20.5 billion in 2012 and US$32.1 billion in 2013. Of the US$32.1 billion generated last year, exports of mobile phones and phone parts amounted to US$21.5 billion.
However, experts said that such strong development of the electronics industry was actually contributed by FDI companies like Samsung, Canon, Nokia and LG.
Vietnamese electronic companies make up less than 20% of the domestic market and nearly 10% of the export turnover.
Despite the huge export revenue, the added value of Vietnam’s electronics industry is not high and the contribution of the industry to the country’s GDP is not commensurate with its contribution to the export turnover.
Chairman of VEIA Luu Hoang Long said that though FDI companies account for only a third of the total number of electronic companies in Vietnam, they possess high technology, hold over 80% domestic market share and contribute over 90% of the export turnover.
According to experts, FDI companies and companies of supporting industries make the most of cheap labor and the Government’s investment incentives, and thus the added value mainly lies in labor and energy use. As a result, in order to inflate the added value of the electronics industry, Vietnam needs to develop supporting industries as the competitive edge will become blunt when labor cost increases.
However, Vietnam’s supporting industries are undeveloped and have not been able to meet the demands of companies.
There are few Vietnamese companies able to supply components and services for FDI companies and component suppliers are mostly foreign ones. Samsung Electronics Vietnam, for instance, currently has 60 components suppliers, with 45 of them South Korean-invested, five Vietnamese-owned and ten from other countries.
Vietnamese companies, according to experts, are not experienced in supplying components for big manufacturers, do not have a marketing system to approach customers, face capital shortages and are weak in technology.
To boost Vietnam’s supporting industries, Vu Duong Ngoc Duy, general director of Viettronics Tan Binh Company, suggested that the Government issue policies to facilitate investments and support companies in selling products.
According to general director of 4P Company Hoang Minh Tri, Vietnam needs to invest in technology, ensure good services, enhance the quality, offer the competitive prices and deliver goods on time.
Companies in supporting industries also need to improve their production capacities and management capacities to meet requirements of foreign companies and cooperate with customers to improve production and products.
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