Note 7 scandal leaves little impact on Vietnam’s exports: official
Note 7 scandal leaves little impact on Vietnam’s exports: official
The halt in production of the Galaxy Note 7 smartphones will negatively affect export turnover in Vietnam, home to multibillion-dollar Samsung mobile facilities, but the impact will be insignificant, a Ministry of Industry and Trade official said.
Samsung Electronics, the world’s largest smartphone manufacturer, announced on Tuesday that it will cease production of its flagship Note 7, along with ending sales and exchanges of the handset worldwide.
The Note 7’s demise was predicted to hurt Vietnam’s export sector, which mainly relies on mobile phones and spare parts produced by Samsung facilities in the country.
Mobile phones and parts account for approximately 20 percent of Vietnam’s total export turnover, and Samsung facilities hold nearly 99 percent of the market share in the industry, according to Professor Nguyen Mai, chairman of the Association of Foreign Investors.
Samsung Electronics has invested $11.2 billion in Vietnam, including a $2.5 billion mobile production complex in Bac Ninh, and another $5 billion facility in Thai Nguyen, both northern provinces.
The two plants account for nearly 30 percent of Samsung’s global smartphone sales.
Though it seems like the cessation of Note 7 production could leave a deep footprint on the country’s export revenue, Tran Thanh Hai, deputy head of the export-import agency under the trade ministry, said the Note 7 issue will only leave a slight impression.
Hai confirmed that Samsung had been producing the Note 7 at four different plants spread between China, South Korea, and Vietnam, with the latter accounting for a third of total production.
“In Vietnam Samsung has only made 700,000 Note 7 handsets over the past two months, so the impact of ceasing production on export revenue is insignificant, especially as we draw closer to the end of the year,” Hai told Tuoi Tre (Youth) newspaper.
“Moreover, Galaxy Note 7 is only one among a number of Samsung devices produced in Vietnam.”
Hai elaborated that the Note 7 handset’s export price of $400 means the country will only suffer export revenue losses ranging from $280 million to $300 million.
“This only equals 0.7 to 1 percent of our total revenue of mobile phone exports, and less than 0.2 percent of the total export turnover estimated for this year,” he said.
The official also denied allegations that Vietnamese Samsung employees will hit by the Note 7 scandal.
The South Korean company currently employs 110,000 workers in its Vietnamese facilities. “As the company produces a wide variety of mobile devices, the ceased production of a single model will not affect the company’s work or the plants’ operations,” Hai asserted.
Last year Vietnam’s mobile phone exports topped $30.17 billion, accounting for 19 percent of total export revenue, according to the trade ministry.
In the first nine months of this year, mobile phone exports were estimated at $24.96 billion, up 8.6 percent from a year earlier.
Samsung started selling the Note 7 at home on August 19, but soon launched a global recall the following month in response to many of the devices reportedly catching fire while being charged.
The recall affected some 2.5 million handsets prior to the company’s decision to halt the sales, exchanges, and production of the ill-fated Note 7.
Samsung said on Friday it may take a hit of some $3 billion to its operating profit over the next two quarters due to the Note 7 discontinuation, according to Reuters.
The outlook increases the total losses the world’s smartphone leader has forecast to incur from the Note 7’s overheating issues to some $5.3 billion, as Samsung said on Wednesday the scandal would give its third-quarter profit a $2.3 billion hit.
