samsung.jpg (Photo : tech.hexun.com)
Electronics juggernaut Samsung has opened a new smartphone factory in Vietnam, replacing years of investment in China. As China’s economy has developed, labor costs have begun to creep up, allowing less developed nations like Vietnam to woo potential manufactures to their shores.
The Samsung organization was portrayed as uncomfortable with its dominance and highly aware of complacency. Likely rooted in this company culture, the electronics manufacturer has begun to shift production of its flagship products to China’s smaller, less regulated neighbor.
Vietnam looks to profit greatly from the shift. When a new USD$2 billion plant ramps up to full production in a year, Vietnam will be producing 40% of all Samsung handsets, and it seems that production will only grow.
Samsung is not the only South Korean company looking toward Vietnam. Competitor LG plans to invest USD$1.5 billion into the Southeast Asian nation to help produce its own line of electronic goods.
Vietnam has become a more prominent economic force in Asia in recent years. With stronger economic growth, the Vietnamese workforce is better educated and equipped to handle the more sophisticated production that global giants like Samsung require.
While the move is not wonderful news for Vietnam’s northern neighbor, China is likely to be left relatively unfazed by the move as it continues to move toward becoming the world's largest economy by 2020.
The move by Samsung follows what some economists call the “flying geese paradigm”, where countries, as they develop, shed industrial activity to other nations that have been slower to develop.
As Japan, Korea, Taiwan, and Hong Kong have refined their economies in the past decades, China has absorbed much of their low-end manufacturing.
With China joining them in terms of development, Southeast Asian countries like Vietnam, Indonesia or the Philippines, will likely be the next to wear the mantle of export-led industrial economies.
