With Samsung now a major player in the smartphone industry, the company has announced plans to invest about $3b (504,749,694,626.43 Naira) in Vietnam. This is to be used to build a new smartphone factory in Vietnam. This is interesting because it marks a gradual shift from China. Vietnam has tax breaks and relatively cheap labour force which is attractive to manufacturers.
This news comes at a time when several other smartphone makers like Microsoft and LG have gradually been gradually expanding their manufacturing with increased demands. Samsung already has a $2b facility which started operations in March. This facility is in the north-eastern province of Thai Nguyen and already employs about 16,000 workers. The new $3b facility is expected to built close to it.
So does this really mark a shift from China?
China used to be the preferred destination for manufacturers of all kind but in recent years, many of these top companies like Apple have begun plans to move manufacturing and assembling from China. The reason is simple, outsourcing in business is generally designed to help the company focus on core products and services which in turn increases profit margins but China has become so successful and modern that increase in wages by workers has given big Tech companies a rethink. The cost per hour is approaching standard western values and this has been a major campaign issue by politicians in the west. In one case, the US President Barack Obama called it campaigning for “insourcing”.
The cost of manufacturing has also gone up in a bid by the government to take advantage of the inflow of several western companies.
Why not Africa?
Africa should ordinarily be the next top destination for tech manufacturing considering the high youth population and fast growing mobile market but all we see is small assembly plants in South Africa and service centres across the continent. Why does the good GDP and growth rate figures not still attract the kind of tech investments we ought to see? The answer is simple, “infrastructure” like power, security, road and rail connections and availability of resources among others are evidently lacking. Countries like Nigeria across the continent ought to do more in order to attract huge investments like this in future.
Vietnam exported $19.2b (3,196,748,065,967.42) worth of mobile telephones and accessories over the first 10 months of the year – 8% more than for the same period in 2013, according to Vietnam’s General Statistics Office.