Vietnam enters global mobile phone supply chain
  • | | November 17, 2009 11:37 AM

Samsung recently inaugurated its mobile phone production factory under the name of Samsung Electronics Vietnam Company Limited (SEV) in Yen Phong Industrial Zone, Bac Ninh Province. SEV’s President Yoo Young-bok speaks with DTInews’ Tuan Anh about the major project.

SEV’s President Yoo Young-bok

What are the scale and implication of this project?

The total investment for SEV is $670 million, plus we have 17 suppliers who have also invested into Bac Ninh to supply us with spare parts and services, bringing the total investment to nearly $1 billion. This marks the milestone of the first time mobile phones are mass produced in Vietnam and exported to the global market. There are currently only about ten countries in the world that are producing mobile phones, so this is quite significant. At the moment, SEV has reached the capacity of 1.5 million units per month, and we plan to increase that to 6 million units per month by next year. The factory’s is expected to supply 100 million products per year in its completion stage by 2012.
What is the factory’s position in Samsung’s global strategy?
This is Samsung’s 7th mobile factory in the world and Vietnam is the 5th country that houses Samsung’s mobile phone production, after South Korea, China, India and Brazil. But this is our first factory that is equipped with a complete injection line that applies the latest technology. Previously, our factories relied on other partners to produce mobile phone’s plastic cases. So for the long term, this injection line will not only serve SEV’s production, but also export its cases to other Samsung’s factories. For the moment, complete made-in-Vietnam mobile phone products will be exported to markets in the South East Asia, Middle East and Africa; and the European, Australian and Commonwealth of Independent States’ (CIS) markets are next on the list.
What are your targets for export and plan for future development?
Over 90 per cent of our products will be exported, while the rest is to serve the Vietnamese domestic market. We plan to reach export turn over of $4.5 billion in 2010 and $5 billion in 2011, making SEV the second largest exporter in Vietnam only after Petro Vietnam. Most of the profit will be reinvested into research and development (R&D) and further factory development, which is currently only at its first phase and will need to go through two more phases, with the building of additional assembly and injection lines to increase the production capacity. Thus the number of employees will also need to go up to about 10,000 from the current 2,300. For R&D, we currently employ 50 engineers, and we are working with local institutions such as the Hanoi University of Technology to recruit to enlarge the R&D team.
How is the progress of your suppliers in Vietnam?
6 out of the 17 suppliers have already started supplying to SEV, and we expect our on-site suppliers to supply around 50 per cent of our spare parts by 2010. Obviously, apart from the direct socio-economic contribution to Bac Ninh province and the surrounding area, this project helps attract more FDI to the province from Samsung’s global supplier base.
Will the products be labeled ‘Made in Vietnam’?
Yes. Usually products that are not completely manufactured and assembled in one place, either by us or by other manufacturers, are not labeled ‘Made in’, but simply ‘Made by (the brand)’. But as SEV is our complete production line, we are proud to imprint the label ‘Made in Vietnam’ on all our products. This is also our chance to help raise the Vietnam brand name as a country to the global market.
So can the domestic market expect a price cut thanks to Samsung’s local production?
No, we are committed to maintain a consistent pricing plan across different markets. In Vietnam, our initial investment is enormous, plus we have to compete with imported products that enjoy very low to even zero per cent of import tax, especially those from China, so we do not really have any pricing advantage.
Thank you!