Vietnam offshoring and outsourcing contract manufacturing services are a late comer to the global supply chain destination stage.
Due to an emergence of a wide degree of sourcing arrangements within, and with, the country, Vietnam’s contract manufacturing opportunities are developing at a rate that was not on the global radar ten to fifteen years ago.
While Vietnam’s wages can be as low as 1/20th of Taiwan’s wages, its labor rates are still not as competitive as China’s. Meanwhile, Vietnam has devised a national strategy for its IT industry that is much different from those strategies adopted by Singapore and South Korea in the 1960’s and 1970’s
SEE ALSO
4 OEM sourcing strategies for Asia
[Hourly] Manufacturing labor wages for Asia
[Annual] Manufacturing labor wages for Asia
Singapore and South Korea followed IT industry strategies that reflected dominance of in-house manufacturing.
Singapore developed its IT supply chain by supplying parts and services to multi-national corporations (MNC) that established in-house manufacturing facilities in Singapore. Whereas, South Korea primarily built-up its IT industry supply chain by reverse engineering company products already in the marketplace while manufacturing them in Korean-owned companies.
So, Vietnam had to consider how its Vietnamese IT industry supply chain would fit into the global supply chain. What Vietnam decided on was accomplishing this through varying stages of production being associated with different sourcing arrangements. Currently, many of Vietnam’s imported electronics components are sourced from China, Japan, South Korea, and Taiwan with high tariffs.
As tariffs on electronics components into Vietnam (currently ~30%) become more reasonable, interest in Vietnam as a destination source for offshoring and outsourcing contract manufacturing services should grow larger.
READ
 |
Vietnam manufacturing tech hub: Strengths and challenges |
Meanwhile, the Vietnamese government continues to try and make Vietnam an attractive destination for electronics manufacturing. Overall production of electronics goods continues to increase. From 2000 to 2004, electronics production grew 25% per year.
Vietnam electronics contract manufacturing challenges
Some of the challenges facing Vietnam’s electronics industry include:
- power (much of Vietnam’s electricity is generated from hydropower which can have a questionable supply consistency due to prevailing weather conditions. This can create trying conditions given high electricity consumption rates associated with technology manufacturing).
- IP (intellectual property) rights can be considered weak
- Vietnam’s transportation system is in relatively poor condition with less than 45% of its roads topped with asphalt
- Questionable funding to support Vietnam’s railroad infrastructure
- Telephone calls into the country, from North America, can be difficult to connect at times
A few of the electronics companies currently committed to manufacturing in Vietnam include Intel, Canon, and contract manufacturing and design companies Jabil Circuit, Spartonics, Mechatronics Engineering Group and, MiTAC Precision Technology.
Request custom list ASEAN EMS manufacturers
OEMs reading this can request a list of electronics contract EMS manufacturing providers in Asia (its free) that match your program requirements by clicking here, or you can also click on the map below.
MORE EMS CUSTOM LISTS
Request list of EMS provider facilities in Silicon Valley
Request list of EMS providers anywhere (worldwide)
Get list of EMS manufacturers for your requirements (Its free)
Save time and money. Find quality EMS manufacturers. Fast. Venture Outsource has a massive, global database of contract electronic design and manufacturing capabilities. Speak with a Provider Advisor.
“Was able to very quickly find details on the important elements of setting up EMS and ODM partnerships, talked with an advisor for personalized info on quality providers matching our requirements while getting up to speed quickly about the industry and connect with key staff from like-minded companies and potential partners. Great resource.”
— Jeff Treuhaft, Sr. Vice President, Fusion-IO
Advisors tell you matches we find for your needs, answer your questions and, can share EMS industry knowledge specific to your industries and markets.
