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29 Mar. 2013 | Comments (0)

Samsung's newly announced Vietnam development represents one of the strongest signals yet regarding China's deteriorating labor competitiveness.  Much has been made in the Western media about the emerging trend of "re-shoring" or "near-shoring" to places like Mexico, but for other Asian countries "near-shoring" away from China is likely to lead to places like Vietnam, as we are now seeing.  To date it has been unclear how much these trends are media hype or pure speculation, and how much the sentiment reflects geniune business intentions and planning. But for Samsung it's clear that China has indeed become too expensive.

Caijing is one of China's premier business magazines, operating out of Beijing:


Samsung to Build Largest Plant in Vietnam as Labor Cost Rises in China

03-27 14:47 Caijing
 
The completion of the new plant will lift the production capacity of Samsung's Vietnam unit to 240 million by 2015, accounting over half of Samsung's total projected capacity.

Samsung Electronics Co. is building the world's large plant in Vietnam manufacturing mobiles largely due to lower costs compared with other Asian countries like China, according to media reports.

The Vietnam unit of the company has started construction on the plant in Yen Binh Industrial Park in Thai Nguyen province, reported the Korea Central Daily News.

Attending a groundbreaking ceremony of the second Samsung plant in Vietnam, Vietnamese Prime Minister Nguyen Tan Dung said the company's choice has served as a model to other foreign companies.

Operation of the plant, which will mainly produce mobile phones, is expected to start from the end of the year, and production is projected to be boosted since 2014 to hit 120 million units by 2015, the report said.

Together with the current plant in Bac Ninh Industrial Area in Vietnam, the completion of the new plant will lift production capacity of Samsung's Vietnam unit to 240 million by 2015, accounting over half of Samsung's total projected capacity.

Citing sources, it said China was not included in the company's alternatives because labor cost is rising in the country, undermining price competitiveness. Considering talents and infrastructures, it is not easy to find an alternative like Vietnam, it said.

This will be Samsung's second manufacturing base in Vietnam and also its world's largest, according to the Vietnam Economic Times.

The Thai Nguyen plant will create millions of jobs in Vietnam and contribute billions of dollars to its exports, Xinhua said. Samsung group built its first industrial area in Vietnam in 2009 in Bac Ninh province, with exports hitting 12.6 billion U.S. dollars in 2012.

  • Posted by Ethan Cramer-Flood

    Ethan Cramer-Flood

    Ethan Cramer-Flood is a Senior Fellow of The Conference Board’s China Center for Economics and Business.  Based in New York City, he helps direct the Beijing-based China Center and supports…

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