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Low-value products hinder electronics, IT development

Update: March, 30/2012 - 09:39

HA NOI — The electronics and IT sector has seen high profits in recent years but it is still facing with a problem of low-value products, according to the General Statistics Office.

Viet Nam's export of mobile phones and accessories ranked third last year, after garments and crude oil, with an export turnover of US$6.86 billion or a year-on-year increase of 200 per cent.

The garment and textile sector brought the country more than $14 billion, with a labour force of three million, Viet Nam Textile and Apparel Association said. Crude oil export posted a turnover of $7.24 billion.

Over the past three years, mobile phones and computer exports brought in $2 billion and electronics and electronic appliances earned $3 billion each year. With a young population and low income, Viet Nam will continue to be an attractive consumer destination for businesses for the foreseeable future.

Statistics about the labour force in the electronics industry are unofficial but the revenue from this sector will continue to rapidly increase and lure more workers. Last year, Canon Viet Nam employed 23,000 workers, bringing a revenue of $1.6 billion. Samsung Mobile Viet Nam posted an export turnover of $5 billion and employed nearly 15,000 workers. Many big foreign companies have plans to build their plants in Viet Nam, Saigon Marketing newspaper reports.

Such development has led to a paradox in the electronics industry. Sales from this sector are great but of low value due to unskilled workers.

For instance, Samsung Viet Nam spent $1 billion in a short time to bring a top export revenue for the country, accounting for nearly 50 per cent of the country's electronic exports. Viet Nam's electronics industry has been given incentives related to investment capital, tax policy and land but in the last 20 years about 100 companies have been involved in manufacturing and assembling low-value electronics items only.

Recently, Qualcomm, a designer and supplier of CDMA chipsets and system software, committed to transfer technology for Viettel corporation to produce mobile phones. Viettel is the first customer of Qualcomm in ASEAN after large scale markets including China, South Korea and Japan. Viet Nam remains a fiercely competitive market, but domestic suppliers are not strong enough to compete with foreign players.

According to Qualcomm Indochina general director Vu Minh Tri, if a Vietnamese company purchases products from other countries and uses Vietnamese brand names, they have to pay a copyright fee. Viettel now has an ambitious plan to employ experienced engineers from global technology groups to help address limits of Vietnamese engineers who are good at technology but are poor at research, development and design due to the lack of a design industry.

The investment flow into the electronics industry now has also changed. The foreign manufacturers have become a link to connect Viet Nam with their global supply chain. Foreign investors will not be persuaded to share in the local market if they don't find opportunities or profit here. These factors will depend on Government policy to create a strong R&D environment. "If not, Viet Nam will continue to be a destination of assemblers due to its cheap labour cost but without having access to the high value segment of the industry," said experts. — VNS

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