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What if Samsung relocates high-end production line to Vietnam?

Samsung Electronics has announced the temporary shutdown of its factory in Gumi, South Korea and has relocated the production line of some high-end smartphone models to Vietnam.

Nguyen Binh Minh, a lecturer of the Trade University, commented that the move is not part of Samsung's long-term development and investment strategy in Vietnam. This is just an action to adjust business plan after six workers were found positive with coronavirus.

 

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Strategically, this is a production line with high-end technology that Samsung might not want to take out of South Korea. However, in the face of the high risks caused by the epidemic, temporary factory relocation is mandatory to ensure production activities.

Asked about the benefits for Vietnam can , Minh said Vietnam would only have benefits in supporting activities.

In principle, technology transfer will be carried out only if it is mentioned in the strategy signed with Vietnam. In this case, the production line relocation is just a temporary move, not a long-term strategy.

Samsung Electronics has announced the temporary shutdown of its factory in Gumi, South Korea and has relocated the production line of some high-end smartphone models to Vietnam.

Agreeing with Minh, an analyst said he can see no opportunity for Vietnamese enterprises to squeeze into Samsung’s production line. In fact, this is an advanced production line and the enterprises are unable to provide components to Samsung.

Besides, it is nearly impossible for Vietnam’s enterprises to join the production chain because all the links of the chain have been defined already.

“If Vietnam allows Samsung to relocate its production line to Vietnam, we will get some benefits from providing relevant services which don’t have direct relations to the production activities,” he said.

Minh said Vietnam should consider this an opportunity and create favorable conditions for enterprises to operate in the current context of high risks.

“We need to show foreign investors that the government of Vietnam creates favorable conditions for investors and will not abandon them in any case, ” Minh said.

This will help make investors feel more secure and believe in the policies as well as the low-risk investment environment in Vietnam.

If the epidemic cannot be contained after a short time, Samsung may have to think of organizing long-term production in Vietnam.

“If this happens, Vietnam will have more smartphone products to export to the world,” Minh said, adding that this will benefit both Samsung and Vietnam. The manufacturer will be able to maintain production, while Vietnam’s investment environment will become more prestigious.

Regarding the proposal by Samsung not to isolate 700 South Korean workers who come to Vietnam to serve a research project, Minh said there must not be any exclusion in the context of epidemic escalation.

Thanh Lich 

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