The consumer electronics market in Vietnam has been one of the most robust market in the world. It is the world’s fifth fastest growing electronics market and the fastest growing in Southeast Asia. In terms of spending in the consumer electronics market in Vietnam, the figure of the first quarter of 2014 was up 27.5 percent on the same period in 2013, while the figure for Indonesia and Singapore were only 10.6 percent and 7.3 percent, respectively. The robust growth can also be seen from the example of Smartphones. In 2013, Smartphones ownership in Vietnam was just 20 percent, but in 2014, the number has soared to 36 percent. Although it is still below the global average (49 percent), the consumer electronics market has proved itself to be bright enough in its growth potential.
Favorable conditions in the consumer electronic market in Vietnam attract large sum of investment
Vietnam rises to the top destination for global electronics manufacturers to invest in. First of all, concerns are rising in the macroeconomic conditions in China, where rising wages and aging workforces make low cost production untenable. Even though suitable alternatives can be found easily in the region, Vietnam still stands out. Unlike Indonesia or the Philippines which are on the outer boundaries of Southeast Asia, Vietnam’s proximity to China makes the integration into existing supply chains easier. Unlike Cambodia, Laos and Myanmar, where even though wages there are less than that of Vietnam, the infrastructure in Vietnam is better and the domestic market there is also larger.
Attracted by these unique advantages, manufacturers invested billions in the consumer electronics market in Vietnam over the past few years. Samsung has made the biggest effort by investing billions of dollars in factories that will produce a large percentage of the company’s smartphone handsets. In 2013, Samsung’s total investment has reached $4.5 billion. Intel and LG also each invested over $1 billion.
The achievement in the electronics exporting sector assures the value of these investments. The growth rate of exporting value from 2009 to 2013 was a stunning 814.2 percent, while the figures of other countries only remained a two digit number.
Challenge ahead of the consumer electronics market in Vietnam
Undeniably the exporting sector in Vietnam showed incredible achievement, questions remain in the long term. Roughly two thirds of the total electronics exports consists of products that are imported and then re-exported without any further processing but just simple assembly. Vietnam should think of ways to move up the supply chain and develop its own tech talent, or it would only be a temporally alternative before the next ideal location is found.