FDI firms make almost 100% of exported cellphones, components

According to the Vietnam Electronic Industries Association (VEIA), exports of cellphones and components in 2016 and the first few months of 2017 helped the country improve its trade balance and reduce the trade deficit.

Foreign companies accounted for one third of the country’s electronic firms but they make up 90% of the total export revenue in electronics and 80% of the nation’s market share.

The low local content ratio in manufacturing may hold back Vietnam’s economy, according to chief representative of the Japan External Trade Organisation (JETRO) Hironobu Kitagawa.

He cited an example of Japanese enterprises in Vietnam, where the localisation proportion made up 34% of the value of their materials, components and accessories, while that in China and Thailand were 68% and 57%, respectively.

Therefore, they have to import inputs from Vietnam’s neigbours such as China and Thailand, leading to bigger costs and risks, he added.

Japanese firms are looking for more local suppliers to enhance their competitiveness and this will require the electronic industry in Vietnam to increase productivity, strengthen supply chain and improve the localisation ratio.