Global firms dominate Vietnam electronics exports

In this Tuesday, Nov. 10, 2015, photo, David Leung, head of sales for North America for Alco Electronics, talks about the operation at the factory in Houjie Town, Dongguan City, in the Guangdong province of China. A look inside the factory shows what it takes to succeed as a maker of gadgets for the rest of the world: Human precision in tiny tasks, increasingly automated manufacturing, but also flexible thinking and perks to keep the best employees. (AP Photo/Ng Han Guan)

In the first quarter this year, exports of phones and components were worth $14.1 billion, 99 percent of it by foreign firms.

Exports of computers and parts exports topped $12 billion, with foreign companies accounting for 98 percent.

The agency said the rate of use of local parts in the industry is 5-10 percent, with Vietnamese businesses in the supply chain mostly producing low added-value products.

There are several domestic smartphone brands like Vsmart produced by VinSmart, a subsidiary of conglomerate Vingroup, and Bphone by cybersecurity company BKAV, but the market is dominated by foreign brands.

The agency said: “The products made by domestic firms do not meet the demand in terms of quality or design. The linkages between foreign firms and their local counterparts remain weak.”

But it admitted Vietnamese businesses have been striving to improve quality so that they could enter the supply chains of foreign companies, pointing out for instance that the number of local tier-1 suppliers (who supply products directly to a company without going through intermediaries) of Samsung had increased from four in 2014 to 35 last year.

Local electronics firms should identify their core products, target their market segments, stay ahead of consumer trends, and keep up with the global technological development to create competitive products, it said.

“They should take advantage of trade deals such as the EU–Vietnam Free Trade Agreement,” the agency stressed.