With a nearly 30-year protection of the State, the electronic industry should have become one of the strong production sectors of Vietnam. However, this important industry still does not have an overall development plan. Electronic firms are only capable of assembling parts, not manufacturing its own ones.
A Backward Orientation
According to the Ministry of Industry, a country normally spends 5-10 years on the assembly period and then begins producing components and designing product. Meanwhile, Vietnam is still in the process of assembly and outsourcing of simple components after 30 years.
Through a survey conducted in early 2006 in nine State-owned enterprises, over 40 joint stock companies, 20 limited liability companies and 38 foreign invested firms in the electronic industry, the Vietnamese electronic industry contributed only 5-10 per cent of the product value. This also means that the profit from electronic products sales is mall.
The Vietnam Electronics Industries Association (VEIA) confessed that the Vietnamese electronic industry is mainly engaged in assembly of common electronic products, about 80 per cent. The specialised products only accounted for some 20 per cent. The supporting industry also grows slowly and fails to meet the domestic demand.
For many years, Vietnam has very few trademarks familiar to the Vietnamese like Viettronics, Tien Dat, Hoa Phat and Etron. After Vietnam joins the AFTA, reducing import duties on electronic products will lead to the market share shrinkage of Vietnamese products. At present, the market share of Vietnamese electronic products fall by half compared with several years ago.
The electronic industry is one of the super-profit industries in many countries because they always pay attention to investments in research and development activities to devise new product lines. The Vietnamese electronic industry is almost exploiting old products with low profits; hence, the added value of the Vietnamese products is only 5-10 per cent. For example, domestic firms are assembling TV sets with cathode displays and 25-29-inch flat-panel displays while the United States and Japan have quitted producing these kinds. They are making TVs with above 36-inch plasma displays or LCD monitors.
Paradoxically, the Vietnamese electronic industry is in the hands of FDI firms, not Vietnamese ones. FDI firms with systematic investment processes and modern equipment are dominating both domestic and export markets. To date, the Ministry of Industry has not produce specific orientations or strategies for the Vietnamese electronic industry. The old orientation was to produce components but failed.
Hope on Transference
The core reason is capital shortage. According to the Ministry of Industry, the total investment into the electronic industry to date was under US$2 billion. The objective of the Vietnamese electronic industry is to obtain US$6 billion revenues by 2010, including US$5 billion from export. To reach this goal, the industry needs an additional US$2 billion, which is too big now.
The small and scattered investment in addition to an official orientation absence causes more difficulties to electronics firms. Without a common strategy, electronics companies are separated apart. Many have gone bankrupt due to backward technologies and uncompetitive products.
Furthermore, the assembly is not a strong point of Vietnamese enterprises because they possess technologies, which are 10-20 years more backward than the region and the world. To sharpen the competitiveness of the electronic industry, Vietnam, first of all, needs foreign investment. Domestic firms must focus on supporting industry. Besides, the industry pays more concentration on specialised products.
Secondly, electronics essentially broaden linkages in manufacturing equipment, components and materials. They should initiatively upgrade existing production lines, intensively invest in technologies, robots and automatic machinery, and concentrate on training product R&D experts. At the same time, the electronic industry should be focally developed in industrial parks and export processing zones in important localities like Hanoi and its neighbouring provinces, Ho Chi Minh City, Danang City, Dong Nai, Binh Duong and Quang Nam provinces.
In the short term, Vietnam can take aim at China, Hong Kong, African countries and new EU member countries when it joins the WTO. Holding an advantage of low labour cost, many world-leading firms like Intel (US) and Nidec (Japan) move their investment into Vietnam, which hopefully pushes up the development of the electronic and computer parts industries of Vietnam.
H.Ly
Vietnamese
