Vexed Over Vietnam

Ubiquitous research firm iSuppli feels a China backlash is coming, with OEMs rediscovering other Southeast Asian nations as manufacturing hotspots. In a new white paper, Validating Vietnam, the firm specifically fingers Vietnam as a likely candidate for a resurgence.

Well, maybe. Few doubt Vietnam’s possibilities; we published an article from EMS provider Spartronics Jason Craft last October that explained the nation’s potential in detail. But Vietnam will remain small potatoes compared to its SE Asia neighbors. The Philippines and Malaysia, I would argue, with their comparatively long histories of electronics manufacturing, are in better shape to catch China’s scraps.

That’s if there are any scraps to be had. Incredibly, China is still scratching the surface of being a player. Most of the country remains untouched by the rest of the world. When they run out of low-cost workers in Shenzhen and Shanghai and Beijing, companies will move inland. And iSuppli’s own data forecast China remaining on the road toward its goal of becoming The World’s Workshop.

It’s reassuring to read that all the world’s eggs won’t end up in one basket. Truth is, they never were going to. But I think it’s a stretch to think Vietnam, to name one, will emerge as anything more than a third tier player.

This entry was posted in Hot Wires by Mike. Bookmark the permalink.

About Mike

Mike Buetow is editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He is also vice president and editorial director of UP Media Group, for which he oversees all editorial and production aspects. He has more than 20 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow

5 thoughts on “Vexed Over Vietnam

  1. I respectfully disagree. Vietnam has proven to be able to take over to be the leader of Southeast Asia. It’s mainly due to the differences in cultures. Vietnamese emphasize in education and work ethics while those in Malaysia and the Philippines don’t do so as much. The challenge Vietnam has to face is that it started its open market way too far behind the other countries in Southeast Asia, but it seems on the right track for the last few years. If Vietnam can keep this growth rate, it will soon be one of the most formidable economies in Southeast Asia.

  2. This is the most non-sense piece of garbage analysis that I have seen. The comparison should be based on higher-value added end of the products, rather than the mass-produced cheap components that China has a comparative advantage in. The author should go back to school and learn economics.

  3. According to reports from Spartronics parent company, Sparton Corp. (NYSE-SPA), its Vietnam operation has started up slower than expected and has produced a second year in a row of losses.

    From Sparton’s May 10, 2007 press release at http://www.sparton.com/releases/07/6.htm

    “Also impacting margins were results from the Company’s Vietnam facility, the start-up of which has negatively impacted gross profit by $520,000 and $589,000 for three months ended March 31, 2007 and 2006, respectively, and $1,205,000 and $1,275,000 for nine months ended March 31, 2007 and 2006, respectively.”

  4. Henry, I’d be interested in knowing just which nation’s high-end assembly business you think Vietnam will take? And also, you should know that China is not just low level manufacturing. I’ve been in no fewer than 20 plants there, and their equipment sets, cleanliness, and capabilities rival anyone’s. No, they don’t have the depth that North America or Europe (or even Malaysia, Korea, Singapore, etc.) have on the high-end. But they have the manpower, the capital, the market and the momentum.

    Finally, there’s a reason Intel, AMD, etc., are putting IC fabs in China. And silicon manufacture is much more complicated than electronics assembly.

  5. In 1948 much of Japan’s once-mighty industry lay in ruin. A decade after VJ-Day the products they exported were so shabby that Japan became the benchmark for junk. Indeed, in the early 60’s it was grounds for a black eye if someone said your bicycle “looked like it was Made-In-Japan”.

    If anyone had said to me in 1963, “I think it’s a stretch to think Japan will emerge as anything more than a third tier player ” I would have readily agreed.

    But, oh, how things were about to change, and quickly.

    Within another decade, by 1973, America became the benchmark for junk. If we didn’t say it with our mouths, we validated it with our wallets. If you had the money, you bought Sony. If you didn’t like repair shops you drove a Datsun.

    By the next decade this role reversal was openly cultural: Michael Keaton was in a comedy exploiting the sad state of American automotive manufacturing, the radio rocked to songs like “I’m turning Japanese” and US-owned Atari was losing the video game war to Japan’s cooler/better Nintendo.

    Within 20-years of the end of WWII, America had become the property of the J. A. Pan Co.

    In 1983 I was long out of school and manufacturing printed circuit boards, when someone said something to me like “I think it’s a stretch to think China will emerge as anything more than a third tier player in electronics manufacturing.” When I didn’t readily agree, I was bombarded by the wisdom of that day: “There’s no infrastructure — they can’t get raw materials from Point-A to Point-B. They’re not even Capitalists, for crissakes. And the cost of shipping something from halfway around the world…”.

    But, oh, how things were about to change, and quickly.

    So now when I read or hear someone say, “I think it’s a stretch to think _____ will emerge as anything more than a third tier player ” I only wonder.

    And wait.

Comments are closed.