If Made in India wants to make a leap, there is an object that has to be surpassed in front of it - Viet Nam.
According to the data released by Viet Nam, in the first five months of 2024, Viet Nam has four categories of goods with an export value of more than 10 billion US dollars, of which the export of various mobile phones and parts reached 22.4 billion US dollars, a year-on-year increase of about 11%, which means that Viet Nam's mobile phone exports have surpassed India and become the second in the world.
According to the Viet Cong Electronic News, United States and China are the largest customers of Viet Nam mobile phones and parts, respectively.
Behind Viet Nam's overtaking of India is its multi-year layout to build Viet Nam into an important production base for the global electronics manufacturing industry. At the same time, the Modi government has long planned to develop India into an export-oriented global mobile phone manufacturing hub.
Who will emerge victorious in this enduring competition?
Viet Nam: Eat the dividends of transfers
The Viet Nam government has been committed to promoting the growth of foreign investment in the electronics manufacturing industry.
The deepest partnership with Viet Nam is Korea's Samsung. Back in 2018, Samsung began moving one of its factories to Viet Nam. One is due to the fierce competition in the mobile phone market in many Asian countries, and the other is because Viet Nam has lower costs for labor and land production factors.
The Viet Nam government has also provided preferential treatment to these foreign-funded enterprises, including long-term free production sites for foreign capital, exemption from corporate tax for the first four years of operation, and so on.
Viet Nam factory
Today, Viet Nam is Samsung's largest production base in the world, and more than 50% of Samsung mobile phones sold worldwide are "Made in Viet Nam".
Of course, Samsung is not without investment in India, but according to an overseas mid-level of Samsung's departure, between India and Viet Nam, Samsung prefers Viet Nam. Samsung believes that compared with India, Viet Nam has more labor advantages, and Viet Nam's worker organization discipline, time concept and industrial maturity are better than India. Viet Nam's efficiency and overall environment are also more attractive.
According to Viet Nam media reports, Korea's Samsung plans to invest an additional $1.2 billion in Viet Nam in 2024 to support the continuous improvement and growth of Viet Nam's industry.
Apple, another major mobile phone maker, has been assembling AirPods in Viet Nam since 2019, and then in 2020, Apple asked its main foundry Foxconn to transfer some of its iPad and MacBook assembly operations to Viet Nam. In 2021, Foxconn established a new production base in Viet Nam.
In addition, Luxshare Precision, Goertek, etc., which are also giants of Apple's industrial chain, have also set up factories in Viet Nam. In 2023, Apple will also put some Apple Watch production in Viet Nam.
Unlike Samsung, iPhone production is not in Viet Nam, but is still mainly concentrated in China and partly in India. Viet Nam is an important computer manufacturing center for Apple, able to meet 40% of its annual Mac and iPad needs.
On April 15 this year, after Apple CEO Cook visited Viet Nam, Apple Viet Nam officially issued a statement saying that it would increase investment in Viet Nam's supply chain. Apple said in the statement that since 2019, Apple has invested more than $15.78 billion in Viet Nam through its supply chain partners.
India: Some mobile phone business went to China
The India government launched the Smartphone Production Link Incentive (PLI) scheme in 2020 to attract the global handset supply chain.
Apple is also following the plan and is vigorously expanding its business in India.
In April 2023, Cook visited India for talks with Prime Minister Narendra Modi in the hope of expanding production and smartphone sales in the country. Apple plans to produce a quarter of its iPhones in India by 2025 and half by 2027. The India media is more optimistic, hoping that after 2025, iPhones produced in India can account for more than 50%.
However, Apple's development in India has not been as fast as expected, and Cook's expansion plan has encountered a number of problems: low efficiency and low yield.
Not only that, compared with Viet Nam's more friendly business environment, India will always encounter many labor disputes, supply chain problems and other problems. Some India's federal and state investment and investment policies have changed rapidly, and there is serious populist sentiment in society. Apple's suppliers must put a lot of effort into contending with local policymakers, landowners and labor groups.
India factory
"Here, everything is expensive except labor." An Apple supplier said.
On July 23, according to the "Reference News", due to the assembly of the iPhone 15, Apple has transferred part of its production capacity back to Chinese mainland foundries this year, and BYD, Lixun Precision and other large manufacturers have joined the iPhone 16 supply chain and become Apple's latest foundry partner.
Despite the efforts of Apple and its suppliers to try to shorten the production cycle between China and India, India has also vowed to increase production in the next five years, the report said. The reality is a different story.
Although the number of iPhone 15 foundries in India accounts for only one percent, there are still many problems: India factories need to rely on imported parts, and quality and efficiency are affected; The yield rate of iPhone OEM in India is only about 50%, and there are still problems in hygiene management.
Viet Nam VS India
According to the data, Viet Nam's attractiveness to foreign investment is now even better, with its exports reaching US$96.99 billion last year. By comparison, India's figure is only $75.65 billion. You know, the total population of India is as high as 1.428 billion, while the total population of Viet Nam has just passed the 100 million mark.
Comparing the two countries, Samir, CEO of Vogel Group, said: "Viet Nam has always been known for its ability to manufacture electronic products. India is new to this area, which gives Viet Nam a competitive advantage. ”
In addition to the first-mover advantage, Viet Nam also has the advantage of being a unitary country and having advantages in policy coordination. In contrast, India, as a federal state, has 29 states, each with different policies.
Another difference is tariffs.
A major obstacle to India's desire to become a manufacturing powerhouse is its high import tariffs. In the ICT sector, for example, the country's import duty reached 10 per cent, significantly higher than Viet Nam's average import duty of about 5 per cent. Although India claims that this is to protect domestic manufacturers, unless the Modi government lowers tariffs, India will basically be less attractive than Viet Nam in some areas of electronics manufacturing.
In addition, compared with Southeast Asian countries such as Viet Nam, India's infrastructure is relatively backward and the transportation efficiency is lower. "In countries like Southeast Asia, a ship can unload cargo in eight hours, and then the cargo is loaded onto a truck and transported to the factory," said Aji, chairman and CEO of the U.S.-India Strategic Partnership Forum. But in India, the same ship will be stuck in customs warehouses for days. ”
"Foreign investors tend to be more concerned about ease of doing business, such as flexibility in hiring and firing workers, which is where Viet Nam has a long-standing advantage over India." Investment manager VinaCapital added.
Of course, India also has its incomparable advantage, that is, its position as the world's second largest mobile phone market, and its economic growth rate is also leading in many countries in the world.
"In the early days of India's attempt to seize market share in electronics, Viet Nam will be its biggest competitor." Viswanathan, senior director of the software company, said.
Source: "Times Weekly" WeChat public account
Author: Ma Huan
Editor: Wang Sheng
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