Asia a key Seagate growth engine

Stephen Luczo

Seagate Technology Plc, the world leader in hard disk drives (HDD) and storage solutions, sees Asia and Vietnam as key to its strategic business development, Seagate chairman and CEO Stephen Luczo tells VIR's Song Ngoc during his first visit to Vietnam last week.

More hi-tech and IT transnational firms are seeing growing investment opportunities in Vietnam. Besides the advantage of the country’s abundant labour force, what other factors draw investors to Vietnam?

It is the growth and the personal computer penetration rate continuing to rise. I think sustaining growth and per capita income are important factors for more companies to come to this market.

In a new strategy to attract foreign investment, the Vietnamese government is ready to offer favourable incentives, particularly tax incentives, to hi-tech foreign investors. Are such tax incentives really what foreign investors want to start-up businesses and how are they comparable to ones in regional countries, particularly IT manufacturing bases in China and India?

Well, it [offering favourable incentives] depends on each country. I would say that China’s attractiveness is not necessarily related to taxes. When Singapore established the technology manufacturing base, it was very thoughtful about how it attracted capital intensive companies was whether in terms of infrastructure capital grants as well as tax holidays so it grew the income base of the people. But China is different because what attracted most people to China is probably its lower wage rates as well as the access to the market. I think Vietnam has a lot of opportunities because Vietnam obviously has a large and highly-educated population. Vietnam also has the ability to use tax bonuses to attract capital, which happens all over the world.

Foreign investors are talking about the quality of Vietnam’s labour force, the quality of policy-making and weaknesses of infrastructure as major challenges to do business here. Do you agree?

This is my first trip to Vietnam but I think all of the elements are for further sustained growth in Vietnam. I think the educational levels here are clearly quite high and particularly the education focus on science and mathematics. In terms of infrastructure, it is certainly good enough and can get better so the quality of infrastructure is not going to be a hurdle. I see the challenge here is language, but it will be easily overcome. Overall the most important things are commitment, education and opportunities.

Seagate announced Asia as an important growing market. What specifically interests Seagate?

For me, honestly the reason I am here in Asia is because of the importance that I attribute to the growth opportunities throughout Asia for Seagate. Some 90 per cent of our employees are located throughout Asia and most importantly, we are here to learn about the market and our customers and where are the places we should be making investments over the next five years, and well position for the company for the next 10-15 years and beyond.

It is fairly obvious to most business leaders in America that China is the easiest place to make investments in. Seagate is well positioned in China where we have had significant investment and market share. But for me, Southeast Asia is the most interesting region in the world. In Southeast Asian economies, Thailand is obviously the largest outside China. But the acceleration in growth that’s been seen here in Vietnam is spectacular, so I am interested in Vietnam as being a place for making investment today that will position us to establish the right relationship with a variety of system integrators, original equipment manufacturers and distributors of big retail brands.

Last month, Seagate and Samsung announced broad strategic alignment, including Samsung combining its HDD operations into Seagate. How will this alignment affect the Vietnamese market, where Samsung currently holds a large HDD market share?

This transactions and agreements, which we expect to complete by the end of this year, will significantly expand Seagate’s customer access in China and Southeast Asia.