NEPCON highlights electronics shift

September 19, 2019 | 10:43
(0) user say
This is a year of breakthroughs for the electronics industry, including the trend of transferring electronic components’ production from international markets to Vietnam.
nepcon highlights electronics shift
NEPCON Vietnam 2019, held in Hanoi last week, set the stage for 200 electronics brands from around 20 nations and territories

Since the EU-Vietnam Free Trade Agreement was signed on June 30, there are now many new doors open for Vietnamese electronics companies that also bring more prospects for supporting industry companies. Last week, the annual NEPCON exhibition came to Hanoi for the fourth time. It is Vietnam’s only exhibition on surface-mount technology, testing technologies, equipment, and supporting industries for electronics manufacturing.

The event aimed to gather state-of-the-art technologies and solutions from over 200 brands, updating on the hottest trends via onsite forums and conferences, and serving attendants with complementary business matchmaking programmes.

Mark Andrew Rinehart, director of White Horse Laboratories Ltd., said, “There are more companies and businesses participating in the exhibition than I imagined. For me, this is a valuable opportunity to learn more about the development of the electronics manufacturing industry as well as to search for high-quality products.”

His company focuses on providing testing and quality control services, as well as educating the industry on standards, processes, terminology, risks, and requirements. White Horse is one of many firms looking for opportunities to lower costs in their facilities and participate in the investment wave to Vietnam.

Vu Trong Tai, general manager of Reed Tradex Vietnam said since a plethora of emerging opportunities is knocking on the market’s door, it is vital for electronics manufacturers to tap into and leverage the opportunities by joining the NEPCON event.

More and more supply chain and procurement managers are involved in outsourcing decisions and are taking a closer look at Vietnam, with companies like Nintendo and Apple supplier Goertek announcing their intention to begin producing in Vietnam. Cheng Uei Precision Industry Co., Ltd. and Pegatron Corporation, which supply chargers and connectors for iPhones, are also considering expanding production overseas, including in Vietnam.

Meanwhile, big names like Samsung, LG, Microsoft, and Intel have already picked Vietnam as their production base and began relocating technology and equipment from many nations, including China, Malaysia, Thailand, and Costa Rica.

According to Do Thi Thuy Huong, representative of the Vietnam Electronic Industries Association, globalisation has created fierce competition in the local supporting and electronics industries. Thus, enterprises need to create a network with one another and foreign partners.

In a recent interview with VIR, chief representative of the Japan External Trade Organization (JETRO) in Hanoi, Hironobu Kitagawa, said, “Electronics, automation, and automotive are all sectors with high potential. Growth in robotics and automation is propelled by the need to improve competitive capabilities in the industry by improving efficiency, production stability, and cost control.”

Kitagawa added that Vietnam is expected to be more attractive for foreign investors thanks to the increasing localisation rate for parts production, especially in the manufacturing industry.

“It is essential for the country to focus on priority sectors and adopt appropriate policies to strengthen the links between Vietnamese and foreign companies to improve the economy. The JETRO will provide assistance for the development of supporting industries in Vietnam,” he said.

However, most electronic companies in Vietnam are small- and medium-sized enterprises (SMEs), which make up a major pillar of Southeast Asia’s developing economies. In order to support them, the United States Agency for International Development is deploying the LinkSME project during 2018-2023 with a total budget of $22.1 million, which strengthens relations between suppliers and buyers, as well as boosting participation of SMEs in global value chains.

LinkSME was also an active participant of the NEPCON event.

Nguyen Thi Xuan Thuy, deputy director of the Industrial Development Centre under the Ministry of Industry and Trade, said at last week’s conference that if Vietnam’s electronics and supporting industries could develop a supply network and provide products matching international standards, their competitiveness and ability to join global supply chains would improve rapidly.

“Additionally, updating information and approaching support from trade and investment promotion initiatives would also contribute to making breakthroughs for businesses,” Thuy said.

Nguyen Anh Tuan - Head, Strategy Department Samsung Electronics Vietnam

Vietnam’s supporting industry is developing and becoming an important supporting base for foreign-invested factories like Samsung, LG, and Canon.

Samsung Electronics Vietnam uses numerous parts manufactured in the country by local partners, such as plastics, cameras, frames, screens, and batteries. The supplier network for the company includes 200 local enterprises, including 30 tier-1 vendors. More and more tier-2 vendors also become tier-1’s, demonstrating the improvement of local businesses in the value chain.

However, these local businesses also have to further improve themselves to catch up with trends. Against the backdrop of the US-China trade war, the move of factories and investors from China to other countries creates both challenges and opportunities for the local supporting industry.

As a long-term partner, Samsung Electronics Vietnam has connections with around 500 local businesses, which partially lack technology, capital, production processes, or management skills, to cope with the ever-increasing requirements of the market.

Tran Thi Thu Trang – CEO Hanel PT

The relocation wave due to the US-China trade war as well as the new investments under the EU-Vietnam Free Trade Agreement will create large opportunities for local supporting enterprises to join the global supply chain.

However, Hanel PT sees that local suppliers need to establish alliances with different industries, namely plastic packaging, electronic components, and garments and textiles. These groups could pool their material orders into large-scale contracts instead of buying material individually. The larger valuation of the contracts would decrease the selling price. Moreover, high-quality materials at a competitive price could help suppliers to become vendors to foreign firms.

Furthermore, suppliers have to focus on technology. While modern technology is not cheap, it will bring more added value. To join a larger playground, suppliers need to have financial potential and should hire financial experts or consultants who will suggest loans and flexible solutions from banks and investment funds.

Last but not least, suppliers have to pay attention to both senior and general employees because when foreign enterprises arrive in Vietnam, they could easily lure them away with more attractive salary and other incentives.

Nguyen Minh Duc - Sales director, Thanh Long Electronics Manufacturing JSC

The US-China trade war and the consecutive move of factories into Vietnam will not able to greatly impact local businesses or our company. Newcomers will spend a lot of time on exploring the market, setting up their facilities, and finding partners. However, we will be able to become a vendor for them, and try to tap on the opportunities, like becoming an official vendor of Samsung Electronics Vietnam.

Our company manufactures printed circuit boards (PCB), which very few local companies can do. Based on our good quality and affordable prices, our products are supplied for South Korea’s largest group.

However, we have to improve much to be levelled-up to a tier-1 vendor, as well as maintain our pioneer brand in the field of PCB and electronic circuits manufacturing, as well as in assembly, coil blocking, filter coils, LED lights, and charging.

Supporting industry companies, including Thanh Long, need to improve their competitiveness and standardise their manufacturing processes in order to partner with more global corporations and reach out to foreign markets.

By Phuong Thu

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional