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Home / Apple / Your next iPhone can be made in Vietnam. Thank you trade war.

Your next iPhone can be made in Vietnam. Thank you trade war.



BAC NINH Vietnam – No country on earth has benefited from President Trump's trade deal with China more than Vietnam.

The country's factories have swollen with orders as US tariffs prompt companies to consider making their products in China. Now, several large technology companies want to consolidate their manufacturing operations in Vietnam and lift the ambitions of a nation that is already on its way to becoming a power producer of smartphones and other advanced things.

But first, Vietnam must be better at making the little plastic houses on your earbuds.

Vu Huu Thang's company in the northern city of Bac Ninh Bac Viet Technology, manufactures small plastic parts for Canon printers, Korg musical instruments, and Samsung mobile phones and phone accessories, including earbuds. He said it would be difficult for his company to compete against Chinese suppliers as long as he had to buy 70 to 100 tonnes of imported plastic material each month, mostly made in China.

"Vietnam cannot compare with China," Thang said. "When we buy materials, it's 5, 10 percent more expensive than China already." And the Vietnamese market is too small, he said, to entice plastic manufacturers to set up plants here.

Vietnam also does not have large galaxies of companies that hire out special components, parts and materials that manufacturers can call at in China.

Samsung has since closed everything except one of its smartphone facilities its in China. It now collects about half of the handsets it sells worldwide in Vietnam. Samsung's subsidiaries in the country, which employs around 100,000 people, accounted for nearly a third of the company's $ 220 billion sales last year.

A Samsung spokeswoman said about 90 percent of sales involved goods shipped from Vietnam to other countries. This means that Samsung alone accounted for a quarter of Vietnam's exports in 2018, even if it did not fully capture the company's impact on the broader economy. Samsung's success in Vietnam helped convince many of its South Korean suppliers to stay here as well.

"When you are a big company and move to a place, everything follows you," said Filippo Bortoletti, Hanoi's deputy manager at the business consulting firm Dezan Shira.

Some Vietnamese business owners say that the blessings are mixed. Foreign giants, they say, come to Vietnam and work largely with suppliers they already use elsewhere, leaving little room in their supply chain for local upstarts.

Samsung has 35 Vietnamese suppliers, the spokeswoman said. Apple declined to comment.

When Samsung first established itself in the country, it purchased some of the metal fittings used on the assembly lines from a local company, Vietnam Precision Mechanical Service & Trading, or VPMS. But then several of Samsung's South Korean partners began to enter the country, and after a year, Samsung and VPMS stopped working, said Nguyen Xuan Hoang, one of the founders of the Vietnamese company.

Price and quality were not the problem, Hoang said, about the hissing and clanging of machines at his factory near Bac Ninh. The problem was scale: Samsung needed many more inventory than VPMS could supply.

Vu Tien Cuong's company, Fitek, manufactures industrial equipment for Samsung, Canon and other large companies around Bac Ninh. He acknowledged that most Vietnamese suppliers had quality and productivity problems that prevented them from winning business from multinational companies. But he believes that the root problem is experience, not lack of money or knowledge.

"Day by day," said Cuong, Vietnam's supplier base is improving and "growing up ."

Nguyen Thi Hue, 28, knows a thing or two about growing up at work. For a long time after starting her own company in 2015, Hue worked 16-hour days juggling a day job for another company while getting her new venture off the ground.

Her startup, Anofa, specializes in metal surface coatings. It has partnered with suppliers for foreign brands such as the Korean Korean electronics manufacturer LG and Italian motorcycle manufacturer Ducati.

"We really look forward" to Apple expanding its supply chain in Vietnam, said Nguyen Van Huan, Ms. Hue's husband, who is also her lawyer .

Anofa has invested in new machines to try to win more business from foreign customers. "They have higher standards and requirements," Huan said.

"We can meet them," said Hue, brilliant .