Samsung may move production to Vietnam for cheaper labor (and higher profits)

Samsung may move production to Vietnam for cheaper labor (and higher profits)
Here's a sentence we never thought we would have to write: it seems that labor costs in China are getting too high for Samsung. We'll repeat that: labor wages in China (which run around $400 to $800 per month per worker before overtime) are getting too expensive, so Samsung is planning to build a new production plant in Vietnam where labor is cheaper.

A new report from Bloomberg is saying that Samsung wants to keep its smartphone profit margins where they are, but in order to do that it has to cut costs somewhere. The fast economic growth in China has led to increased wages for low-end workers, but labor is cheaper in Vietnam, which helps to cut costs and keep those profit margins up. So, the electronics giant is building a new plant in Vietnam for $2 billion, which is expected to come online in February, but not reach full production until 2015. 

By that time, it is estimated that China will be producing about 40% of the profit-bearing devices in Samsung's mobile lineup. The new plant will be able to produce about 120 million devices per year at full production, which will help because Samsung is expecting to ship 800 million mobile devices in 2015. Most of the company's workforce is still in Korea, but as of June it had about 19% of its workforce in China, so keeping that down will help save money.

source: Bloomberg

FEATURED VIDEO

25 Comments

1. HASHTAG unregistered

Well that is just sad. They're already not paying those workers a living wage, and want to move to a different location to make employees suffer even more. Stop being so freaking greedy!

5. woodshop20

Posts: 459; Member since: Sep 14, 2013

Sorry but this happens with just about any successful company. Not ethical, I agree, but at least it helps with Vietnam's economy.

7. ihavenoname

Posts: 1693; Member since: Aug 18, 2013

Yeah, don't think that like Apple, Nokia, Sony or LG would be any less greedier. Business is business.

13. Sandyago

Posts: 14; Member since: Nov 25, 2013

"Business is business."-Good point!All companies should pursue more profit, that's the rules.

22. donfem

Posts: 708; Member since: Mar 30, 2011

Nope. I disagree. There is something called "Social Responsibilty" which is expected of companies.

9. xfire99

Posts: 1207; Member since: Mar 14, 2012

Suffer more? It brings alot more jobs for peoples in Vietnam and help the peoples with theirs living. Its poitive for the peoples in Vietnam. Everything is much cheap there and with 100US u can live luxury already in Vietnam for 1-2 months. Its always positive if a big company like Samsung invest $2B in such poor country like Vietnam.

15. likemorethan1

Posts: 48; Member since: Aug 22, 2013

Actually, you CAN"T live with 100$ in your pocket in Vietnam, and everything is more expensive now

16. taikucing unregistered

How do you know? Have you ever visited Vietnam? $100 can live luxury? You must be an idiot. $100 is just to stay alive by eating rice & vegetables (not meats). It's not included for paying month electricity.

17. sniperdroid

Posts: 146; Member since: May 23, 2013

But those people getting $100 didn't have jobs to begin with, so it's not like they're going to lower wages of people who are already earning above that amount. They're going to come in and lift those people who couldn't make that much in the first place. Many countries would fight for that opportunity. Plus I doubt it's going to be $100 maybe $250.

2. promise7

Posts: 894; Member since: Jul 03, 2013

How long can China last with all that smog.

3. zekes

Posts: 230; Member since: Aug 14, 2012

see this is what happens when you have a big ego you have to make compromises when reality hits you in the face Lol I got my popcorn ready

4. woodshop20

Posts: 459; Member since: Sep 14, 2013

What reality? Like the Note 3 being a better phone than the 5s? That's the only reality I know of.

6. E.S.1

Posts: 308; Member since: Sep 14, 2013

Damn...That's good. Thumbs up!!

11. number29

Posts: 185; Member since: Jan 25, 2013

That sounds an awful lot like an opinion to me rather than 'reality'.

19. darkkjedii

Posts: 31757; Member since: Feb 05, 2011

If that's the only reality you know of, you need to log off PA, go outside, meet a girl, and go in a date, cuz you have no life.

20. number29

Posts: 185; Member since: Jan 25, 2013

Or a guy. Could be female, or gay!

21. darkkjedii

Posts: 31757; Member since: Feb 05, 2011

Yeah that's true

23. donfem

Posts: 708; Member since: Mar 30, 2011

You should have ignored him. He loves talking to himself. :)

8. itsdeepak4u2000

Posts: 3718; Member since: Nov 03, 2012

All productions are done in China for most of the OEMs so this doesn't affect their economy, but Vietnam's economy would be going to increase for sure.

10. doremon0710

Posts: 5; Member since: Dec 13, 2013

Yeah,this would definitely boost the economy of Vietnam. One important thing is that the monthly income of most Vietnamese is about 200-300/per month. Therefore, cheaper labor will be a strong advantage for VN to gain many benefits from those Tech giant like samsung.

14. likemorethan1

Posts: 48; Member since: Aug 22, 2013

We have a Nokia factory too :)

12. almostdone

Posts: 450; Member since: Sep 25, 2012

Samsung has the vast majority of theri wrokforce in Korea and only 19% in China unlike Apple... They are saving some cost by moving production from Korea/China to Vietnam.

18. darkkjedii

Posts: 31757; Member since: Feb 05, 2011

Now fanboys will finally say "Samsungs copying apple". In reality, this is just big business.

24. donfem

Posts: 708; Member since: Mar 30, 2011

The article is michievious. Says, "may move" and then "for higher profits". A few things wrong with this statements: May, is not definitive and the move probably might never materialize. Next, for higher profits, could be untrue because anyone who knows anything about current affairs will know the friction developing between China backed North Korea and South Korea. Considering Samsung is a South Korean company, it could be a preventive measure. Also, with the development of Chinese android cell phones, it might just be a move to protect itself. While I am not saying profit could be a motive, it is important for the writer to give all scenarios possible.

25. rusticguy

Posts: 2828; Member since: Aug 11, 2012

China is becoming expensive. Many apparel retailers in US are also shifting out of China for manufacturing /sourcing.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.
FCC OKs Cingular's purchase of AT&T Wireless