In December last year, there was news that Foxconn, Apple’s largest foundry, was considering building a factory in Vietnam to manufacture Apple mobile phones. At that time, Foxconn did not respond to the news. Now that more than half a year has passed, Foxconn seems to be ready to make a move.
According to the latest news on the 1st, people familiar with the matter revealed that Foxconn has recently purchased land in Vietnam to set up a production line for Apple mobile phones, which means that future Apple mobile phones may be labeled "Made in Vietnam".
But at the same time, people familiar with the matter emphasized that Foxconn’s current plan to build a factory in Vietnam still faces many problems, one of which is the cost of raw materials.
It is reported that most of the raw materials required by Foxconn to produce Apple mobile phones can be obtained directly in the Chinese market. However, if the production line is located in Vietnam, Foxconn will need to import raw materials from China. For example, for the most common plastics, Vietnamese manufacturers need to import hundreds of tons of plastic raw materials from China every month in order to complete orders. This also leads to the price cost in Vietnam being 5% to 10% higher than that in China. In this regard, industry insiders revealed that "Vietnam cannot change this situation (importing raw materials from China) in a short time."
In addition, Vietnam still relies on imported equipment from China. Data shows that from January to May this year, Vietnam’s imports of electronic and mechanical equipment from China increased by 80.8% year-on-year. For large foundries like Foxconn, labor costs are naturally one of their primary considerations, but now various signs seem to indicate that Vietnam's production capacity and supporting supply chain are not complete.
In recent years, many overseas companies have set up factories in Vietnam. However, most giants, including Apple, only set up production lines for low-end products in Vietnam. High-end production lines still remain in China, and many even plan to do so. US companies that have moved to Vietnam have "changed their minds", proving that compared with China, Vietnam's manufacturing still has a long way to go.
It is undeniable that under the wave of globalization, Vietnam has attracted the attention of a lot of foreign investment as a new manufacturing base. However, China’s manufacturing industry has accumulated a lot of experience over the years and has created a series of environments that are complementary to production. Resources, transportation resources, policy resources, etc. are all unmatched by Vietnam, and cannot be solved by Foxconn setting up a factory in Vietnam.