Why Samsung is Making Vietnam a Powerhouse – Transcript

00:00Samsung is a global business brand that every single person around the world has heard of they know them for their smartphones While others for their televisions and some for their Blockbuster semiconductors all of these combined have created the big Samsung electronics business which is now worth $353 billion US in market capitalization this means that Samsung's market cap is

00:25worth much more than some nation's gross domestic product or GDP such a big business means that they are important for the entire global economy but for one nation they are much much more needed than any other Vietnam is a developing nation and has opened up its economy to many foreign investors one of the investors that took advantage of the nation's developing status is none other

00:50than Samsung Samsung has a massive business in Vietnam and when we say massive it is very very big they're locally Incorporated ated company known as Samsung Electronics Vietnam tyun has invested over $20 billion into Vietnam this has resulted in huge economic benefits for Vietnam and its people between 2018 and 2022 Samsung

01:15contributed massively to Vietnam's export industry achieving over $36 billion in export turnover notably in 2022 alone Samsung's export turnover reached $65 billion this substantial contribution played a crucial role in propelling Vietnam's total export turnover past the $700 billion Mark for

01:39the first time ultimately exceeding $332 billion sevt has also significantly impacted employment generating job opportunities for 150,000 individuals notably over 79,000 of these employees are from tyin additionally sey has made a substantial fiscal contribution contributing over $1 billion to the state budget to date but these are only a mere overview of

02:06Samsung Vietnam's contribution to the Vietnamese economy just take into account how big $1 billion is it is the livelihood of thousands or even tens of thousands of people in a given year if we take a look at this from an international trade perspective this may undoubtedly help visualize the importance of Samsung for the entire nation in 2022 their export ter over reached $65 billion the key to

02:33understanding how important this is is the concept of exports exports happen when a nation sells a product or service overseas in this case Samsung Vietnam is exporting or selling their products to say the United States when this happens the United States will pay Vietnam in US Dollars a part of this US denominated currency then piles up within Vietnam's reserves these reserves are essential because they enable the country to to

03:00maintain Financial stability and economic independence as the reserves grow they provide a cushion against economic shocks which is crucial for maintaining investor confidence and economic stability it helps stabilize Vietnam's dong which is the country's local currency they are really important but another key in understanding their impact and importance is the history in Vietnam and its future plans let's first talk about the history of Samsung in

03:26Vietnam in early 2008 Samsung electronic announced that it would invest 50.5 billion Korean W into Northern Vietnam now the investment was for the construction of a mass production mobile handset plant they were eventually granted the green light by the Vietnamese Government after submitting the necessary documents for this project what made this investment possible and even lucrative for Samsung was because of Vietnam's entrance into the World

03:52Trade Organization or WTO as well as its membership into Asen which meant that cell phones produced in Vietnam will be subjected to a 5% tariff cut in the Asian market and given Vietnam's low labor rate and persistent government push for economic growth Samsung saw the nation as the best destination for its plant hence their mass production factory would immediately be big it would have an annual production capacity

04:18of over 30 million units initially and will increase to over 100 million units in the future moreover the plant was cheered by local officials and businessmen as Samsung said that it will buy 40% % of its materials from Vietnamese suppliers and provide jobs for over 20,000 local workers it is to many surprise that when we look back on it now their $46 million investment was nothing compared to their investment

04:43today A year later by 2009 Samsung Vietnam's registered investment Capital would balloon to over $670 million and is reportedly capable of producing 60 million cell phones every single year and is expected to reach over 100 million by 2012 the plant located in Yen Fong ey industrial Zone in the bnim province stated that they were using materials and components from

05:0932 suppliers including 15 local ones by October of 2009 they were employing about 2,300 laborers while Samsung was investing in their buckin plant they were also expanding other businesses hoi mean City hosts the largest household appliance factory in Southeast Asia and besides Samsung electronics inv ments include Samsung electromechanics Samsung display Samsung Vietnam in just a short

05:35amount of time became one of Samsung's biggest manufacturing plants there were only seven mobile phone factories run by the Samsung group the plants first export abroad amounted to about 20,000 cell phones and went to the UAE Thailand and Singapore in 2010 Samsung Vietnam along with the Vietnamese government would celebrate the company's $1 billion export turnover the en Fong plant was now employing over 7,000 workers three

06:03times as many as last year and moreover smartphones are now being exported to over 53 countries and territories globally the total registered Capital however still only amounted to 96 million two years later by 2012 Samsung Vietnam had called on the Vietnamese government to provide additional incentives incentives are basically benefits provided by the government to encourage businesses to

06:28invest and expand in their country these can include tax breaks reduced tariffs subsidies infrastructure improvements and other Financial or regulatory advantages aimed at making the investment environment more attractive and competitive Samsung Vietnam was already enjoying tremendous amounts of incentives they had a preferential income tax rate of 10% for 15 years a tax exemption for 4 years after and a

06:5350% tax reduction for the following 9 years but some authorities said this was not enough the expansion of Samsung Vietnam would face difficulties if no assistance from the government is provided and 2012 was still a time when Vietnam needed a lot of foreign investments Samsung Vietnam was in a primed position to give it to them they wanted to increase their registered Capital to over $1.5 billion for Samsung

07:20Vietnam to reap as many benefits as they can it is no wonder that they want more incentives a month after this was reported Vietnam had given the green light to give give more incentives to Samsung Vietnam this enabled Samsung Vietnam to announce a new $700 million investment into the country this big investment was for a new mobile phone factory located in the northern Vietnamese city of tyen by the end of

07:45the year Samsung Vietnam is now leading Samsung Electronics overseas handset plants in terms of production pumping out over50 million units per year accounting for 1/4th of the company's annual output Samsung official was quoted back then saying that the total investment in Vietnam by 2020 is expected to grow to over 2.2 billion by the early months of

08:102013 Samsung Vietnam signed a 49-year lease with the local Vietnamese government for its second Factory in Vietnam the project was expected to generate 10,000 workers in its first year of operation and would increase to over 30,000 in the following years in that year it was evident that Vietnam had become a smartphone manufacturing Hub Samsung Electronics Vietnam alone

08:34had plans to produce over 240 million smartphones in 2013 which was 20% of the world market share Vietnam was on to something big and they knew they were in a position to benefit from this booming technology Trend by 2015 Samsung Vietnam would now become a big company they two high-tech facilities that produce mobile devices and components in bnin and T

08:59provinces have a combined investment of $7.5 billion the two facilities together exported 26.25 billion of products in 2014 and now created jobs for over 100,000 laborers in May of 2014 they had also announced a big investment into the Samsung consumer electronics hoochi mean City complex a project that covers 70

09:24hectares and a total investment value of 1.4 billion fast forward to 201 19 Samsung Electronics four subsidiaries in Vietnam would reach total revenues of 31.8 billion just for the first half of that year a significant investment announced was the $220 million research and development center in the west of Hanoi the project aims to be Southeast

09:49Asia's most advanced R&D Center spanning 11,600 s m with a 16f floor building to house 3,000 employees to today Samsung Vietnam is not just any small Korean foreign investor they are the largest and most important investors in Vietnam from the time they invested less than a billion dollar to over $22.4 billion they have impacted the

10:15nation like no other in 2024 Samsung is now expecting to invest $1 billion every single year into Vietnam to further segment its smartphone base in the country which is now responsible for half of of its smartphone output but anyway do let us know what you think thanks for watching