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What Vietnam offer and what obstacle you have to overcome

Posted:? May 4, 2008 9:49 AM
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Author:huynhquochung

Level:? Interns

Points:? 279

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Offers:
1) Ask anyone about the country's greatest strength and the answer is almost always the same -- its people.
"Vietnamese engineers are excellent, and very suited to creative tasks," agrees Tsuneo Sato, the outgoing president and CEO of Renesas Design Vietnam, which was one of the first major arrivals to the country when it opened its doors in 2004. "They may not have much experience in design or the semiconductor industry, but they study and learn a lot faster than engineers in other locations."
http://www.eetimes.com/showArticle.jhtml?articleID=201807202&pgno=1
The other thing universally mentioned is tenacity. Manufacturers are deeply impressed with the diligence of the average Vietnamese employee. "After I hired several engineers and managers, they read through the equipment manuals," Craft said. "By the time the equipment arrived, they knew all about it. I can't say enough about the work ethic."
http://www.eetimes.com/news/semi/showArticle.jhtml?articleID=175700160
The Vietnamese have put the war behind them and see education and hard work as the path to victory. By some accounts, 700,000 people in Ho Chi Minh City are going to some type of night school, whether vocational, English or business.
http://www.eetimes.com/news/semi/showArticle.jhtml?articleID=175700160

2) Vietnam offers advantages that seem to be slipping away from China. Take wages.
A skilled employee in China earns two to three times more than his Vietnamese counterpart. Any further revaluation of China's yuan currency, considered likely, would only widen that gap.
http://www.eetimes.com/news/semi/showArticle.jhtml?articleID=175700160
Vietnam also has little turnover compared to China’s 25 percent annual turnover rate in electronics hotbeds such as Suzhou. Skilled-labor wages are increasing, although still attractive. An engineering graduate typically earns $300 per month, Tran says.
http://www.edn.com/index.asp?layout=article&articleid=CA6400925

3) Add to this, a government that Sato says is "aggressively" looking to groom the hi-tech industry -- authorities recently unveiled a plan to more than double annual electronics exports to at least $3 billion by 2010 -- and it's no surprise multinationals find Vietnam a welcoming environment.
SHTP, for example, offers investors such goodies as a four-year income tax holiday, import duty exemptions and fast-track visa, investment application and customs services. And many note those moving into the country are likely to get a warmer reception than they would in more crowded destinations.
"In China you have to be an Intel to get attention, whereas in Vietnam you can be a small guy and still get the government's support," says Fred Burke, managing partner at law firm Baker & Mackenzie's Vietnam practice.
http://www.eetimes.com/showArticle.jhtml?articleID=201807202&pgno=1
Companies set up in Vietnam's industrial parks have advantages. The government has opened problem-solving channels between officials and manufacturers. Most industrial parks have on-call fixers, people who keep the supply chain oiled.
http://www.eetimes.com/news/semi/showArticle.jhtml?articleID=175700160
On a larger scale, Vietnam's political stability has been a primary attraction, particularly with Japan.
http://www.eetimes.com/news/semi/showArticle.jhtml?articleID=175700160
Ito adds that having a Vietnam operation is also seen as a way to spread risk.
“People went into China very aggressively and are starting to feel the need for some kind of risk management,” he says.
http://www.edn.com/index.asp?layout=article&articleid=CA6400925

Obtacles:
1) So far the main challenge is also workforce-related.
“We can get enough engineers, but they are not trained to the level we require,” Tran says.
Therefore, a large part of Renesas’ budget involves training, and the company has established links with universities to better prepare engineering graduates.
http://www.edn.com/index.asp?layout=article&articleid=CA6400925
"There's a lot more competition in this industry now, so in that sense it's become a bit difficult to hire more good engineers ... sooner or later the costs are going to start increasing," says Sato, who is trying to source around 500 staff over the next two years for a new design facility.
http://www.eetimes.com/showArticle.jhtml?articleID=201807202&pgno=2

Others say it has become even harder to fill senior positions.
"At the basic engineer level there's a really good pool of talent because Vietnam has a lot of educated people who are strong in math and science," Burke says. "The real shortage is as you get up to the project management level."
http://www.eetimes.com/showArticle.jhtml?articleID=201807202&pgno=2
2) Legal professionals also see some aspects of Vietnamese law as problematic, especially if the government hopes to develop the domestic technology industry.
Burke says while new technology transfer legislation will make it easier for foreign firms to disseminate solutions or knowledge to local partners, local copyright law leaves the door open for inventors or developers to stake claims to work produced under contract.
http://www.eetimes.com/showArticle.jhtml?articleID=201807202&pgno=2
3) Vietnam also shares some of the weaknesses common to other developing Asian nations.
"Infrastructure, especially in communications, is poor," Sato sighs. "Broadband is still very slow, so when we try to send a lot of data to Japan, everything gets stuck."
http://www.eetimes.com/showArticle.jhtml?articleID=201807202&pgno=2

Rick Howarth, general manager of Intel Products Vietnam, says corruption remains a "looming cloud" over the country, and that its bureaucracy could prove trying for smaller investors.
"It's easier for us -- we've had the red carpet," he says. "The followers, the smaller customers, will have more difficulty than we do. But coming in understanding that there are going to be difficulties, and if you have the right level of patience, it can work, you can get things through the system."
http://www.eetimes.com/showArticle.jhtml?articleID=201807202&pgno=2

Look ahead:
Officials insist they are not ignoring the obstacles that could dog the electronics sector in the years ahead.

"Of course in the years ahead there will be some constraints, but in places like the educational system the country is already making efforts to improve itself," says SHTP's Mai. "There's still time for us to develop."

After all, he says, Vietnam has built an industry from scratch before. "It's the same as with software five years ago, there was nothing here, and no one could imagine that Vietnam would be a place where you could get (development) done," he says. "But nowadays more and more people come to do just that."

http://www.eetimes.com/showArticle.jhtml?articleID=201807202&pgno=2

huynhquochung edited at May 5, 2008 12:35 PM
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Reply:What Vietnam offer and what obstacle you have to overcome

Posted:? May 7, 2008 3:57 PM
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Author:ATPV

Level:? Interns

Points:? 475

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The items mentioned here shed light on my understanding of the matter. Nicely put.
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