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Production exodus: Nokia moving to Vietnam?

Posted: 28 Aug 2014 ?? ?Print Version ?Bookmark and Share

Keywords:production? Nokia? Vietnam? China? smartphone?

Microsoft is reportedly looking to transfer all or a segment of Nokia's smartphone production lines to Vietnam, deserting China, Hungary and Mexico in pursuit of business strategy restructuring, according to VietNamNet.

The said transfer is a big leap Microsoft is making following its acquisition of the smartphone company. In the VNN report, Bac Ninh Province's authorities claimed that Nokia communicated to relevant agencies in Vietnam that it will shut down all Komarom facilities in Hungary as well as part of the Beijing and Dongguan plants in China, and repurpose the Reynosa factory in Mexico as a service centre.

Nokia's Bac Ninh Province factory, meanwhile, was mentioned that it will be scaled up to accommodate the manufacture of Windows smartphones including Lumia 530 and 630 by the end of August, as well as produce other types of smartphones later in the year. The factory was originally built to focus on feature phones, and capitalise on its high consumer demand.

The factory was built in 2011, and Nokia has since made 10 million feature phones of the 108, 107 and 105 models on six production lines and exported to as much as 73 countries worldwide. The shifting of production to the country has allegedly started in May, and will be made until February next year.

Reports say that Microsoft wants to position Nokia Vietnam as a key production base, aiming to triple the monthly output by the end of the year by raising the production lines from 6 to 39. The Ministry of Science and Technology was supposedly involved to help accelerate Nokia Vietnam's technology transfer and production line imports as planned.

A source from Nokia Vietnam factory in Bac Ninh Province, however, shot down the rumours of a production exodus to Vietnam as no official announcement has been made on the subject so far. True or untrue, the information proves one thing about China: its rising labour costs.

Japan External Trade Organisation (JETRO) said through the VNN report that it is cheaper to pay a factory worker in Hanoi with the monthly average of $145 versus the $466 in Beijing. Utility prices are also reported to be lower in Vietnam than in China.

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