Apple,airpod,global supply chain,fdi,vietnam economy

Apple plans to increase its orders for component suppliers in Vietnam.

In recent days, the information that Apple produces wireless earphones (Airpods) in Vietnam has been a cause for happiness. This is the result of a long collaborative journey between Vietnamese agencies and this globally renowned maker of smart devices.

With little information about Apple’s upcoming investment in Vietnam revealed, many people mistakenly believe that Apple will set up a factory in Vietnam like Samsung did. However, Apple's operating model in Vietnam is different from that of Samsung. Apple does not directly manage any manufacturing plant. Instead, it cooperates with suppliers around the world to produce and assemble Apple products. These suppliers are called Original Equipment Manufacturer (OEM).

Apple has more than 1,200 suppliers worldwide, mainly in Asia. Surprisingly, according to a source of VietNamNet, there have been dozens of such suppliers in Vietnam for a long time, including "familiar names” like Foxconn and Samsung. In particular, Samsung Display produces screens for Apple.

Therefore, the increasing presence of Apple in Vietnam may be the increase in orders placed for suppliers in Vietnam or calling for foreign suppliers to open factories in Vietnam.

That is why in March 2019, Apple opened an executive office to manage the supply chain in Vietnam.

In any case, Apple’s increasing interest in the supply chain from Vietnam is good news, demonstrating Vietnam's efforts over the years to be on the world technology map, to become a "base of electronics production" of many big brands such as Samsung, LG, Intel ... That is an achievement, a spectacular shift of Vietnam in attracting quality FDI inflows, even though Vietnam can in fact do better and make better use of the pervasive value of this capital inflow.

But it is not easy for Apple to enter the Vietnamese market. Apple also has many considerations, calculations and concerns, most notably in the matter of procedures, and business investment environment.

 

When senior leaders of Apple worked with Vietnam, they expressed great concern about customs procedures when it takes more hours in Vietnam than in international practice to fulfil more procedures to clear goods. Apple has proposed being designated a special priority enterprise regime under the official program of the Vietnam Customs that many other businesses are enjoying. Apple has made this proposal several times and it was rejected by the customs agency for many reasons.

Apple's story shows that the opportunity for Vietnam to receive large capital flows from multinational corporations is getting closer. In this global trade movement trend, Vietnam can become an important link.

Four major economies including Australia, Japan, India and the United States have officially resumed four-party dialogue after 10 years of interruption and upgraded it to a dialogue of foreign ministers. On March 20, the "Diamond Quartet" invited three other countries including Vietnam, South Korea and New Zealand to join the dialogue. This new group was called by the Indian Times as the "QUAD Plus”. This group is fueling international media with the possibility that the US is trying to move the supply chain out of China as soon as possible.

Vietnam has been named in the "QUAD Plus”. The opportunity for Vietnam to contribute more to the global value chain is closer than ever. The problem is whether we can change to seize that opportunity or not. This needs a change in mindset and changes to create a more favorable and more open investment environment for businesses and partners.

The concerns of Apple in discussions with Vietnamese government agencies are probably also the concerns of many other businesses. In many conferences and seminars at all levels, many businesses and associations have called for that change. Vietnam has also listened to and changed, but the change is still beyond expectation.

Vietnam will have to do a lot of work to take a long step into the global value chain. After Samsung, LG, Intel ..., Apple will set a new era for capital inflows into Vietnam. If Apple successfully enters Vietnam, large corporations will also choose Vietnam as a destination, from which "made in Vietnam" products will go to the world.

Luong Bang

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