The world's second largest TV manufacturer will move its TV production from Thailand to Vietnam this year for logistical ease and efficiency.
In an interview with Reuters, the Marketing Director of Thailand LG Electronics, Mr. Nipon Wongsaengarunsri, said that the group wants to have a regional base with new machinery similar to the machinery at its South Korea factory, for TV production. "Our parent company has chosen Vietnam as the best country for this," he said. "Besides low wages, the main reason is to ensure quality as well as logistics."
According to Mr. Wongsaengarunsri, annual production at LG in Thailand is estimated about 600,000 TV sets, valued at about $243 million. Around 100,000 are exported.
China is the main supplier of materials for LG and it takes several weeks to ship them to Thailand for assembly, while the China to Vietnam route is less than a week. "We will move to Vietnam between late-April and early May," he said.
According to an LG Electronics spokeswoman in Seoul, as its TV production is quite small in Thailand the move will enhance efficiency, as the company is integrating its two Vietnam plants, in Hai Phong and Hung Yen, into one.
Mr. Wongsaengarunsri said the 200 workers involved in TV production in Thailand would be reallocated to other departments at its Rayong plant, 176 km from Bangkok. About 2,000 workers at LG Thailand will continue to produce other products, such as washing machines and air conditioners.
As the Vietnamese Government offers special incentives to foreign companies in the high tech field, the Foreign Investment Agency said, a number of international companies have chosen Vietnam as their base to expand production, including Samsung with three factories in Bac Ninh and Thai Nguyen and investment of $7 billion, Intel Products Vietnam's plans to make Haswel CPUs, and the shift of Microsoft's production of phones from China.
The Vice President of the Vietnam Association of Foreign Investment Enterprises (VAFIE), Mr. Nguyen Van Toan, believes there will be a wave of investment to Vietnam in the technology sector because of its sound investment conditions and the gradual withdrawal of many foreign companies from China because of its unstable macro-economy and high labor costs.