Apple Supply Chain Shift Into Vietnam Creating Rural Boomtowns
Apple’s investment in Vietnam-based supply chain suppliers and manufacturers has created an unprecedented boom in the poorer norther region of the Southeast Asian nation.
A new report from Bloomberg explains that since Apple and Foxconn have set up shop in the Bac Giang region in northern Vietnam, the growth in foreign investment has almost doubled every year. The province now forecasts the value of exports this year will reach $11 billion USD, a tenfold leap in six years.
This economic boom in the region highlights the world’s shifting supply chains associated with rising Chinese labor costs, the US-China trade war, and logistical vulnerabilities during the pandemic.
“Manufacturers are knocking on the doors of Vietnam’s northern provinces and committing billions of dollars to set up operations, including Samsung Electronics Co., where it is producing about half its smartphones,” reads the report. “Apple assembly partner Pegatron Corp. plans to invest $1 billion in the northern port city of Haiphong, local media reported, following moves to Vietnam of other suppliers for the Cupertino, California company. Apple recently posted Vietnam job openings, including for a mechanical quality engineer, and managers for supply chain operations and government relations.”
Vietnam’s low costs, political stability, investor-friendly policies, improving infrastructure and state-backed efforts to promote tech startups make the country appealing, said Gene Tyndall, a supply chain expert at Atlanta-based eMATE Consulting.
Going forward, Vietnam’s challenge will be to improve education so the country can avoid the “middle-income trap” once factories leave as costs eventually rise and pivot to a high-skilled economy.
“We hardly had anything to eat and clothes to wear,” said Bac Giang resident Lanh. “She will have plenty of food to eat and the best clothes to wear. We will send her to a university so she can have more opportunities than we ever had.”