Next stop could be Vietnam for some electronics distributors

By Jim Carbone -- Purchasing, 5/1/2008 1:32:00 PM

Many electronics distributors are thinking about Vietnam as the next potential growth area for their global businesses. The problem is so far there isn’t a lot of electronics manufacturing there.
“Vietnam is a hot topic,” says Mark Larson, president of Digi-Key. “Everyone in Japan, Hong Kong, Singapore talks about Vietnam.”

He says Vietnam is eventually going to be a good market for the electronics industry because it offers low labor rates and a pro-business government that is willing to give tax breaks to businesses.

A handful of electronics OEMs and electronics manufacturing services (EMS) providers have operations there and those companies would welcome the presence of global electronics distributors. These companies now have to import all of the electronics they need from Singapore or other Southeast Asian locations.

“I have talked with distributors in Singapore and they are all talking about doing business in Vietnam eventually, but they haven’t; started doing so yet,” says Jason Craft, general manager of EMS provider Spartronics, a subsidiary of Sparton Electronics based in Jackson, Mich. Spartronics has a factory near Ho Chi Minh City which builds printed circuit boards for various OEMs.

He says that infrastructure in Vietnam, including roads and ports, need to be built before distributors, OEMs and other EMS providers open facilities there.

Distributors agree and they also want to see EMS providers and OEMs move there first before they open up facilities.

Bill Mitchell, chairman and CEO of Arrow Electronics, says Arrow will open a facility “when it makes sense.”

“We have not established a presence in Vietnam, but we have been clear that we will,” he says.

Also see:

Vietnam may become the next hot spot for electronics sourcing

Business in Vietnam defies misconceptions