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August 30, 2007

Apple iPod Maker Hon Hai Gambles $5 Billion on Vietnam

posted by MR WAVETHEORY at 8/30/2007 03:53:00 PM
Soon, Apple iPods could be bearing stickers that say Made in Vietnam! Hon Hai Precision Industry is betting $5 billion that Vietnam will be the next big manufacturing center of Asia. Hon Hai makes the Apple iPod, Nintendo Wii, and xBox 360 among other boring products like cellphones for Nokia and routers for Cisco. Its quite a company. The do between $25 and $30 billion in revenues per year!

This company is a huge employer in China. They have about 500,000 employees in their factory towns which resemble some of the New England manufacturing towns a century ago - think Hon Hai village!

I can see why Hon Hai is going to Vietnam. One reason is the lack of regulation in Vietnam which makes manufacturing cheaper than in China - even the Chinese are cracking down on lead paint in toys!

Taiwan's Hon Hai Technology Group plans to invest US$5 billion (€3.67 billion) in Vietnam, dramatically increasing its commitment to a country drawing growing attention from high-tech manufacturers, an official said Thursday.

In an agreement signed in Hanoi on Wednesday, Hon Hai agreed to quintuple its planned investment in Vietnam, where it intends to build factories in six provinces across the country over the next five years, said Dang Van Hien of the Ministry of Planning and Investment.

Also, another reason is that the government of Vietnam is trying to improve their reputation as a growing manufacturing center since they joined the WTO in January

Vietnam has one of the world's fastest-growing economies, inexpensive labor costs and a large supply of young, well educated workers. Its appeal to investors has also grown since it joined the World Trade Organization in January.
I think Vietnam could be an interesting place for the next couple of years!

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