Taiwanese Firms Switch Operations to Northern Vietnam From Mainland China

Taipei, April 18, 2008 (CENS)--To ease the impact of skyrocketed production costs in mainland China, Taiwanese firms operating there, including those form the electronics and conventional industries, are rushing to move operations to northern Vietnam.

The relocation move such leading electronics as Hon Hai Precision Industry Co. and Compal Electronics Corp. is expected to encourage more Taiwanese firms to do so in the second half of this year. Taiwan's top-five electronics firms have all set up production facilities in the northern part of Vietnam.

T.Y. Wang, president of Lien Tai International Co., a well-known business management consulting service provider, said the industrial zones located in the northern part of Vietnam have seen momentous increase in plant rental rates.

Wang said the average land price for some industrial zones in northern Vietnam is set at 200,000 renminbi per acre, quite the same as those located in eastern and southern parts of mainland China.

A few years ago, the first wave of relocated Taiwanese firms, mostly from the conventional sector, were clustered in Ho Chih Minh City of southern Vietnam. Since the beginning of this year, domestic firms have selected Hanoi of northern Vietnam to site their production facilities. These firms relocating to Hanoi mostly focused on the production of computers, cellphones and electronics components. At present, Taiwan has become Vietnam's second-largest foreign investor, only behind South Korea.

Wang estimated over 300 Taiwanese firms set up their production facilities in northern part of Vietnam in the first quarter of this year. These firms mostly came from the electronics sector.