Xiaomi Starts Smartphone Production in Vietnam. Photo: Thanh Nien Online

Xiaomi has joined up with its partners to implement production localization and headed to Vietnam for its latest smartphone electronics manufacturing plan.

According to the Global Times, delivery costs in Southeast Asian markets have increased due to the COVID-19 pandemic and logistics costs have risen in recent years, and in order to address these problems, the Xiaomi handsets produced in Vietnam will be delivered locally as well as to other Southeast Asian countries, including Malaysia and Thailand, ALso, the contract electronics manufacturer operates plants in China and India for clients that include Huawei Technologies Co and Lenovo.

Xiaomi's move also comes as China and Vietnam are seeking to further expand bilateral cooperation. During a meeting between Chinese State Councilor and Foreign Minister Wang Yi and Vietnamese Foreign Minister Bui Thanh Son in Bagan, Myanmar on the sidelines of the seventh Lancang-Mekong Cooperation Foreign Ministers' Meeting, both sides vowed to use the upcoming 14th Meeting of the China-Vietnam Steering Committee for Bilateral Cooperation as an opportunity to comprehensively sort out and coordinate the promotion of cooperation between the two countries in various fields, according to the Chinese Foreign Ministry.

Several electronics manufacturers have also noticed this trend in recent years, including leading Chinese home appliance maker TCL and monitor maker BOE. One of China's leading solar panel manufacturers, Trina Solar, also established a production line in Vietnam in early 2017.

The Chinese company was hit hard by China's strict Covid-19 lockdown measures and subsequent supply chain disruptions this year but its business in Vietnam remained robust during the same period. For the first time, it became Vietnam's second-largest smartphone supplier with a 20.6 percent share of total shipments, behind South Korea's Samsung Electronics with 31 percent, according to a May report from Counterpoint Research.

Customers line up outside Xiaomi's first Mi store in Hanoi, Vietnam, May 12, 2018. Photo: Yahoo! News

Xiaomi has been working with Hong Kong-based DBG Holdings in Vietnam for more than a year to boost the supply of handsets in the region, cited to Yahoo! News. The factory delivered Xiaomi's first batch of made-in-Vietnam smartphones in June 2022. Besides producing smartphones, the factory will also produce various components such as data transmission devices and circuit substrates.

During the same period, US giant Apple moved some of its iPad production from China to Vietnam after Covid-19 lockdowns in Shanghai and nearby regions disrupted production, Nikkei Asia reported.

ASEAN has become China's largest trading partner, and increasingly tight industrial cooperation between China and ASEAN will be the long-term trend for many industries, including smartphones. Alongside China's industrial upgrading, some labor-intensive industries have started to relocate to Vietnam and other countries, starting with manufacturers of shoes, clothes and furniture.

Market experts noted that Vietnam has many advantages such as labor resources, location and other aspects, yet its capacity to undertake production from China is so far limited given its dependence on China for the supply of certain core equipment and parts.

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