Compal to resume production at Vietnam factory, says president
Aaron Lee, Taipei; Adam Hwang, DIGITIMES [Monday 29 December 2014]
Notebook ODM Compal Electronics will resume production at its factory in Hanoi, northern Vietnam, as soon as the second half of 2015, according to company president Ray Chen.
Compal in November 2007 announced an investment of US$500 million to establish the factory for notebook ODM production, with production scheduled to begin in first-quarter 2009 and production capacity to eventually account for 50% of Compal’s total.
However, the notebook supply chain in Vietnam failed to developed as originally expected to provide sufficient support for the factory, and consequently Compal suspended production at the factory in March 2013.
Compal is reopening the Vietnam plant as short supply of labor in China has worsened, with the average labor turnover rate for the manufacturing sector expected to rise from 20% currently to 30% in 2015.
While wages in China have been rising, the China government has limited monthly overtime work to 36 hours, which could reduce workers’ actual incomes by 25-30%, making them more unwilling to work at production lines, Chen said.
The wage level in Vietnam is about 50% lower than that in China and the Vietnam government’s adjusting wages based on consumer price index has significantly decreased the risk of workers going on strikes, motivating Compal to resume production in Vietnam, Chen said.
But the Vietnam factory will now produce smartphones instead of notebooks because Samsung Electronics has established a considerably complete smartphone supply chain in northern Vietrnam and the factory is closer to the China-based smartphone supply chain cluster in Shenzhen, southern China, than Compal’s existing production of smartphones in eastern China, Chen indicated.