Phone, phone part export turnover reduces because of US-China trade war

SGGP
Phones and phone parts export turnover growth has reached 20-50 percent in recent years, hitting the record high of 60 percent in the first quarter this year. However, it has been reducing under influence of the US-China trade war.

Workers producing electronics components for exports (Photo: SGGP)

Workers producing electronics components for exports (Photo: SGGP)

At the end of 2017, the export turnover touched $54.31 billion, growing 22 percent over the previous year. The growth rate hit 62.3 percent in the first quarter this year with the total value of US$12.6 billion.
Still it strongly dropped to $9.9 billion in the second quarter, reducing 15.5 percent over a year back. In the third quarter, the turnover slightly inched up to hit $14.19 billion, increasing 14.6 percent over the same period last year.
Explaining the turnover drop in the second quarter, General Statistics of Vietnam said that was because changes in new phone sale time in 2017 and 2018.
Specifically, businesses concentrated on production in the fourth quarter last year to boost export in the first quarter this year, when phone consumption demand was estimated to highly increase. So the turnover growth rate highly surged.
In the second quarter, businesses reduced exports to focus on production, pulling down the export turnover. It still posted a year on year increase of 15.4 percent in the first half this year.
Nevertheless, the number grew 14 percent to reach only $14.19 billion at the end of the third quarter. In September, it fell 1 percent over August.
Mr. Nguyen Phuong Dong, deputy director of HCMC Department of Industry and Trade, said that businesses mainly Samsung chose the first quarter to export their goods causing the strong hike.
The third quarter’s low growth rate showed that the US-China trade war has started influence on export activities of the electronics industry, he said.
According to him, China, the US, Europe, South Korea and Japan are the largest export markets of Vietnamese electronic products. The trade war has sent many Chinese firms to narrow production scale while US firms have been more cautious than before to goods imported from China.
The US’s tax increase on products imported from China has created a wave of investment removal out from China which has spouted before and fueled by the war. Therefore production of businesses in the Chinese market has slowed down.
The Ministry of Industry and Trade said that phone export turnover is expected to touch $48.5 billion this year, increasing an average of 7.13 percent over 2017. China will still be the largest export market.
Economic experts said that phone and phone parts export turnover reduction will much impact FDI firms and less affect industrial production growth of domestic companies. That is because over 70 percent of export turnover in the field has belonged to foreign firms, domestic companies have made up a modest ratio.
Mr. Nguyen Hoa Cuong, deputy head of Enterprise Development Department under the Ministry of Planning and Investment, said that over 73 percent of support products for domestic phone and phone part production are imported. Localization rate approximates only 17 percent, mainly in low value phases including mechanical components, plastics and rubber, packing, handbooks and molds.
Although phone and phone part export turnover reduces now, the growth rate of domestic industries especially support industry is strongly increasing.
Japan External Trade Organization (Jetro) said that over 2,000 Japanese businesses investing in Vietnam have rushed to find making support product suppliers in Vietnam to increase domestic supply ability from 13 percent to 30 percent in 2020.
Ms. Le Nguyen Duy Oanh, deputy director of Support Industry Development Center in HCMC, said that support product supply demand will quickly move up in the coming time. So the Government, ministries and agencies have issued many policies to fuel domestic support industry.
Businesses themselves should take the initiative in renewing and modernizing production lines and machines to create products able to compete with import items and meet demand of end-product manufacturers.

By MINH XUAN – Translated by Hai Mien

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