What will the fate be of Nokia’s factory in Vietnam?

VietNamNet Bridge – The rapid fire pieces of news about the bad business performance of Nokia group worldwide has raised a big worry about the fate of the group’s mobile factory in Vietnam.

A question has been raised that if Nokia would do the things it has committed when applying for the investment license in Vietnam, if it is facing big difficulties in Finland, the home country, and many other localities in the world itself.

The Finnish Nokia group released world shaking news when giving a higher predicted loss level for the second quarter of the year. It has also announced the plan to lay off 10,000 workers, shut down many factories and research and development (R&D) centers in Finland, Germany and Canada.

Nokia has also reached an agreement on selling the luxury brand Vertu to Swedish EQT Partners at 200 million euro, or 250 million dollars.

According to The Financial Times, Nokia would have to sell a lot of its assets to get money to restore the mobile phone production unit which is now on the verge of bankruptcy, amid the hard pressure of the stiff competition on the smart phone market. Nokia now has to struggle with many redoubtable rivals, especially Apple and Samsung.

Nokia has lost 70 billion euro, or 88 billion dollars worth of the market value since the day Apple launched its iPhone series into the market in 2007. In order to regain the market share from Apple and Google’s Android-based products, Nokia decided to market the smart phone products using Microsoft’s operation system Windows.

However, the sales of the smart phone versions have been tragic, which, according to Bloomberg newswire, has led to the 10 percent price decrease of Nokia’s shares to 2 euro per share.

The current big problems Nokia is facing have given reasons to Vietnamese people to worry about the plan on building a factory in Vietnam.

Nokia plans to set up the factory, which specializes in making normal popular mobile phone products, in VSIP industrial zone in Bac Ninh province. The construction of the 302 million dollar factory was kicked off two months ago, while it is expected to become operational by early 2013. By that time, the factory would churn out 180 million products a year and generate 10,000 jobs.

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Vietnam encourages FDI in hi-tech sectors, but still installs barriers

Intel, Samsung, Nokia and Compal are the names that people regularly mention when talking about the hi-tech projects in Vietnam. However, in fact, not every project is considered a “high technology project” and receives preferential treatment.

In 2008, when receiving the investment certificate for the mobile phone factory Samsung Electronics (SEV) in Bac Ninh province, Samsung was recognized as a high technology enterprise.

However, when the investor expanded the project by raising the investment capital from 670 million dollars to 1.5 billion dollars, and planned to make printing machines, mobile phone batteries and cameras as well; the products were not listed as high technology products. As a result, the investor can only enjoy some incentives after entreating a specific mechanism from the government.

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Buying Success In Emerging Markets Doesn’t Pay

Buying Success In Emerging Markets Doesn’t Pay
Joel Backaler, 10.07.11, 03:30 AM EDT
Partnering with local distributors is the quickest way to expand across the region, but proceed with caution.

Is it possible to buy success in emerging markets like China and India? Diageo seemed to think so. The world’s largest spirits company was recently charged with making more than $ 2 million in illicit payments to various government officials in India, Thailand and South Korea from 2003 to 2009. The U.S. Securities and Exchange Commission (SEC) estimates London-based Diageo reaped profits in excess of $ 11 million as a result of payoffs to hundreds of officials in India to gain administrative approvals and stock its products in government liquor stores and canteens. The SEC charged Diageo with paying a Thai government and party official $ 12,000 a month to gain favorable rulings in several tax and customs disputes. In South Korea, Diageo allegedly paid $ 86,000 dollars to a customs official to reward him for his help in securing a government decision to grant Diageo tax rebates of approximately $ 50 million. Were all of these wrongdoings Diageo’s fault?

Given that over 90% of Western multinationals operating in emerging markets work with local distribution partners to some degree, it’s difficult for executives sitting in headquarters to be aware of everything happening on the ground in these markets.

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Vietnam mobile phone sales thrive despite inflation

Sep 12, 2011. Led by strong smartphone growth, country’s mobile market continues to expand as consumers seem undeterred by rising cost of living, reveals new report.

Smartphone and feature phone sales in Vietnam increased by 27 percent in unit shipment and 21 percent in value in the first seven months of 2011, despite cutbacks in general consumer spending, reveals a new report released Monday by GfK Asia.

The research firm noted that accelerating inflation had affected Vietnam’s economy since the beginning of the year and increased the country’s cost of living. However, the mobile phone sector continued to thrive under these economic conditions, it added.

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