Chinese smartphone maker Xiaomi taps Vietnam as production base for Southeast Asia market amid supply chain disruptions at home
- DBG delivered Xiaomi’s first batch of made-in-Vietnam smartphones last month, with the models sold to the local market, as well as in Malaysia and Thailand
- Xiaomi’s move is the latest sign that major smartphone makers are gradually moving supply chains from China to Southeast Asia in search of lower costs and stability
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, a DBG representative told the South China Morning Post. The contract electronics manufacturer operates plants in China and India for clients that include Huawei Technologies Co and Lenovo.
Yan Hao, DBG’s business director, said the firm has long wanted to expand to Southeast Asia and such a goal was in line with Xiaomi’s plans in the region.
The factory delivered Xiaomi’s first batch of made-in-Vietnam smartphones last month, with the models sold to the local market, as well as in Malaysia and Thailand, to solve supply chain disruptions caused by Covid-19, according to a report in the Vietnam Express which cited a local Xiaomi reseller.
“Xiaomi’s shipment costs to Southeast Asia have increased due to Covid-19 and escalating logistics costs, so having local production in Vietnam can help control costs,” Xiaomi said in an emailed statement.
The Vietnam move is the latest sign that major smartphone makers are gradually moving parts of their supply chain from China to Southeast Asia in search of lower costs and more stable production output.
Last month, 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.
Located in northern Thai Nguyen province, the Vietnamese factory producing Xiaomi smartphones covers an area of about 200,000 square metres and represents an investment of about US$80 million, according to DBG’s website. It began production in June last year and has a monthly production capacity of more than 2 million handsets.
In the emailed statement, Xiaomi said the share of “made-in-China” parts in its smartphones and other products has been steadily rising over the years.
“For now, no overseas country can replace China’s supply chain system, and this is the consensus for the whole industry,” Xiaomi said.
However, its business in Vietnam remained robust during the same period. For the first time, the Chinese company became Vietnam’s second largest smartphone supplier with a 20.6 per cent share of total shipments, behind South Korea’s Samsung Electronics with 31 per cent, according to a May report from Counterpoint Research.