Samsung shifts plants from China to Vietnam to protect margins

Samsung Electronics is shifting output from China to Vietnam to secure even lower wages and defend profit margins as growth in sales of high-end handsets slows.

With demand sagging in the most-profitable top end and Chinese rivals driving prices lower, Samsung is joining technology companies such as Nokia Oyj and Intel to be drawn to Vietnamese wages that are about a third those in China.

With about one-third of the global smartphone market, Samsung may eventually produce as many as 80% of its handsets in Vietnam, said Lee Seung Woo, an analyst at IBK Securities in Seoul who has been tracking the company for more than a decade.

China’s wage inflation is too costly for operation, so manufacturers that wish to cut costs are turning to Vietnam. The wage of a factory worker in Beijing was $466, compared with $145 in Hanoi, according to a 2012 survey of pay by the Japan External Trade Organization.

The Vietnamese government has approved $13.8 billion of new foreign projects this year through Nov. 20, a 73% increase on a year earlier, according to the General Statistics Office in Hanoi. South Korea led with $3.66 billion.