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Samsung Electronics Accounts for 28% of Vietnam’s GDP
Samsung's Largest Overseas Production Base
Samsung Electronics Accounts for 28% of Vietnam’s GDP
  • By Kim Eun-jin
  • March 14, 2019, 09:34
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A view of Samsung Electronics’ Smartphone Factory 1 in Yen Phong, Bac Ninh

Samsung Electronics posted 74 trillion won (US$65.7 billion) in sales in Vietnam in 2018, accounting for 28 percent of the Southeast Asian country's gross domestic product (GDP). The sales figure in Vietnam amounted to 30 percent of the Korean tech giant's total sales in 2018. Analysts say that these figures mean that Vietnam has solidified its position as the biggest production base of Samsung Electronics, outclassing China.

Total sales of Samsung Electronics' four production affiliates in Vietnam reached US$65.7 billion last year, earning Samsung the overwhelming number one position among companies in Vietnam, local media outlets and Samsung said on March 13. Samsung's sales in Vietnam swelled by US$3.6 billion from 2017. However, its net income, which recorded US$4.6 billion in 2018, fell by US$128 million from 2017.

Sales of all of these four Samsung Electronics factories in Vietnam reportedly increased in 2018. In particular, the Yen Phong factory recorded the largest sales increase of US$1.85 billion from the previous year.

Considering that Vietnam's GDP hit US$280 billion last year, Samsung Electronics accounted for 27.6 percent of the country's GDP. Vietnam's economy grew at a rapid rate of 7 percent so the Korean electronics giant’s share of the GDP dropped from 33 percent in 2017.

In addition, as Vietnam accounted for 30 percent of Samsung’s total sales of 243.51 trillion won last year, the Southeast Asian nation became its largest overseas production base.

However, some experts say that global mobile phone market’s stagnation and excessive competition among global smartphone makers are making the future of Samsung Electronics' production subsidiaries in Vietnam not so bright. As a result, Samsung Electronics' Vietnamese subsidiaries are said to be paying close attention to the performance of the Galaxy S10, the most important strategic phone of Samsung Electronics in the first half of this year, and the Galaxy Fold, a foldable phone.

Meanwhile, the Vietnamese government recently extended the rent exemption for the site of Samsung Electronics' Yen Binh factory. At the time of the establishment of the factory in 2013, the Vietnamese government provided a corporate income tax break for four years, a 5 percent tax benefit for 12 years and rent exemption.