When I wrote about Vietnam last summer, I noted that investments from Intel and Taiwan's Hon Hai Technology Group marked the country as a rising star in Asia's red-hot electronics manufacturing market.
Though Hon Hai is spending more in Vietnam, Intel is getting the lion's share of attention, perhaps due to its better-known brand name and its proven ability to jump start economies. According to a MercuryNews.com article, Intel's $3.3 billion investment in Malaysia, its first non-U.S. manufacturing facility, yielded 10,000 jobs. The chip maker will employ 4,000 at the semiconductor manufacturing facility in Ho Chi Minh City. In June, Intel will host a conference for 200-plus tech vendors in Vietnam.
Intel's due diligence was unusually diligent, notes the article, with the manufacturer examining crime reports, school curricula, traffic patterns and more before committing to Vietnam. The company's biggest challenge, says the manager overseeing construction of the new facility, is an "antiquated" educational system that emphasizes fact memorization rather than practical application of concepts. Only 90 of 2,000 Vietnamese students recently tested by Intel got a grade of 60 or better, and many of them were not proficient in English.
In Vietnam's favor: The government has been unusually attentive to Intel, granting company officials regular audiences with the prime minister. Proximity to China gives Intel an edge in capturing business in that red-hot market. Vietnam has a highly motivated and low-cost workforce. In fact, as I blogged in October, Vietnam is becoming a popular manufacturing destination for Chinese companies facing wage inflation in their own country. It's also a popular outsourcing destination for South Korea, Singapore and Taiwan.
Two Vietnamese cities landed on a recent list of 15 emerging outsourcing hot spots selected by Global Services. The only other countries with more than a single city on the list were outsourcing giants India, with five, and China, with three.