Xiaomi production in Vietnam triggers debate in China

Xiaomi’s devices are made in Vietnam by DBG Technology, a subsidiary of Hong Kong's DBG Electronics Investment Limited, at an $80-million factory in the northern province of Thai Nguyen, Chinese media company Sina reported Tuesday.

Soon after, "Xiaomi makes smartphones in Vietnam" became a top search phrase in China with around one million searches, and the topic has also triggered much debate in the country.

"We have lost the assembly lines of Apple, Samsung and now Xiaomi. Even a domestic brand is now looking forward to moving abroad. Such a shame," commented Wu Gusu.

"When a factory is built, it employs locals, improves infrastructure and raises living standards. Vietnam and India are taking our opportunities and it is a matter of time before they can master the latest technologies," Xu Shilin wrote.

Vietnam is one of the largest beneficiaries of factories leaving China as it facilitates manufacturers access to the 10-member Association of Southeast Asian Nations (ASEAN) trade bloc and preferential trade pacts with countries throughout Asia and the EU as well as the U.S., Nikkei Asia reported last week.

But it also warned that the country’s rapid growth had reached a bottleneck with diminishing land and labor cost advantages.

So far, Vietnamese factories are still mainly engaged in low-end assembly and more than half of orders to the country come from China, it added.

Without disclosing specifics, Xiaomi said its Vietnam factory only produces certain models, but analysts have named some budget smartphones including the Redmi 10A and Redmi Note 11.

In the future, the Thai Nguyen plant may also manufacture Xiaomi’s headphones and smartwatches, they added.

Meanwhile, some Chinese citizens have also remarked that expanding to Vietnam is a good sign.

"It is absurd that many are criticizing Xiaomi. [...] Our brand is growing to the global scale, and building a factory in Vietnam is Xiaomi’s stepping stone to compete with Apple and Samsung," commented Xishan Xuncha.

"Xiaomi has flooded [Vietnam’s] market with its products for the past two years. I saw many Vietnamese using its devices, so I support the company’s move to open a new factory there", said Wang San, adding that the Chinese brand can take advantage of Vietnam’s cheap labor.

On Monday afternoon, a Xiaomi representative confirmed the move with news site Red Star Capital Bureau, saying that it aims to "produce devices for Vietnam and some Southeast Asian countries.

"Not all of our factories have moved there," the representative said.

The Covid pandemic has affected Xiaomi’s logistics and supply to the region, so expanding production to Vietnam will reduce costs and improve supply proficiency, the rep added.

Xiaomi is the second largest smartphone producer in Vietnam, according to a first quarter report by analyst Canalys. Counterpoint Research said it accounted for 20.6 percent of smartphone sales in Vietnam in the first three months.