Japan's Nintendo group, a leading manufacturer of electronic games announced that it plans to shift some of the production of its popular Switch gaming consoles from China to Vietnam. The move is a result of the trade wars between the U.S. and China and the Trump administration’s decision to impose 25% tariffs on Chinese goods.
Currently Nintendo has manufactured its game consoles at factories owned by Foxconn, Taiwan’s leading contract manufactuturer and production will be moved to Foxconn factories in Vietnam.
Foxconn employees at one of the company’s Vietnam facilities
Foxconn entered Vietnam in 2007 and has facilities in Bac Giang, Bac Ninh and Vinh provinces to manufacture computers, car parts and other electronic products. The company is said to employ approximately 30,000 people in Vietnam has said that it is considering opening additional factories in Vietnam in 2019 and 2020 and that employment could expand to 300,000 people.
Because of the China – U.S. trade dispute, a number of international companies have indicated that they plan to move some or all of their production from China to Vietnam. The list of companies include:
• Adidas (Germany)
• Brooks Running Shoes (US)
• Nike (US)
• Nintendo Electronics (Japan)
• Olympus (Japan)
• Samsung Electronics (South Korea)
• Sharp Electronics (Japan)
Vietnam’s labor, land and electricity costs are lower than China, but despite its advantages, there are still limitations to Vietnamese production. China has developed the most complete supply chains in the world, with thousands of suppliers available so assist companies to manufacture sophisticated products. Vietnam lacks similar supply chains and it will take years for it to rival China. However, as more companies make a decision to move production to Vietnam, many of their supply chain partners are also expected to move with them.