’s dramatic move to recall and end production of its recently-launched Galaxy Note 7 could have an adverse effect on Vietnam’s economy which has taken a hit from severe drought and falling oil prices.
The South Korean electronics giant produces around one third of its mobile phones worldwide at two plants in Vietnam’s northern provinces of Thai Nguyen and Bac Ninh.
Former Trade Minister Truong Dinh Tuyen said in Hanoi on October 11 that the recall of Galaxy Note 7 could put a brake on Vietnam’s export growth, which stood at 6.7% in the first nine months of this year, below the whole-year growth target of 10%.
“The recall of a product with potential exploding batteries could cause many countries to ban the import of this product. A slowdown in Samsung’s exports could impact the Vietnamese economy,” Tuyen said.
Sharing the same view, economist Vu Dinh Anh noted that Samsung has become the largest exporter in Vietnam over the past few years. “The recall of Galaxy Note 7 could greatly impact Vietnam’s 2016 trade performance,” he added.
Samsung Vietnam shipped some $33 billion worth of electronics last year, accounting for one fifth of Vietnam’s exports.
Vietnam raked in $15 billion from overseas shipments in September, a 6.8% fall from a month earlier, according to the General Statistics Office.
Of the amount, exports of phones and spare parts dropped 17.24% month-on-month to $2.4 billion, partly because of the Note 7 recall.
Samsung Vietnam said Wednesday that its two smartphone plants produce not only Galaxy Note 7 but also other products such as tablets, S7, S7 Edge, Galaxy A, and Galaxy J.
“The fallout of Galaxy Note 7 will not have a large impact on the company’s 2016 export revenue, which is expected to be higher than that in 2015,” the firm said.
“Samsung told me earlier this month that they have no lay-off plans for now as smartphones are just a part of their production portfolio,” Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises, told Bloomberg.
The total workforce tied to Samsung in Vietnam is about 400,000 people, including 130,000 direct workers, according to Mai.