Vietnam at the center of Samsung’s renewed R&D push

HANOI, Vietnam – Gone are the days when Vietnam served as a cheap manufacturing base for global companies. Samsung Electronics, among others, have more recently been investing heavily to nurture a new research hub there.

Ahead of the opening of its new research and development center later this month, the South Korean tech giant held its recruitment test, called Global Samsung Aptitude Test, three times this year alone -- a massive hiring drive that is rare both at home and abroad.

“About 99 percent of the center’s some 2,000 staff are local tech talent who graduated from elite schools such as Ho Chi Minh City University of Technology and Hanoi University,” an official at Samsung Electronics Vietnam told The Korea Herald.

“Almost half of Vietnam’s population is under 25 years old, making it an attractive market to harness the power of young workers.”

The Vietnamese workforce has been the backbone of Samsung’s smartphone production, with the country making up around 50 percent of the company’s total mobile phone exports. Starting from TVs in 1995, the company’s key products, from smartphones to displays to network equipment, are now being produced there. Four local production units are in operation.

The upcoming R&D center is the culmination of Samsung’s decades-old commitment to the Southeast Asian country. The 16-story building, located on an 11,603-square-meter site in the capital city of Hanoi, is Samsung’s largest R&D center in the region.

The center is expected to play a key role in developing software for Android-powered smartphones and doing research work for 5G and 6G network technologies.

“The R&D center has a symbolic meaning that the country is transforming from a production base to a strategic hub where key tech innovations will happen,” the Samsung official added.

Despite recession fears prevalent worldwide, Vietnam is expected to continue its growth momentum. While World Bank estimated a 7.5 percent economic growth this year, the Vietnamese government is banking on at least 8 percent.

More noticeable is the rapid growth of the innovation sector with lower regulatory hurdles. Samsung and Viettel, Vietnam’s largest telecom operator, have teamed up to build infrastructure for the ultrafast 5G network. The recently launched Vietnam Blockchain Association is the first official organization to develop a legal framework for the burgeoning digital economy.

Adding to the market dynamics is Vietnam’s geopolitical attractiveness as an alternative market to China as neighboring countries are seeking to reduce China risks amid the escalating Washington-Beijing rivalry. Korea is no exception. In celebrating 30 years of official ties this year, South Korea and Vietnam have elevated the bilateral relationship to the highest “comprehensive strategic partnership.”

Samsung, one of the largest foreign investors in Vietnam, has also seen its exports from Vietnam surge in recent years. In the January-July period this year, the export volume increased 18 percent to $343 million compared to the same period last year.

And the company seems willing to spend more to further expand its footing there.

Samsung Electro-Mechanics, the tech giant’s parts unit, plans to build a production base for advanced substrates for chips there, with the first shipment expected to start in July next year.

Another key project is supporting local firms to digitize their manufacturing facilities, helping them take advantage of the largest smart factory push across industries.

Thanks to its constant efforts to upgrade welfare benefits for local employees, Samsung recently topped UK consultancy YouGov's list of Global Best Brand Rankings in Vietnam this year, as well as in South Korea, the Netherlands and Ireland.