Nokia has kept construction of its $302 million manufacturing facility in Vietnam on schedule to start production next year, despite the company’s well-documented financial setbacks.
William Hamilton-Whyte, managing director of Nokia’s representative office in Vietnam, said even though the mobile phone maker faced financial difficulties, the company’s investment plan in Vietnam remained on schedule and capable of creating 10,000 jobs at its facility under construction in northern Bac Ninh province.
“It is still being built here. It is not behind the schedule. We are building foundations, walls and roofs of the facility. But you will see that it goes fast because Nokia wants to build it like facilities we did in Finland, India or China,” he said.
Nokia began the construction of this $302 million facility in April and planned to complete the construction in 2013. The factory has a production capacity of 45 million units per quarter. Most of the products will be exported to overseas markets.
Nokia is building the facility in Vietnam amid the financial trouble that forced the firm to announce closure of its facilities in Germany, Canada and Finland. As a result of the planned changes announced, Nokia plans to reduce up to 10,000 positions globally by the end of 2013.
By building manufacturing facility in Vietnam, Nokia could reduce production costs through taking the advantages of affordable labour cost and preferred tax incentives in this country.
In Vietnam, Nokia is recognised as a high-tech enterprise, meaning that Nokia will have an equal competitive advantage with its rival Samsung Electronics in term of tax incentives, which include 10 per cent of corporate income tax for the whole life of its project. A high-tech enterprise also enjoys tax exemption for its first four years of operation with profits and pays half of this 10 per cent rate in the following nine years.
“I am very eager to get the first product from the facility in Vietnam,” he said, adding that it would have a huge impact on Nokia’s business in Vietnamese market as it “enables us to be closer to customers.”
In a bid to expand its market share of smartphones in Vietnam, where Whyte said it was growing month-on-month, Nokia last week officially announced plans to sell its best smartphones Nokia Lumia 920 and Nokia Lumia 820 in the market, and introduce a new device running Windows Phone 8 called Nokia Lumia 620.