According to a report from the South Korean economic news, South Korean electronics manufacturer LG Innotek has decided to relocate its camera production line from China to Vietnam. LG Innotek is a subsidiary of LG specializing in electronic components. Through continuous technological development, it has grown into a leading global accessory company. Currently, core materials and components for various electronic fields produced in China are supplied to global customers. One of its factories in China has been processing camera components for over a decade. With the changing times, supply chain restructuring is a trend. LG Innotek plans to gradually move the camera production line from Yantai, China, to Vietnam.
Looking back in history, LG Innotek began production at its factory in Yantai, Shandong, in early 2005 and expanded its customer base in China. Until early 2020, Yantai had been LG Innotek’s largest overseas production base. With the rise of Chinese production capacity in recent years, competition in China has become fierce. LG Innotek’s production capacity is now mainly for export to the North American and European markets, so LG can choose to stop production in Chinese factories and move to lower-cost locations, such as some Southeast Asian countries. In this larger context, LG Innotek has decided to relocate its factory to Vietnam, where labor costs can be significantly reduced.
The LG Group headquarters was established in Seoul, South Korea, in 1947 and is an international company leading the world in the electronics industry. LG operates in many countries worldwide and is involved in various fields, including electronics, chemistry, lifestyle, energy, and more. LG was initially a major player in the mobile phone market in its early years but gradually phased out of the mobile phone market. Now, LG Electronics has transitioned part of its production capacity in Vietnam to the home appliance industry. Since 1995, LG has invested $5.3 billion in Vietnam, covering many manufacturing areas and creating numerous jobs in Vietnam. Since last year, LG has further increased its investment in Vietnam. LG will continue to invest in various sectors in Vietnam, expanding production and adding an additional $4 billion in investment. LG Innotek plans to expand its production subsidiary in Vietnam with the goal of commencing production by 2025.
Many other similar companies are also facing similar issues. For example, companies like Samsung and Hyundai Motor Co. are reducing their production in China. Their partners and suppliers are gradually withdrawing from China as well. Due to continuous weak consumer demand in China over the past two years and intense competition among local enterprises, the advantages of producing in China are gradually diminishing. Therefore, major corporate groups are closing or reducing their production scale in China and shifting this part of their industry to some Southeast Asian countries. Given the uncertain outlook of the international economy, each company has its own plans, most of which involve tightening production capacity while maintaining a certain level of output. How to survive and profit better in an uncertain environment is a key consideration for companies in recent years.
