05/14/18: VSIP and II-VI

In our visit to Vietnam Singapore Industrial Park (VSIP) we were able to learn about what exactly the industrial park is and what it does. The industrial park provides the infrastructure that other companies need to operate in Vietnam and acts as a “one stop shop” where these companies can go to receive the essentials for their operation. The only major drawback is that this can be more expensive than finding these services elsewhere. For many companies, utilizing the services provided by VSIP may look like renting out a pre-built factory and utilizing the draining and waste management system that VSIP has in place. VSIP also provides in house customs services where companies can get products to clear customs before they leave the park. This benefits companies as it means that their products don’t have to wait in the longer lines of the customs agency at the port. Also, with the customs office at VSIP they are able to cut through red tape more easily because VSIP already knows the companies they service and their products. VSIP was originally set up by the Vietnamese and Singaporean governments to provide these services and increase development in these countries. VSIP does have competition with other industrial parks that have been established in a similar fashion by the Vietnamese government and other countries. Something interesting about VSIP is that they develop the areas in which their company operates, bringing increased wealth to the area and investing in the education of the people that work for them. Infrastructure must also develop around the parks to support the employees, including living spaces, stores, and restaurants, which is a good thing as it promotes economic growth.

It was very interesting to follow our visit with VISP with a visit to II-VI as II-VI is a company based out of the United States that utilizes the services provided by VSIP in their Vietnamese operation. II-VI is a company that produces optics materials, namely glass lenses, as well as semi-conductor heating elements that can be hot or cold depending on which direction you pass current through them and can also create electricity through exposure to heat. The reasons that II-VI has an operation in Vietnam is because of the decreased costs associated with being in Vietnam, especially with wages being so low, and because it is in an ideal location for shipping and access to other parts of Asia. Working in Vietnam also has some drawbacks. There are not many skilled workers here with experience doing the work that II-VI is doing which means that they need to train people who may only have experience working as farmers. The people at II-VI also described a problem where employees would save their money to go home for the Tet holiday. However, once the employees went home, they would not come back but would take vacation until they ran out of money and then return to find a new job elsewhere. This problem with retention is difficult to manage as hiring and training new staff is expensive. The people at II-VI solved the problem with smart management by incentivizing their workers to come back by doing things like paying their travel expenses and providing bonuses after the holiday season.

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