Today was a fun day filled with two visits that were both very interesting. The first one, VSIP, stand for Vietnam-Singapore Industrial Park. VSIP is a joint partnership between the governments of Vietnam and Singapore. Singapore is relatively small, thus can’t physically develop anything due to land constraints, however they have a lot of money to invest. Vietnam, has less money than Singapore but tons of land to develop. Thus, these countries work hand in hand to both benefit from the development of land into large spaces for factories, residential areas, and more. Due to VSIP being backed by the government, VSIP also receives support and funding from the government for their projects. Something interesting I noticed is that when visiting Phu My Hung last week, this company was also a joint venture between Vietnam and Taiwan, just like VSIP. I found it interesting that while Vietnam wants to globalize and develop, they need help and money from other countries to provide the resources for this development. Additionally, joint ventures like this are very good for Vietnam because they not only boost the country’s economy, but they promote Vietnam’s global presence in certain industries, furthering the development of the country.
In terms of VSIP specifically, they are a company that develops industrial parks that have spaces for factories to be built, as well as residential areas, restaurants, and parks. They have nine different sites, with three in the north, two in central Vietnam, and three in Southern Vietnam. They strive to create an integrated township, or a place where people can both live and work in a convenient space. VSIP works with specific clients, normally foreign investors, that come to Vietnam to manufacture their products. VSIP specifically has generally three main products: industrial land, where they maintain large spaces of land and lease it to companies to build their factories on for a 50-year contract, ready built factories, where VSIP builds factories and leases them to investors as a quick set up for a company, and retail and commercial/commercial and residential, where VSIP creates residential areas for people/workers to live as well as other amenities. Some interesting amenities that VSIP builds within their sites is an on-site custom office, so foreigners can check their goods, which I thought was convenient because it caters to the foreign investors and makes it easier for them to come to Vietnam and start their business. Additionally, something I found interesting about the residential areas is that they are open to everyone, and that one does not have to work in a factory located on the VSIP site in order to live there; I found this interesting because it illustrates how VSIP is working to develop all of Vietnam and improve the general quality of live throughout the entire country, not only a specific area.
There are some pros and cons that are evident that result from the nature of the company and industry. For one, VSIP is convenient because if a client has a problem that needs to be dealt with, since VSIP works directly with the government, they can provide assistance and support to that client, which would be much more difficult otherwise. However, a con is that this industry is very competitive since it is growing, and it is becoming more difficult to obtain land to develop since everybody wants it.
After VSIP, we visited the company II-IV, the company originally got its name from the products that were developed, which were made from groups two and six from the periodic table. Now, the company utilizes other elements from the periodic table as well to make more complex and diverse products. II-IV has many different locations across the world that create different products. For example, there was locations in Singapore in 1988 and then in China in 1997, and now there has been a II-IV location in Vietnam since 2004. The strategy is to utilize the experienced workers from Singapore and China to help train and maintain some aspects of the facilities in Vietnam, however the Vietnam facilities create many jobs for the Vietnamese.
II-IV has three main subdivisions of products, which are photonics, performance products, and laser solutions. From these three subdivisions, the site that we visited in Vietnam creates thermoelectric modules (TEM), which regulate temperatures in certain electronic and automotive products. Their products are similar at a very basic level, however the design is up to the client, thus making each of their products different depending on who they are manufacturing for. In terms of their workforce, there is a fairly diverse skill level, as some training requires two years and other training could require two weeks. In general, the company tries to take certain steps in the creation of a product and break them down into simpler and smaller steps to be performed. The labor cost is very cheap, and even though the company is headquartered in Pennsylvania, this is one of the reasons for opening a location in Vietnam. Additionally, there are certain business incentives that make setting up a factory here very appealing, like the fact that for four years since the first year of profitability, there is no tax.
Globalization has had a huge impact on the development of II-IV. For one, due to globalization, it is becoming more accepted by companies to have their products manufactured in Vietnam, even though there are still some clients who will not let II-IV manufacture their product there. The location that the client wants their product manufactured at is up to the client, yet the process for manufacturing is a set standard, and is the same for each facility across the globe. In turn, globalization has opened a gateway for II-IV to possibly expand even more in many ways. However, something interesting is that the machinery used in their production is very specific, and as such, it was mentioned that their product diversity could never grow too much because of the specific equipment that are meant to perform certain functions. Despite this, a way to expand their company is by acquiring data technology companies, and II-IV has just acquired the data company Finisar. With this pairing, II-IV can combine their work with the technology from II-IV to expand even more.
After a presentation about what II-IV does in general, were able to visit actual II-IV manufacturing facilities. Something I noticed during the site was heavy machinery, as well as lines of workers sitting doing the same exact task. It led me to question the nature of working in a manufacturing facility like II-IV, because as a chemical engineer, I found the tour of the facility very exciting, and was able to interact with some of the equipment used. However, a lot of the machinery performs one task, and thus only needs one person to operate it. During our presentation, it was stated that there is no research and development at the site, it is strictly manufacturing. It led me to wonder not only how the workers feel, and if they enjoy performing similar tasks constantly, but how this could present a problem in the future.
Overall, I really enjoyed being able to tour VSIP and II-IV in the same day, because their connection is very apparent. VSIP is able to leave the space to II-IV in order for II-IV to operate and manufacture. In all, VSIP benefits because they have someone to lease the land to, II-IV benefits due to the clients consumer their product, and Vietnam’s economy benefits because many jobs are created through the development of manufacturing companies. I found it somewhat saddening that the workers only perform the same tasks all the time, however it also led me to question the education system, since it is improving and the work force is becoming more educated. Soon, Vietnam could be doing the research and development for II-IV instead of strictly manufacturing. Additionally, I gained a new perspective of the Vietnamese government from this visit, because hearing about all of the jobs created and the positive aspects to developing land made me realize more how the Vietnamese government is working for its people, and working to improve the quality of life for all.