Why does VinSmart accept to outsource to another company instead of bringing its own brand to the US?

Months after being revealed by Chairman Pham Nhat Vuong himself, VinSmart’s ambition to finally bring the phone to the US has finally come true. The new announcement by VinSmart said the first shipment from Vietnam was exported to the US a month ago. The total number of smartphones ordered to the US is 2 million units.

However, according to the assertion of CEO Le Thi Thu Thuy, the first shipment of smartphones arriving in the US will only be carried out by VinSmart as an OEM. This means that VinSmart will play a manufacturing role for customers who are an American carrier. Even Vsmart is not allowed to reveal the name of the partner or a list of the company’s models.

2 million smartphones produced by VinSmart are / are about to land in the US. But no one knows what brand they will carry …

All VinSmart followers clearly understand VinGroup’s determination in the technology market: not only continuously investing trillions of dong to build factories and supply chains, VinGroup also sells the second largest retail chain in Vietnam. Male to put effort into smartphones (and cars). So what is the reason that when VinSmart first came to the US, it accepted to be a “supporting character” behind others instead of using its own brand?

Carrier power

Certainly, many people have realized that the move of VinSmart is meant to prepare for the long-term future of Vsmart phones in the future. In order for Vsmart smartphones to have the best future in the US, VinSmart first needs to build relationships with carriers.

Because in the world’s No. 1 economy, most consumers still have the habit of buying phones with monthly subscription plans. For example, the iPhone 11 has an unlocked price of $ 700, but when purchased with a carrier contract it will only cost the user about $ 30 / month, comes with the capacity to connect and the number of calls / messages. This amount is only equivalent to about 3 lunches, and therefore is also the most popular shopping method.

Why does VinSmart accept to outsource to another company instead of bringing its own brand to the US | Phone

The power of the carrier was so great that Samsung had to create different versions of Galaxy S II for each carrier.

Vsmart is not the first to build relationships with carriers. Even Steve Jobs was in the process of designing / implementing the first iPhone to knock on the carrier’s door. The first Android smartphone was born under the hands of Google and HTC, but with the name of T-Mobile carrier. Samsung, when selling the Galaxy S or S II generations, must also create a separate version for each carrier in the US. If you want to go to the US, you must do business with the network operator – this is the principle that VinSmart must follow if you want to find a future for Vsmart in the US.

OEM opportunity

Many people still hold the view that OEM is a less “glorious” business model than the phones that are self-designed, self-produced, and self-employed in technology. But the undeniable truth is that in business, there is nothing more “glorious” than profit. Right now, Vsmart in particular and Vietnam in general have great opportunities in hardware outsourcing.

Because over the years, the relationship between the United States and the biggest hi-tech factory in this country (as well as globally) – China has gotten worse and worse. The Trump administration has made clear its view of the need to reduce dependence on the Chinese supply chain and has also repeatedly introduced heavy tax policies on goods imported from China to the US. Even Apple, the No. 1 US company, has repeatedly threatened to increase taxes on iPhones made and imported from China. In 2020, the Covid-19 epidemic also left Chinese factories paralyzed for some time. The need to differentiate supply chains to reduce dependence on a single country has become even more acute.

Why does VinSmart accept to outsource to another company instead of bringing its own brand to the US | Phone

The announcement of an OEM order of 2 million units for the US shows that VinSmart is ready to welcome the next customers to the line in Hoa Lac, Hanoi.

VinSmart had obviously seen an OEM opportunity before the outbreak of Covid-19. Earlier this year, a subsidiary of VinGroup announced to put into operation a production complex with a maximum capacity of 125 million units / year, equivalent to 1/12 of global smartphone sales. Declaring to export 2 million phones to the US is like an invitation: VinSmart wants to “implicitly” send its words to international partners that Vietnam has enough capacity to manufacture phones for the most demanding market. gender. If it can continue to increase the processing scale to a few tens of millions of machines, VinSmart can dream of a new revenue source, equal to or even higher than the smartphone with the Vsmart brand name – which has sales of only 1.2 million units. after 1.5 years of opening for sale in “home country”.

Ultimate purpose

Once again, VinSmart’s ultimate purpose is still to bring Vsmart smartphones to the US and other international markets. Seeing as realistically as possible, the task of bringing Vsmart to the US at this time is impossible … The scale of VinGroup, although large in Vietnam, is still too small when compared with the “super corporations” like Apple or Samsung. The needs of US users are also different from Vietnamese users, the requirements of the partners themselves.

Why does VinSmart accept to outsource to another company instead of bringing its own brand to the US | Phone

Experience from outsourcing will help Vsmarts become more and more perfect.

To make the impossible possible, Vsmart needs time to learn and adapt. General Director Le Thi Thu Thuy has made no secret of this purpose: “[Xuất khẩu với vai trò OEM] This is an important step to help us understand the US market, their working methods as well as their product needs, in order to bring Vsmart-branded phones here in the future. “The leader of VinSmart also gave some details about the Thorough testing is done by American partners – surely, Vsmart will learn many valuable lessons when “being” closely watched by the world’s most demanding partners.

Few people remember that Vsmart in the early days of its debut was quite faint. It took a considerable time for Vsmart to create successful products like Live or Joy 3, to do miracles that Vivo, Huawei, and Xiaomi could not do: break into the top 3 with market share threatening. Samsung and OPPO. There will be a day when Aris or Lux will be released in the US as “Designed in Vietnam” and “Made in Vietnam” products. Right now, OEM for the most demanding market in the world is the necessary stepping stone to make that impossible dream come true.

[ Æsir Tales ]
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