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Vietnam: Locals dominate IT hardware market

In Vietnam, the rapidly-growing domestic computer manufacturing industry has cornered the lion's shareof the local market, but experts warn that urgent steps are needed to ensure quality and generate more revenue.

The rapidly-growing domestic computer manufacturing industry has cornered the lion's share of the local market, but experts warn that urgent steps are needed to ensure quality and generate more revenue.

HANOI (Asia Pulse)--Three-quarters of all personal computers bought in Vietnam are manufactured domestically, according to deputy general director of Viet Nam Informatics and Electronics Corp, Le Ngoc Son.

Son said the domestic manufacturers had upped their quality, giving them an edge over more costly imports. A domestically produced PC costs 50 to 70 percent less than an import, and local customers can now get better warranties on domestic PCs.

But experts say that more focus is still needed on guaranteeing quality, and are also urging the local IT industry to diversify into making components. Most PC assemblers use accessories imported from various sources because the country has no enterprises of its own manufacturing computer accessories.

Consequently, 95 to 98 percent of the product value is derived from the import value of the accessories, and local assemblers contribute only 2 to 5 percent of the product value.

Meanwhile, say insiders, the varied sources of component imports have resulted in the fluctuating quality of domestic PCs, particularly hard disk drives. For example, on April 24, Intel warned that some Pentium III microprocessors found on the Vietnamese market had been altered to run faster than their capacity allowed.

Tran Trong Phuc, director of Intel Viet Nam, said the use of such microprocessors seriously affects the operation of PCs since the CPU has to run faster than its designed capacity. As a result, PCs often crash and lose data.

Phuc also drew attention to the use of second-hand components or those PCs without clear origins of assembly. To protect consumers, observers say IT authorities need to issue specific regulations on PC quality and set up a consulting centre for PC buyers.

Insiders also suggest that domestic computer manufacturers only import component clusters of guaranteed quality from reputable firms like Intel and Quantum.

In an attempt to help the industry develop, the Government has decided to add domestic computer manufacturers to a list of key enterprises entitled to benefit from special Government assistance. The Ministry of Science, Technology and Environment is also proceeding with the establishment of a division in charge of controlling the quality of IT products.

The domestic computer industry got going in the early 1990s, when Gen Pacific imported the country's first PC assembly line with a capacity of nearly 20,000 units a year. After nearly a decade, domestic PC producers - mostly private firms - now churn out 100,000 to 150,000 units assembled each year. The domestic industry is now carving out a niche in the laptop market.

Dong Nai Computer Centre is producing Vinacom Pentium III, with a speed of 1 GHz. All computer components for the assembly of laptops are imported from the US, Japan and Taiwan.

The domestic market is currently valued at US$130 million per annum and is expected to rise. The country has about 160 businesses currently working in IT-related areas.