1. Case Background

An electronics manufacturing company was originally located in the Ho Chi Minh City Industrial Park, focusing on the production of electronic components and equipment. With the development of the Ho Chi Minh City Industrial Park, the number of companies in the park has continued to increase, leading to problems such as resource shortages, rising land rents, and rising labor costs. The saturation of the park has put the company under high operating cost pressure. In addition, with the expansion of the company’s business and the increase in production capacity requirements, the original production facilities and space can no longer meet the company’s long-term development needs.

To meet these challenges, the company decided to move some of its production lines to the Da Nang Economic Zone. With its favorable policies, lower land and labor costs, and relatively new infrastructure, the Da Nang Economic Zone has become an important choice for the company’s strategic transformation. Through this transformation, the company hopes to reduce operating costs, expand production scale, and better utilize the resource advantages of the Da Nang Economic Zone to enhance its competitiveness in domestic and international markets.

This case study will delve into the challenges faced by the company during the transformation process, the strategies adopted, and the results achieved, in order to provide reference and lessons for other companies in similar situations.

2. Analysis of the causes of transfer

2.1 Park Saturation

As an important industrial base in Vietnam, the Ho Chi Minh Industrial Park has attracted a large number of domestic and foreign companies after years of development. With the increasing number of companies, the land resources in the park are becoming increasingly tight, and the space for companies to expand production facilities and increase production capacity is limited. Especially for electronic manufacturing companies, large-scale factory buildings and supporting facilities are required to support efficient production. However, it is difficult to provide sufficient land resources in the Ho Chi Minh Industrial Park to meet the needs of further expansion of companies. This saturated situation in the park has become one of the main reasons for companies to consider relocating some production lines.

2.2 Rising costs

In recent years, the rent and labor costs of industrial parks in Ho Chi Minh City have increased significantly. As the parks become increasingly saturated, land rents continue to rise, causing the operating costs of enterprises to increase year by year. In addition, as Ho Chi Minh City is one of the largest cities in Vietnam, the rising cost of living has also pushed up labor costs. For electronic manufacturing companies, profit margins are already limited, and rising costs have further increased the operating pressure of companies. In order to maintain market competitiveness, companies must find a production base with lower costs, which has prompted companies to transfer some production lines to the lower-cost Da Nang Economic Zone.

2.3 Infrastructure bottleneck

The power supply, water supply and drainage infrastructure in Ho Chi Minh City Industrial Park has gradually become aged and overloaded as the park expands and its service life increases. These infrastructure problems have directly affected the daily production and operation of enterprises, especially during the expansion process, when the demand for electricity and water resources has increased significantly, but the existing infrastructure is difficult to meet this growth demand. The bottleneck of infrastructure has become an important factor restricting the development of enterprises, forcing them to consider setting up new production bases in areas with more modern infrastructure.

2.4 Policy support

In order to attract corporate investment, especially in the manufacturing sector, the Da Nang Economic Zone has introduced a series of preferential policies, including tax exemptions, land lease concessions, and fast approval procedures. These policies have greatly reduced the operating costs of enterprises and increased the return on investment. In addition, the Da Nang Economic Zone also provides a relatively relaxed labor law policy and a flexible foreign exchange management system, making it more convenient and efficient for enterprises to operate locally. These policy supports have become one of the key driving forces for enterprises to decide to transfer some production lines to the Da Nang Economic Zone.

Summarize:

The saturation of industrial parks in Ho Chi Minh City, rising costs, infrastructure bottlenecks, and favorable policy support provided by the Da Nang Economic Zone have led to the electronic manufacturing company’s decision to make a strategic adjustment in the relocation of its production lines. By moving to the Da Nang Economic Zone, the company can better control costs, expand production scale, and take advantage of policy dividends, thereby maintaining its competitive advantage in domestic and foreign markets.

3. Analysis of the transfer process

3.1 Feasibility Study

Before deciding to move part of its production lines to the Da Nang Economic Zone, the company conducted a comprehensive feasibility study. The study covered key factors such as the infrastructure conditions, labor market, policy environment, logistics conditions and potential market demand in the Da Nang Economic Zone. Through field visits, data analysis and consultation with local experts, the company conducted a detailed assessment of the power supply, water supply, transportation network and communication facilities in the Da Nang Economic Zone and confirmed that they could meet the company’s production needs. In addition, the company also evaluated the number and skill level of the local labor force and analyzed the policy benefits of the Da Nang Economic Zone, including tax exemptions and land lease benefits, and finally concluded that the transfer of production lines is highly feasible.

3.2 Project Approval

Based on the feasibility study, the company developed a detailed transfer plan and formally launched the project. The plan includes the determination of investment scale, selection of production lines, transfer of key equipment, personnel placement, production cycle arrangement and budget control. The company paid special attention to how to minimize the impact on existing production during the transfer process and formulated careful risk management measures. The transfer plan was approved by the Da Nang Economic Zone Administration and obtained the necessary administrative support and resource guarantees, which provided institutional guarantees for the smooth progress of the project.

3.3 Infrastructure Construction

After obtaining approval from the Administration, the company purchased suitable land in the Da Nang Economic Zone and quickly started infrastructure construction. The construction project includes production workshops, warehouses, employee dormitories, canteens and other necessary supporting facilities. In the construction of infrastructure, the company focuses on the use of modern building materials and environmental protection technologies to ensure that the new facilities can operate stably and meet environmental protection requirements in the long term. The design of the production workshop takes into account the flexibility and scalability of the production line to meet the possible demand for increased production capacity in the future. After several months of intensive construction, the infrastructure construction was completed as scheduled, laying a solid foundation for the subsequent installation and trial operation of the production line.

3.4 Personnel Training

To ensure the smooth operation of the production line after the transfer, the company transferred some experienced managers from the existing factory in Ho Chi Minh City to help the new factory quickly establish an effective operation and management system. In addition, the company also recruited a large number of technical workers locally and designed and implemented a comprehensive training plan based on their job requirements. The training content includes the operation of production equipment, quality control processes, safety production regulations, etc. Through training, the new technical workers quickly mastered the production skills and adapted to the company’s operating model, ensuring the efficient start-up and stable operation of the new production line.

3.5 Trial Production

After the infrastructure construction was completed and the personnel training was in place, the company started the trial production of the new production line. During the trial production stage, the company focused on the smoothness of the production process, the operating status of the equipment and the stability of product quality. During the trial production, the company strictly followed the established quality control standards and conducted detailed testing and analysis on each batch of products to ensure that the various technical parameters of the production line met the standards. After discovering and solving a small number of problems in equipment commissioning and process flow, the trial production was successful. The successful completion of the trial production marked the official operation of the production line and laid the foundation for the company’s long-term development in the Da Nang Economic Zone.

Summarize:

Through rigorous feasibility studies, careful project approval, sound infrastructure construction, effective personnel training and strict trial production processes, the electronics manufacturing company successfully transferred part of its production lines from the Ho Chi Minh City Industrial Park to the Da Nang Economic Zone. This transfer process not only helped the company reduce operating costs, but also provided new opportunities for further expansion in the Vietnamese market. The planning and execution capabilities demonstrated by the company throughout the process provide valuable experience reference for other companies.

4. Analysis of transfer results

4.1 Improved production efficiency

After moving to the Da Nang Economic Zone, the company’s new production line uses the latest equipment and production technology, which greatly improves production efficiency. By introducing automated production lines and advanced production management systems, the company is able to complete more production tasks in a shorter time. In addition, thanks to the high precision and stability of the new equipment, product quality has also been significantly improved, and the product qualification rate and customer satisfaction have both increased. This result not only enhances the company’s production capacity, but also improves the company’s competitiveness and brand image in the market.

4.2 Cost reduction

The land and labor costs in the Da Nang Economic Zone are lower than those in Ho Chi Minh City, and the overall operating costs of enterprises have been effectively controlled. In terms of land costs, since the Da Nang Economic Zone is still in the development stage, the land rent is relatively low, and enterprises can save a lot of rental costs. In terms of labor costs, the cost of living in the Da Nang area is low, and enterprises can attract and retain high-quality employees with more competitive salaries. The reduction in operating costs provides enterprises with greater profit margins, giving them a stronger price advantage in market competition.

4.3 Policy benefits

The company has successfully enjoyed the tax incentives provided by the Da Nang Economic Zone, further reducing its tax burden. These policies include corporate income tax exemptions, import equipment tariff concessions, and value-added tax refunds. These incentives not only directly reduce the tax costs of the company, but also improve the company’s cash flow and capital turnover, and enhance the company’s investment and expansion capabilities in the new market. The policy incentives provide important support for the rapid development of the company in the new region, helping the company to maximize its economic benefits in a short period of time.

4.4 Market Expansion

The geographical location of the Da Nang Economic Zone and the convenient conditions of the Da Nang Port have created new opportunities for the export business of enterprises. Da Nang Port is one of the important ports in Vietnam. It has excellent logistics conditions, and enterprises can export products to international markets such as Asia, Europe and America more efficiently. Thanks to the reduction of logistics costs and the improvement of transportation efficiency, enterprises have been able to open up new overseas markets and expand the market share and international influence of their products. The success of market expansion has not only increased the income of enterprises, but also enhanced their global competitiveness.

Summarize:

Through the successful transfer of the production line, the company has not only achieved significant improvements in production efficiency and product quality, but also effectively reduced operating costs. In addition, the policy benefits and port advantages of the Da Nang Economic Zone have further promoted the company’s market expansion, enabling the company to achieve greater success in domestic and foreign markets. This transfer has laid a solid foundation for the company’s future development and provided a successful example for other companies considering regional transfers.

5. Case Study

Choose the right park

When considering park relocation, enterprises must conduct a comprehensive assessment. They should fully consider the new park’s infrastructure conditions, labor market, policy support, logistics conditions and other factors to ensure that the new park can meet the company’s operational needs and long-term development plans. Choosing the park that best suits its own development will help companies quickly adapt to and succeed in the new environment.

Develop a thorough transfer plan

During the transfer process, enterprises need to make a detailed and careful plan. The plan should cover investment scale, production line selection, equipment migration, personnel placement, risk management, etc. By making a detailed transfer plan, enterprises can ensure the orderly progress of the transfer process, reduce the negative impact on production and operations, and smoothly complete the transition from the old park to the new park.

Strengthening communication with the Administration

During the relocation process, enterprises should maintain close communication with the administration of the new park. By establishing a good relationship with the administration, enterprises can obtain the latest information on relevant policies in a timely manner and obtain necessary administrative support. This kind of communication not only helps enterprises to smoothly handle relevant procedures, but also helps them obtain more resources and opportunities in the new park and enhance the smoothness of operations.

Focus on staff training

In the process of moving to the new park, enterprises should attach great importance to the training of new employees. Through systematic skills training and career development planning, enterprises can improve the work ability and loyalty of employees, thereby ensuring the efficient operation of the production line and the stability of product quality. The improvement of employee skills not only helps the current production operation, but also lays a solid foundation for the long-term development of the enterprise.

Taking advantage of the park

Enterprises in the new park should make full use of the park’s advantageous resources, such as modern infrastructure, convenient logistics conditions and favorable policy environment. These advantages can help enterprises reduce operating costs, improve production efficiency, and expand market coverage. By making full use of the resources and support provided by the park, enterprises can enhance their competitiveness and achieve faster development and higher market share.

Summarize:

When enterprises transfer from one park to another, they need to make comprehensive considerations and plans to ensure the smooth transfer process and maximize the advantages of the new park. Selecting the right park, developing a detailed transfer plan, strengthening communication with the administration, focusing on personnel training and making full use of the park’s advantages are all key factors for enterprises to succeed in the process of transformation and upgrading. Through this series of strategies and measures, enterprises can achieve stable growth and sustainable development.