Stopping the production of TV sets and cell phones, Vingroup is repressing or becoming bigger?

A Vsmart phone model was posted by Vingroup on the group’s website on May 9, 2021.

Vingroup Group of Vietnamese billionaire Pham Nhat Vuong on May 9 announced that its subsidiary VinSmart will stop the production of TV sets and cell phones to focus resources on developing electronic products and features serving infotainment equipment for VinFast cars.

According to Vingroup’s announcement, VinSmart will turn to develop smart features on vehicles and houses.

The press release posted on the group’s website emphasizes that this is a “strategic step to bring VinFast towards its goal of becoming one of the smartest and most convenient electric car manufacturers in the world.”

Mr. Nguyen Viet Quang, Vice President and General Director of Vingroup, said in the announcement that the production of smartphones or TV sets “has no longer brought breakthrough capabilities, creating differentiated value for users.”

Still, the group leader added: “Meanwhile, the development of exceptionally smart cars, smart homes, even smart cities … will bring a lot more benefits and outstanding experiences for mankind. Therefore, we are determined to devote all resources to this spearhead.”

Vingroup, a group that started in the real estate business, reiterated in the statement that it had previously withdrawn from the retail, agricultural, and aerospace segments, in turn, to focus on its core priority, that is car production.

The group of billionaire Pham Nhat Vuong points back in the announcement that up to now, after nearly 3 years of development, VinSmart has launched to the market 19 smartphone models and 5 TV set models.

In particular, Vsmart phones took the Top 3 smartphone market share in Vietnam, and was awarded the Best Vietnamese Phone Brand Tech Awards 2020, and is one of the most popular brands in Vietnam.

Associate Professor-Dr. Nguyen Hoang Anh, the former lecturer at Hanoi Foreign Trade University, confirmed to VOA that Vsmart phones are well received in the country. She added:

I personally also bought one, used to be good. I was relatively surprised that VinSmart stopped making phones.”

Vingroup’s latest decision to stop TV and mobile production immediately became a hot topic of discussion on social networks.

Many opinions suggest that what has happened recently is the price to pay for the group’s participation in many fields. Some people even made heavy comments such as the “corporation building a castle on the sand” or the gradual withdrawal from some areas as “partial death” of the corporation.

On the other hand, others are positive about what they see as Vingroup soberly withdrawing from areas that do not have the strengths to focus on key areas.

Dr. Nguyen Quang A, a veteran businessman who previously founded a number of electronics companies and banks, analyzed with VOA that when Vingroup entered the TV and phone segment, those were the markets where the competition is fierce while Vingroup has no experience. Therefore, the fact that this group stops working in those two areas is understandable.

With his experience, Dr. Quang A said that there should not be too negative views about Vingroup’s gradual withdrawal from some fields. He said:

Vingroup is a big corporation. It explores the market by expanding into many areas, experimenting to find out which products are core. For example, it tried 10 products, maybe 8 or 9 products are not suitable, maybe there is 1 core product and it will focus on developing it. If judged strictly, it can be said that it had made reckless and dangerous progress, now must stop to avoid risks.”

From the perspective of the person who taught about business, Associate Professor-Doctor Nguyen Hoanh Anh compared that the development of Vingroup has many similarities with the Chaebol (large family-owned corporation) in South Korea in previous decades.

She reiterated that the Chaebol took advantage of the Korean government’s support and relationships with officials to raise capital, expanding the business into many fields. But by the crisis of 1998, they had to cut off segments that were not likely to succeed, into more specialized conglomerates. She continued to VOA:

I think Vingroup’s strategy shows that they have learned from the Chaebol ahead and they also know not to get too far into their main field. Vingroup used to have the ambition to make products and services for everyone from birth to death. Now, they know to focus on some fields. This is the right strategy which can make them stronger and reduce their vulnerability.”

Commenting on Vingroup’s announcement of withdrawing from a series of areas to focus on VinFast automobile production, Dr. Nguyen Quang A is not optimistic:

I think it’s even more difficult with cars. In the Vietnamese market, I think assuming VinFast holds 10-15%, it is still too small to develop. To develop, they must reach the US, especially China or India. But I think it’s difficult for Vin to squeeze in. As for the auto industry, I’m very concerned that it’s unlikely.”

At the end of April, Reuters reported that VinFast was making a big bet on business in North America and Europe from 2022 and that the company’s CEO, Nguyen Thi Van Anh, would travel to the US in May to prepare for this plan. There are currently 100 people working for VinFast in the US.

But in the early days of May, a VinFast car owner posted to YouTube some videos pointing to the vehicle’s defects and problems in after-sales service, leading to a dispute between the automaker’s representative and the owner in the domestic press, causing a stir and considered a disadvantage for VinFast.

Not long ago, in February, VinFast had to deal with social media which reported that a series of its cars had lost their wheels and broken cranes in different localities in Vietnam. (Translated)


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