HONG KONG (MarketWatch) -- Microsoft Corp. plans to shut two mobile-handset manufacturing plants in China formerly run by Nokia Corp., cutting about 9,000 jobs in total, various reports said Thursday. Microsoft, which bought Nokia's handset business last April, scheduled the closure of the plants -- located in Beijing and the southeastern city of Dongguan -- earlier this month and plans to ship some of the manufacturing equipment there to Vietnam, according to a report in the government-run Beijing Youth Daily. It quoted an unidentified Microsoft China executive as saying the closures and transfer of production capacity to Vietnam would likely be completed by the end of March. The layoffs are part of an estimated 18,000 job cuts which Microsoft announced in the wake of its purchase of the Nokia unit for $7.2 billion.
A Microsoft mobile phone factory (former Nokia mobile phone plant) in Bac Ninh province, North Vietnam.
Ditching the ‘Make in India’ dream: Mobile phone manufacturing moving out to Vietnam
Tech2, 19-January-2015
The Indian cellular industry has expressed concern that manufacturing is moving out of the country to Vietnam and says the government needs to create a business-friendly environment to attract more investors.
Inside Microsoft mobile phone factory in Bac Ninh province, North Vietnam
“Manufacturing has been moving out to Vietnam due to an investor friendly and predictable regulatory environment in place and better incentives available. The big brands are now buying products for the Indian market from Vietnam,” Indian Cellular Association (ICA) president Pankaj Mohindroo told IANS.
Mohindroo, along with other industry players, said in a presentation to Finance Minister Arun Jaitley: “Vietnam offers a 30-year tax holiday window at just 10 percent tax on mobile manufacturing which further goes down to 100 percent exemption in the first four years and reduction of 50 percent in the next nine years.”
The presentation was made ahead of the union budget for 2015-16 due in February.
According to ICA, India’s mobile manufacturing industry is only 1/12th of Vietnam and 1/60th of China.
“A 10-year tax holiday in a block of 15 years should be granted on all profits and gains from manufacturing or rendering of services in or in relation to the mobile phone industry for all fresh investment made in plant and machinery and other equipment of a durable nature for all three environments,” Mohindroo has recommended to Jaitley.
The three environments are special economic zones, domestic tariff areas and export-oriented units.
The ICA is the apex body of the mobile industry comprising manufacturers, brand owners, technology providers, value-added service and solution providers, distributors, retail chains and eminent consumers of mobile handsets.
It has members like Samsung, LG, Microsoft Devices, HCL Infosystems and Apple Europe Ltd, among many others.
India’s position in mobile phone exports has fallen from seventh in 2009 to 14th in 2013. The value of exports was $3.40 billion in 2009 and fell to $2.28 billion in 2013.
The estimated domestic market for mobile handsets was Rs.75,000 crore ($12 billion) in 2014, of which handsets worth Rs.58,550 crore were imported. For 2015, the estimated market size is Rs.1 lakh crore, with imports accounting for Rs.75,500 crore.
As of November-end 2014, there are 964.20 million telephone subscribers in India, of whom 937.06 million are wireless subscribers.
The ICA, in its budget recommendations, said: “India achieving a 25 percent share in global mobile phone manufacturing by 2019 from the current share of three percent” should be the aim of the ‘Make in India’ initiative in the mobile industry.
This will help in the creation of 1.3 million jobs for people in the mobile handset sector.
Mentioning that mobiles with a screen size of between six and seven inches are sometimes classified as computers and mobiles above seven inches are always classified as computers, Mohindroo said: “Putting mobile tablets under the computers category has put obstacles for the domestic manufacturing industry to take off, as it works out to be cheaper to import than to produce domestically.”
“Mobile phones, mobile tablets and computers are the same category. We recommend that they should be charged the same duty as applicable for mobiles,” he added.
IANS
Microsoft seeks Vietnamese gov’t approval to bring old equipment to Nokia plant in Vietnam
(VietNamNet Bridge, 28/08/2014) – Microsoft has decided to relocate its Nokia production base in China to Vietnam, but it may not be allowed to reuse old machines and equipment at its production base in Vietnam.
Microsoft, after taking over Nokia in April, has decided that Nokia Vietnam will play a major role in Nokia’s global mobile-phone production chain.
It plans to shut down factories in Hungary and stop the operation of some units at factories in China, while the factory in Mexico will be turned into a repair center.
This means that the giant will gradually scale down production in other countries and gather strength for the factory in Bac Ninh province in Vietnam.
The first phase of the factory relocation is expected to be completed by the end of October, while the relocation of other parts would be completed by the end of February 2015.
The number of production lines at the Bac Ninh factory would increase from six in late 2013 to 39 by the end of the year.
However, some difficulties have arisen during the relocation process.
In a document to the Ministry of Science and Technology and the Bac Ninh provincial People’s Committee in mid-August, Microsoft said the process has been interrupted because the machines being used at the factory in China cannot be imported to Vietnam.
Under Circular No 20 which takes effect as of September 1, the used machines and equipment will only be allowed to enter Vietnam if they have usage time of no more than five years and they are at least 80 percent brand-new.
Under legal documents, dozens of Nokia’s production lines could not be brought to Vietnam.
In a document to government agencies, Microsoft, while affirming that their equipment is all modern, proposed to exclude the equipment out of the scope of implementation of Circular No 20.
The group emphasized that the import of the used production lines serves Microsoft’s business strategy on restructuring its factories around the globe, and that it is not bringing production lines to Vietnam because they are out of date.
In its document, Microsoft asked for a reply to its proposal before September 1, 2014.
Arguments have been raised about whether to allow Microsoft to bring used equipment to Vietnam.
The Bac Ninh provincial authorities have expressed their support to the technology giant, having sent a dispatch to the Ministry of Science and Technology (MST), urging that the proposal be approved soon, so that the enterprise can implement its business strategy as scheduled.
Meanwhile, some experts have warned that if MST gives the thumb-up to the imported equipment, it would break the law. This could lead to general disrespect for Vietnamese laws.
A Nokia mobile phone factory in Bac Ninh province, capitalized at $300 million, began its production in June 2013. It churned out 10.8 million products in 2013, which brought $193 million in export turnover.
VNE
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