Vietnam Korean Small and Medium Enterprises Struggle
Providing Dormitories and Tents Instead of Commuting for Quarantine Cooperation to 'Minimize Movement'
Local Infections Increasing... Factory Operation Rate Reduced by 50%
A temporary tent accommodation set up at a domestic company's factory located in Bac Ninh Province near Hanoi, Vietnam. As the Vietnamese government requested cooperation from companies to prevent the spread, domestic companies have established temporary accommodations within their factories to operate manufacturing lines. Photo by Reader Provided
[Asia Economy Reporters Heeyoon Kim and Junhyung Lee] Company A, a first-tier supplier of Samsung Electronics that established a production base in Bac Ninh Province near Hanoi, Vietnam, airlifted about 500 tents from its headquarters in Korea to its Vietnamese factory on the 5th. One of the factory buildings originally built to expand the manufacturing line is lined with hundreds of tents, resembling a campground. As COVID-19 cases surged due to the spread of the Delta variant, the Vietnamese government banned employees working in industrial zones from moving outside and only allowed factories that secured facilities for on-site accommodation to operate. Following local government quarantine guidelines, most companies that could not stop factory operations hurriedly brought in tents to set up temporary lodging.
Most employees on Company A’s manufacturing line have been staying overnight at the factory for nearly two weeks. More than half of the managerial staff are working from home. A representative from Company A said, “To block employees’ external contact, we installed tents inside the factory to create temporary lodging and are struggling to keep the manufacturing line running. If production stops, delivery schedules will be disrupted, and it will be difficult to produce products that include these parts, so we have no choice but to keep the factory operating.” Company A plans to continue factory operations through two weeks of on-site lodging followed by shift work or extended working hours.
As the COVID-19 spread continues in Vietnam, Samsung Electronics’ suppliers in Bac Ninh Province and Korean small and medium-sized enterprises (SMEs) are struggling to contain the spread by setting up accommodations at factories and operating manufacturing lines. About 150,000 workers employed in the industrial complexes of Bac Ninh and Bac Giang Provinces, where major suppliers of Samsung Electronics and Apple are concentrated, have been living and working in temporary accommodations at or near the factories since early this month, following government directives.
The COVID-19 spread in Vietnam is explosive. According to Worldometer data, as of 0:00 GMT (2 a.m. Korean time on the 23rd), the total number of confirmed COVID-19 cases in Vietnam reached 74,371. On the previous day, 5,357 new cases were added.
Samsung Electronics also banned all factory employees from commuting after 48 confirmed cases were reported at local factories and isolated infected employees in separate facilities. A local source said, “At Samsung Electronics’ Ho Chi Minh factory, vaccination for Vietnamese workers is underway.”
As local COVID-19 community infections spread and vaccine supply remains difficult, factory operations of Korean SMEs in Vietnam have become even more challenging. The CEO of Company B, a Korean road paving materials company operating a factory in Bac Ninh Province, said, “Two-thirds of managerial staff are working from home, and all production workers are living and working in tents set up inside the office. The local government recommends employees rotate every two weeks and stay at the company during that period. Since stopping the production line would cause significant damage, they are forced to live in tents, conducting COVID-19 tests once a week and making every effort to maintain quarantine.”
According to the Korea Trade-Investment Promotion Agency (KOTRA) Ho Chi Minh Trade Center, 1,350 Korean companies in Ho Chi Minh City and 490 Korean companies in Binh Duong Province have faced one-month business suspensions or reduced factory operations, steadily increasing overall costs. Especially since the Vietnamese government only allows factory operations if product manufacturing, meals, lodging, and weekly COVID-19 testing are possible, the damage is expected to worsen if the COVID-19 spread prolongs.
Kim Deokryong, head of the Vietnam office of the Korea Federation of SMEs, said, “As the COVID-19 spread intensifies mainly in Ho Chi Minh City and the southern region, domestic companies’ factories are operating at less than half capacity. Since local infections are increasing, companies’ self-quarantine measures, including workers’ lodging inside factories and self-administered COVID-19 tests, are expected to continue for the time being.”
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