LS Electric Vietnam relocates main plant to Bac Ninh to spur growth

LS Electric Vietnam plant in Bac Ninh, Vietnam. The plant was relocated from Hanoi to Bac Ninh and is capable of doubling production. Korea Times photo by Kim Hyun-bin

By Kim Hyun-bin

BAC NINH, Vietnam ― LS Electric is on the verge of completing the relocation of its new plant from Hanoi to Bac Ninh, Vietnam later this month. The site of the new plant is 30,000 square meters and the area of the production facility is twice that of the existing Hanoi plant, aiming to better penetrate the Southeast Asian market, according to company officials, Thursday.

“With the relocation, the production scale has drastically increased. The Hanoi plant was capable of sales worth $25 million annually but the new Bac Ninh plant will be able to create $45 million next year. By 2030, we aim to reach $100 million in annual sales through the plant,” Hong Soo-mong, factory director at LS Electric Vietnam said.

With the official launch of the new plant scheduled for later this month, LS Electric plans to expand its influence in the Vietnamese electricity market. LS Electric was the first Korean electric power company to enter Vietnam in the mid-1990s and has maintained its top position since 2013, occupying more than 35 percent of the low-voltage power equipment market.

The company aims to diversify its business structure throughout the power system industry by adding high-end products such as an ultra-high voltage gas insulated switchgear (GIS) along with the low voltage market. The strategy is to expand the proportion of overseas sales by using the new plant as its base.

“As Vietnam’s industrial structure changed from labor-intensive industries such as textiles to electronics and petrochemicals, demand for low-voltage power devices such as a switchgear and circuit breakers as well as general power systems such as switchboards increased. Vietnam’s electricity demand is said to be increasing more than 10 percent annually,” Kim Kyung-soo, CFO of LS Electric Vietnam, said.

LS Electric Vietnam’s main product is a medium voltage metal clad switchgear that it largely sells to major Korean electronics companies that are operating plants in the country.

“Around 60 percent of the sales go to Korean companies in Vietnam such as Lotte, Samsung and LG and the percentage continues to grow,” Hong said. “We are also trying to penetrate local Vietnamese companies as well. Our vision is to develop the plant into a production base in Southeast Asia. We plan on providing a total solution in Vietnam, including technology and services.”

LS Electric aims to establish Vietnam as its base for producing and selling key power solutions in the Association of Southeast Asian Nations (ASEAN) region, under a strategy to solidify its position as a definite leader in the low-voltage power equipment field.

The company is occupying the biggest market share in Vietnam, beating out major global companies from Europe and Japan, while aiming to accelerate market expansion through bold investment in system businesses centered on switchboards and transformers.

As a member of ASEAN, Vietnam is exempt from regional export duties and is geographically adjacent to inland areas with great growth potential such as Laos and Cambodia, which make operations in the country more beneficial, according to the company. As of 2020, ASEAN’s gross domestic product (GDP) was $3.11 trillion, the fifth largest in the world.