(Yicai) April 24 -- Chinese display manufacturers BOE Technology Group and TCL Technology Group are widening output in Vietnam to avert hiked tariffs on China-made goods in the United States.

BOE recently started building the second phase of its smart display project in Vietnam, marking its first self-built intelligent factory overseas, with a total investment of CNY2 billion (USD280 million). TCL announced it will open its screen manufacturing base in the Southeast Asian country this month.

Through the project, BOE will enhance its global presence and services, Chairman Chen Yanshun said, adding that Vietnam is a strategic location for BOE's expansion, and smart terminals are a key focus in the company's transformation toward the Internet of Things. The phase one project feeds parts to BOE's TV set assembly plant in Mexico.

The second phase, which will add an annual capacity of three million televisions, seven million displays, and 40 million e-readers, should be ready for mass production by 2025. It will send products to the Asia-Pacific, European Union, and North America. The project is expected to create about 4,000 local jobs.

TCL entered the Vietnamese market as early as 1999. Chief Operating Officer Wang Cheng said earlier this month that the firm has invested over USD100 million in Vietnam through its two major platforms, TCL Technology and TCL Industrial Holdings, creating over 10,000 local jobs. Local revenue should exceed USD1.5 billion this year.

Even original equipment manufacturers, such as HKC and MTC, have set up factories in Vietnam to avoid paying the higher import duties implemented on China-made products.

The tariff on China-made TV sets exported to the US is as high as 11.4 percent whereas that for goods made in Mexico is zero, Zhang Bing, research director at advisory group Omdia China. TV sets made in Vietnam carry a 3.9 percent tariff.

"The future changes in the quantity of TV sets exported from China to the US will largely depend on changes in tariffs," Zhang added.

Anticipating Risks

Investing abroad means new risks.

"It remains to be seen whether trade protectionism will extend to the Association of Southeast Asian Nations, including Vietnam," Zhou Nan, secretary-general of a branch of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, said to Yicai.

Yang Shucheng, secretary-general of an association of Chinese mobile phone companies based in India or Vietnam, agreed that it is still unknown if tariffs on exports from Vietnam to the US will increase.

Moreover, industry insiders said that the rapid influx of new investments has driven up land and labor costs in Vietnam, and even led to a shortage of labor in industrial parks.

Editor: Emmi Laine