Why did Pandora choose Vietnam as a manufacturing base ahead of other countries in Southeast Asia? What role will the Vietnam facility play in its overall global supply chain?
In order to minimize supply risks, Pandora has decided to build its third manufacturing facility in Vietnam. This is the first facility outside of Thailand and was carefully selected from 27 countries.
The facility will be located at the Vietnam Singapore Industrial Park 3 (VSIP) in Binh Duong province, about 40 km north of Ho Chi Minh City, with investment of $100 million. The project will create more than 6,000 craftsman jobs with an expected annual capacity of 60 million pieces of jewelry and use 100 per cent renewable energy.
Pandora launched a new growth strategy entitled “Phoenix” last year. To support the strategy, we decided we needed to further expand our production capacity, and considered minimizing risks by diversifying our sources of supply in the face of complicated global developments.
With the majority of our supply concentrated in Thailand, geographic expansion and diversification was essential.
After looking carefully at 27 countries, we finally chose Vietnam. Factors included it being close to Thailand, its history, the skill of its artisans, its handicraft products, and its production capacity. Another point is that its infrastructure is very good and ready for us to invest.
Regarding Vietnam’s position in Pandora’s global supply strategy, production facilities were previously located in Bangkok and Lamphun province in Thailand. Even though they are two facilities, they are still in only the one country, so we decided to build a third facility outside of Thailand.
We expect the Vietnam facility to account for one-third of Pandora’s global capacity.
And why choose Binh Duong?
After deciding on Vietnam, the next question was where exactly. We first chose ten provinces with skilled workers and access to an international airport, for export purposes, before continuing to the classic question of north or south, as Vietnam stretches geographically from the north to the south. Once this was answered, the next question was which of more than 280 different industrial parks should we build in. We finally chose Binh Duong.
There were three reasons behind us choosing VSIP Binh Duong. The first was the skill levels of local artisans. Pandora has access to a large pool of highly-skilled craftsmen in Binh Duong province, and this factor is related to competition and recruiting talent.
The second factor is the excellent infrastructure in Binh Duong. We paid a visit and saw it first-hand. Looking at the data is one thing, but visiting the site and seeing the readiness at VSIP Binh Duong in person is another.
Third, VSIP is convenient in terms of geographical location and is near an airport. Our products are mostly for export, so a location near an airport was very important. We also received enthusiastic and dedicated support from the local government as well as the VSIP team and the Danish embassy.
Expanding Pandora’s production capacity was critical to meeting its evolving needs. We are very excited about this new investment.
Pandora’s facility in Vietnam will be built in early 2023 and put into production in 2024. Can you tell us about production costs in Vietnam?
We look forward to speeding up construction to go into production, but construction will still take about two years. Only at the end of 2024 will the facility come into operation.
When productivity is at its maximum and we have reached our break-even point, production costs in Vietnam are really competitive. The portfolio of products to be made in Vietnam will also balance that in Thailand, benefiting the industry as a whole as consumer satisfaction is enhanced.
You sold 102 million pieces of jewelry last year. What will the figure be with the new facility?
Pandora’s sales in 2021 were 102 million pieces of jewelry, hand-finished at its two crafting facilities in Thailand. We will also expand our existing facility in Lamphun, increasing our total investment to DDK 1 billion ($160 million) over the next four years.
This will allow Pandora to increase its total production capacity by around 60 per cent and support the company’s long-term growth ambitions. By diversifying geographically, Pandora will also become more resilient to potential supply disruptions. And we expect the production facility in Vietnam to account for one-third of global capacity.
While the new facility will strengthen the relationship and cooperation between Vietnam and Denmark, how will it contribute to Vietnam’s economy?
We had the Danish Ambassador with us at the Vietnam project’s announcement, so you can see how important it is from the Danish perspective and also from the Vietnamese perspective. As the Ambassador said in his speech, more and more Danish investors have been coming to Vietnam, which shows it has become an attractive destination, especially due to the economy’s green transition.
The Ambassador emphasized that he is delighted to see Pandora make this important investment decision in Vietnam, and hopes that the establishment of our first manufacturing facility here will contribute to further expansion and therefore strengthen the close cooperation between Denmark and Vietnam.