Vietnam's largest private conglomerate, Vingroup, confirmed in a statement that it is shutting down its consumer electronics subsidiary VinSmart, as it looks to concentrate more resources on growing its electric vehicle business under the VinFast brand.

VinSmart was established in 2018 and began exporting smart phones to the US last year so the decision to close the unit comes as a surprise and underlines the huge challenges the group faces in establishing a global automotive brand. The company also makes smart TVs and other consumer electronics.

It is unclear whether the decision to pull the plug on VinSmart was based on disappointing feedback from the US market in which case it comes as a wake-up call for the group as its EV strategy is also based on success in selling smart EVs in the US and other developed markets.

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Vinfast sold 6,849 petrol-powered vehicles in Vietnam in the first quarter of 2021, after selling just under 30,000 units in 2020. It plans to start EV sales locally later this year and begin overseas sales in 2022.

VinGroup company said in a statement at the weekend the decision to close VinSmart is to "mobilise all resources" into developing VinFast, adding "this is a strategic step towards making VinFast one of the world's leading firms in electric and smart vehicles".

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The group last month said it is considering a number of fund-raising options for VinFast, including an initial public offering (IPO) in the US to raise US$2bn and also a special purpose acquisition company (SPAC).

VinGroup said it will use the assets of VinSmart in a company focusing on smart solutions for vehicles and homes, including in-car infotainment for VinFast.

The unit will continue to carry out research into smart city, smart homes and related IoT devices.