According to Dang Van Ha, sales manager for HuyenMobile, prominent mobile-phone retailers in Ha Noi, about 20 budget smartphones from leading makers cost less than VND3 million.

"They are a real threat to local makers as Vietnamese tend to opt for foreign brands," she said.

Meanwhile, local makers such as Viettel, FPT Mobile, Hanel Mobile and Mobiistar, recently introduced cheap gadgets, such as F8, Avio Sen S1, Avio Sen S3, V8302 and V8410, to try and compete.

"Frankly, mobilephones from Samsung, LG and Nokia are better in both design and functionality," Ha added.

On the other hand, Michael MacDonald, director of ASEAN region of Huawei, China’s biggest phone maker, said the company was about to bring out a powerful 3.5 inch touch display, 1Ghz chipset for just US$100.

According to world’s leading telecom researcher IDC, the smartphone market in Viet Nam posted annual growth of 83 per cent in recent years and expects a stronger rate this year.

However, IDC reported that market share for local smartphones decreased from 24 per cent in 2010 to 21 per cent in 2011 and was likely to be down to 10 per cent in 2012.

Market watchers attributed the weak performance of local made smartphones to the lack of investment in new design as well as new technologies, Most local phones are similar in appearance and function.

John Stefanac, director for the Asia-Pacific region of the world’s largest phone-chip maker Qualcomm said that to regain the market, Vietnamese phone makers should use advanced chipsets instead of cheap brands from China.