Plastic spare parts of Minh Nguyen Support Indsutry Joint Stock Company supplied to Samsung. (Photo: thegioihoinhap.vn) Hanoi (VNS/VNA) - A few years ago,Samsung, a world-leading electronics company, encouraged local Vietnamese firmsto produce spare parts for its factories.
However, the firm struggled to findVietnamese suppliers capable of making simple components like screws, chargersand keyboards to adequate standards.
This sparked concern about the country’s supportingindustry being unable to meet Samsung’s strict requirements, even for thesimplest components.
But difficulties are also opportunities forthose who are awake and many businesses and investors bet on the supportingindustry, especially after the Government issued many preferential policies andinvestment incentives.
Speaking at a recent conference on the supportingindustry, Prime Minister Nguyen Xuan Phuc said the capacity of the country’ssupporting industry has gradually improved. Notably, the Samsung’s localisationrate is now at 58 percent.
The PM said Vietnam aimed to have highlycompetitive supporting industry products by 2020, meeting 45 percent ofnecessary demand for production and local consumption.
Some domestic manufacturers have taken the bullby the horns and are determined to become suppliers of multinational groups in Vietnam.
Chau Ba Long, General Director of Minh NguyenSupporting Industry Joint Stock Company in HCM City, one of Samsung’s tier-1suppliers, said his company was established with a determination to become oneof leading part suppliers as well as a trusted brand in the region.
Established in 2015, Minh Nguyen now producesmillions of spare parts for home appliances products, digital products, mouldmaking, car parts, refrigerator products, vacuum cleaners, washing machines andtelevisions for Samsung. The company now has 340 workers and more than75,000sq.m of workshops.
“One of the reasons for our success was humanresources. The company in recent years spent much employing high qualityworkers and foreign experts with long-term experience at multinational groupsto ensure sustainable development,” Long said.
Truong Thi Chi Binh, Vice Chairwoman cum GeneralSecretary of the Vietnam Association of Supporting Industry, said when Samsungcame to Vietnam, only a few businesses dared to take risks. If they metSamsung’s requirements, they could supply spare parts for Samsung. If not,their products would be rejected. However, not everyone could do it. Minh Nguyencould do it and dared to invest.
“Some successful companies decided to invest andpursue their goals as Samsung has always been open for all Vietnamese firms tojoin in their global supply chain. The common characteristics of Samsung’stier-1 suppliers were being ready to invest in improving their production andhuman resources,” Binh added.
A Samsung representative said at present,Samsung Electronics has nine mobile phone factories worldwide, with Samsung Vietnamthe largest and most modern, contributing half of its total production worldwide.
He said to maintain such a large-scaleproduction system, Samsung needs the support of its network of suppliers.Currently, 35 Vietnamese enterprises are tier-1 suppliers. The total number ofVietnamese suppliers was 190 enterprises participating in Samsung productsupply chain.
“Our principle is very simple. Samsung isactively seeking and co-operating with competitive businesses regardless ofcountry or corporation,” the representative added.
Minister of Industry and Trade Tran Tuan Anhsaid in addition to support policies for the industry, the ministry wouldclarify some key sectors which should be prioritised to bring breakthroughdevelopments. Some sectors which Vietnam has potential include electronics,automobile, garment and textile, leather shoes and energy.
Anh said the ministry had asked for the PrimeMinister for permission to establish research and development centres for thesupporting industry.
However, Pham Manh Thang, a specialist inimproving productivity, said many Vietnamese firms in the supporting industryhave been not active in joining global supply chains.
Statistics from the ministry showed that Vietnamnow has some 1,800 part suppliers. However, only 300 firms are in the supplychains of multinational groups.
“Foreign direct investment (FDI) enterprisesneed local suppliers when investing into Vietnam. Meanwhile, Vietnamesesuppliers still wait for FDI firms to find them, but don’t actively seek to betheir partners,” he said.
On the other hand, Vietnamese spare partproducers are set to face fierce competition from China, Thailand and Indonesiawhen tariff barriers are removed.
“Being in a flat playground, we need to lookoutside, because not everyone comes to your house. I have a chance, you alsohave a chance,” Thang said, adding: "If Indonesian, Thai and Chineseexport firms overtake domestic enterprises, we should blame ourselves becausetheir costs are much lower."
From the angle of businesses, Binh said localfirms should have long-term strategies.
“We took Vietnamese firms to the EU and Japan toseek for partners and all had orders. Small companies which can’t do big thingsshould do their job well. If they can do big things, their orders willincrease,” she said.-VNS/VNA
VNA
