Want to be in the loop?
subscribe to
our notification
Business News
OPPORTUNITIES FOR LOCAL SUPPORT INDUSTRY FIRMS
A few years ago, Samsung, a world-leading electronics company, encouraged local Vietnamese firms to produce spare parts for its factories. However, the firm struggled to find Vietnamese suppliers capable of making simple components like screws, chargers and keyboards to adequate standards.
This sparked concern about the country’s support industry being unable to meet Samsung’s strict requirements, even for the simplest components.
But difficulties are also opportunities for those who are awake and many businesses and investors bet on the support industry, especially after the Government issued many preferential policies and investment incentives.
Speaking at a recent conference on the support industry, Prime Minister Nguyen Xuan Phuc said the capacity of the country’s support industry has gradually improved.
Notably, the Samsung’s localisation rate is now at 58 per cent.
The PM said Viet Nam aimed to have highly competitive support industry products by 2020, meeting 45 per cent of necessary demand for production and local consumption.
Some domestic manufacturers have taken the bull by the horns and are determined to become suppliers of multinational groups in Viet Nam.
Chau Ba Long, general director of Minh Nguyen Support Industry Joint Stock Company in HCM City, one of Samsung’s tier-1 suppliers, said his company was established with a determination to become one of leading part suppliers as well as a trusted brand in the region.
Established in 2015, Minh Nguyen now produces millions of spare parts for home appliances products, digital products, mould making, car parts, refrigerator products, vacuum cleaners, washing machines and televisions for Samsung.
The company now has 340 workers and more than 75,000sq.m of workshops.
“One of the reasons for our success was human resources. The company in recent years spent much employing high quality workers and foreign experts with long-term experience at multinational groups to ensure sustainable development,” Long said.
Truong Thi Chi Binh, vice chairwoman cum general secretary of Viet Nam Association of Support Industry, said when Samsung came to Viet Nam, only a few businesses dared to take risks. If they met Samsung’s requirements, they could supply spare parts for Samsung. If not, their products would be rejected. However, not everyone could do it. Minh Nguyen could do it and dared to invest.
“Some successful companies decided to invest and pursue their goals as Samsung has always been open for all Vietnamese firms to join in their global supply chain. The common characteristics of Samsung’s tier-1 suppliers were being ready to invest in improving their production and human resources,” Binh added.
A Samsung representative said at present, Samsung Electronics has nine mobile phone factories worldwide, with Samsung Viet Nam the largest and most modern, contributing half of its total production worldwide.
He said to maintain such a large-scale production system, Samsung needs the support of its network of suppliers. Currently, 35 Vietnamese enterprises are tier-1 suppliers. The total number of Vietnamese suppliers was 190 enterprises participating in Samsung product supply chain.
“Our principle is very simple. Samsung is actively seeking and co-operating with competitive businesses regardless of country or corporation,” the representative added.
Minister of Industry and Trade Tran Tuan Anh said in addition to support policies for the industry, the ministry would clarify some key sectors which should be prioritised to bring breakthrough developments. Some sectors which Viet Nam has potential include electronics, automobile, garment and textile, leather shoes and energy.
Anh said the ministry had asked the Prime Minister’s petition to establish research and development centres for the support industry.
However, Pham Manh Thang, a specialist in improving productivity, said many Vietnamese firms in the support industry have been not active in joining global supply chains.
Statistics from the ministry showed that Viet Nam now has some 1,800 part suppliers. However, only 300 firms are in the supply chains of multinational groups.
“Foreign direct investment (FDI) enterprises need local suppliers when investing into Viet Nam. Meanwhile, Vietnamese suppliers still wait for FDI firms to find them, but don’t actively seek to be their partners,” he said.
On the other hand, Vietnamese spare part producers are set to face fierce competition from China, Thailand and Indonesia when tariff barriers are removed.
“Being in a flat playground, we need to look outside, because not everyone comes to your house. I have a chance, you also have a chance,” Thang said, adding: "If Indonesian, Thai and Chinese export firms overtake domestic enterprises, we should blame ourselves because their costs are much lower."
From the angle of businesses, Binh said local firms should have long-term strategies.
“We took Vietnamese firms to the EU and Japan to seek for partners and all had orders. Small companies which can’t do big things should do their job well. If they can do big things, their orders will increase,” she said.
Source: VIR
Related News
VIETNAM’S GDP TO GROW 5.5% THIS YEAR – WB
This forecast is based on the assumption of a moderate recovery in manufacturing exports in 2024, fueled by rebound growth of 8.5% year-on-year in the fourth quarter of 2023 and 17.2% year-on-year in the first quarter of 2024, reflecting strengthening global demand, said Dorsati Madani, senior country economist at the WB in Vietnam.
FARE REFUND FOR VISA REJECTION
Cathay Pacific will offer full refunds for cases of visa rejection to provide you with the confidence to explore the world with ease. If you are planning to fly to a destination that requires an entry visa, you can now book with greater peace of mind.
FOUR COMMODITIES POST Q1 EXPORT VALUE OF OVER 5 BILLION USD
The total export turnover of agricultural, forestry, and fisheries products in the first three months of 2024 is estimated to reach 13.53 billion USD, an increase of 21.8% compared to the same period of 2023.
MOIT PROPOSES SCHEME TO BOOST RENEWABLE ENERGY PROCUREMENT
The proposed Direct Power Purchase Agreement (DDPA) mechanism, outlined in the draft decree, targets organisations and individuals consuming electricity from the 22kV power grid or higher, with a monthly consumption averaging 500,000kWh. However, residential households are excluded from direct procurement.
REAL ESTATE BONDS PLACE PRESSURE ON ISSUING FIRMS
The ministry’s recent report underscores concerns within Vietnam’s corporate bond market for 2023 and 2024. It emphasizes the critical need to address hindrances to the real estate sector in line with the objectives provided in Government Resolution No. 33/NQ-CP, which aims to stabilize the industry.
DA NANG CUSTOMS FOCUSES ON DEVELOPING CUSTOMS-BUSINESS PARTNERSHIPS
Da Nang Customs Department issued an action plan for developing customs-business partnership in 2024. One of the new events this year is the workshop on “Settlement reports for enterprises engaged in outsourcing, export production and export processing” held in Da Nang Customs Department on April 16, 2024.