Vietnamese firms have potential to join in global supply chain

Friday, Feb 15, 2019 10:22

Samsung Viet Nam’s leaders visit Minh Nguyen Support Industry Joint Stock Company in HCM City. — VNS Photo

Although it is not easy to participate in the supply chain of multinational corporations, Vietnamese enterprises are fully capable of supplying large companies. Chau Ba Long, General Director of Minh Nguyen Support Industry Joint Stock Company in HCM City, one of the few tier-1 suppliers of Samsung Viet Nam, talks about the experience of an enterprise operating in this field.

Some have said Vietnamese firms can’t make simple components like screws when talking about Viet Nam’s support industry in recent years. Do you think this statement is still true?

Chau Ba Long, General Director of Minh Nguyen Support Industry Joint Stock Company. — VNS Photo

I don’t think so. There have been many Vietnamese suppliers of electronic components. For example, Samsung Viet Nam, which is not only a factory for assembling electronic components but also directly manufactures important electronic spare parts. Thanks to the direct production of key electronic components of smartphones such as 3D glasses, cameras, metal frames, monitors and batteries, Samsung’s localisation rate has increased to 58 per cent. Among these, many factories including Minh Nguyen Company has also produced many electronic spare parts.

In addition, we are producing high quality plastic components and moulds. We provide products to many industries including digital household goods, electronic components and car parts for some famous brands such as Mitsubishi.

Because of that remark, though now it is not true, we had momentum to build a successful Minh Nguyen Company today.

However, according to the Ministry of Industry and Trade, of the 1,800 firms in the country in the supply chains of multinationals, only 300 are Vietnamese. Why, after years of working to become an industrial country, is Viet Nam’s supporting industry still so sluggish?

I think there are many reasons for the situation. Firms operating in the support industry like us need preferential policies from the Government in terms of interest rates, loan access and land funds for developing warehouses as well as regulations relating to investment to import machines and equipment from foreign countries to facilitate our operation.

I’m an entrepreneur coming back to the country from Australia. At the beginning, I encountered a lot of difficulties when I did not know how to apply for land and administrative procedures for support industry. After that, I applied for the business establishment in HCM City’s Hi-tech Zone. Thanks to the assistance and support by HCM City People’s Committee, departments and agencies Minh Nguyen Company could go into production for Samsung Viet Nam.

In your experience, what are the biggest obstacles for businesses?

The first is the capital problem. If an enterprise does not have enough capital, it is difficult to access the supply chain because they will have continuous orders. If foreign companies develop, we also have to develop. If we don’t have enough capital, we can’t go on.

The second is human resources. Businesses operating in the support industry must have enough manpower with knowledge and experience to reduce risks of unexpected problems. If the problems affect quality, it is certain that our output would also be affected.

What should small and medium-sized support industry enterprises which are not tier-1 suppliers do to become suppliers for big corporations like Minh Nguyen Company?

When we join in the supply chain of corporations, they are interested in my mindset and efforts. Why do I say mindset? Our thoughts have to change. Accordingly, I will have to change technology, market and human resources. If our human resources are not provided adequate training, they can’t operate new technologies. Then we can’t produce high quality goods which meet customers’ requirements.

When we want to participate in the supply chain, foreign corporations have a lot of evaluation criteria for an enterprise. All people in a company from management level to workers must have determination to improve. Whatever we do not know, we need to learn and train.

Luckily, the foreign groups have experts to support local companies joining in their supply chain. When I have difficult problems, I will ask and they can support immediately. Minh Nguyen Company has been given consultancy from Samsung and the Ministry of Industry and Trade and Department of Industry and Trade. Through production improvement consultants, enterprises should try to learn and change their production and quality control over a period of time to evaluate themselves. Foreign firms will step by step evaluate, then decide if they can become tier-2, tier-3 and tier-1 suppliers.

How do you assess the potential of the support industry in Viet Nam?

Viet Nam’s support industry has much potential for development. It is important that we control the source of input materials, then control prices and create competitive advantages among countries in the region. Viet Nam has another advantage that as of now, its costs are low.

The problem is how Vietnamese enterprises can take advantage of this time to balance production costs and then have good preparations in management and production process to not make the costs increase. Accordingly, we can compete with other countries in the region, especially Thailand.

Minh Nguyen Company got on the map of support industry companies quickly. What will your company do in the short term and medium term? What do the next five years hold for Minh Nguyen?

Minh Nguyen Company approached Samsung Viet Nam in 2014 before it started construction in HCM City. We became a support industry supplier for Samsung in 2016. Currently, we focus on main areas such as visual digital, household appliances, televisions, computers and high-tech plastic components. In addition, our company provides products including vacuum cleaners and spare parts.

In the future, we have a desire to connect the majority of businesses in the same industry, or support industry in particular to combine to form a separate ecosystem. But to do that, each enterprise must have a change in thinking, plans, risk taking and sharing strengths and weaknesses of each enterprise to support each other.

Now I have not thought of a name for this ecosystem. Maybe I need to think a little more. But when it becomes an ecosystem, if we receive an order, we can share with the remaining businesses. One could do first stage, another do the rest. However, there will be a leading business to control the whole process. — VNS


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