Domestic firms fail to qualify for Samsung production chain

Thursday, Jul 16, 2015 08:00

Last year, the local suppliers sold spare parts worth US$35 million to Samsung. The figure is expected to increase to $45 million this year. — Photo

HA NOI (Biz Hub) — Vietnamese businesses still have a low share of just about 10 per cent in Samsung Electronics' production chain in Viet Nam.

The main reason for this is the limited ability of local firms to ensure quantity, quality and competitive prices for Samsung.

The Deputy Minister of Industry and Trade, Tran Tuan Anh, said becoming a supplier for Samsung would be a significant achievement in terms of improving the competitiveness of the country's support industry, which has been a key pillar in the country's industrialisation process.

In the context of globalisation, the support industry has acted as a foundation on which the country's development depends since it can decide the production cost and add value to products, Anh told a conference, held in Ha Noi yesterday, on the support industry for Samsung.

Samsung is one of the big foreign investors in Viet Nam, having 80 suppliers of spare parts and accessories in the country, he said.

"However, the number of Vietnamese suppliers in Samsung's production chain is low as they have not met the company's requirements. The local enterprises have joined production segments which have low added value," he said.

Businesses were not solely responsible for this situation, he said, pointing to a lack of strong policies, especially a favourable legal framework to enhance the capacity of firms and create opportunities for them to join the support industry.

The deputy minister said it was true that policies regulating the support industry had not created a breakthrough for local businesses. The ministry has submitted to the government six draft plans to develop the sector, and is awaiting approval for these, he said.

"The ministry will cooperate with Samsung to find capable suppliers," he added.

Han Myoungsup, Samsung Viet Nam's general director, said the company had worked with the Vietnamese government to develop the country's support industry.

He said four Vietnamese businesses were direct suppliers to Samsung Viet Nam, while 28 other firms had passed strict selection tests to become its suppliers.

Last year, the local suppliers sold spare parts worth US$35 million to Samsung. The figure is expected to increase to $45 million this year.

Jang Ho Young, SEV's purchasing manager, said several Vietnamese firms wanted to work with Samsung, and two companies had been trying to become Level 1 suppliers to the company.

Nine other firms had the potential to become Level 1 suppliers to Samsung, he said.

Forty-one local businesses are expected to become potential partners of SEV, he said.

"Businesses are required to meet conditions such as having a large scale, high quality, stable capital and capable leaders to become our suppliers," he added.

Jun Dea Joo, the South Korean Ambassador to Viet Nam, said his country's investments in Viet Nam had reached US$39.4 billion, with 4,000 firms involved. Two-way trade turnover has increased steadily. Last year, there was bilateral trade worth $30.1 billion, while the figure for the first five months of this year was $14.66 billion, he said.

This is the second time SEV has organised a conference to seek local suppliers. Samsung unveiled a list of electronics components the company is seeking from suppliers, and held direct talks with 200 businesses that want to become its suppliers.

After seven years of operation in Viet Nam, SEV sources 36 per cent of its components locally. Of this, nearly 10 per cent is made by Vietnamese firms, while the remaining comes from foreign firms from nine countries operating in Viet Nam. — VNS

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