Samsung ordered a list of 170 parts from Vietnamese suppliers in August to increase localisation.— VNA/VNS Photo Tuan Anh

HA NOI (Biz Hub) — The Ministry of Industry and Trade (MoIT) has announced a list of 144 parts, which will be produced by local suppliers in partnership with Samsung Electronics Viet Nam.

Information revealed on the ministry's website showed that 91 of the total number of agreed parts would be used for the smartphone Galaxy S4 production, while the remaining 53 parts would be for the 7-inch tablet.

The parts range from simple to complex mechanics, such as battery, earphone, USB data storage devices and insulation tape. Parts used for cable data transmission are included as well.

The ministry said it would co-operate with Samsung to connect Vietnamese parts suppliers with the company.

This is the first time MoIT published a detailed list of the parts on its website. This decision to publicise the list is aimed to encourage the participation of partners from both Vietnamese and foreign direct invested enterprises, which could meet Samsung's requirements.

Parts suppliers could directly contact the ministry to register. It would also continue to update information regarding the demands from Samsung to help businesses planning to join in the company's production chain.

Samsung ordered a list of 170 parts from Vietnamese suppliers in August to increase localisation.

However, no Vietnamese parts suppliers were able to seize the opportunity. The suppliers were even unable to meet Samsung's standards in making a smartphone charger.

There are 67 enterprises providing parts to Samsung. Most of them are South Korean, Japanese, Singaporean and Malaysian firms. Only four Vietnamese companies supply packaging to Samsung.

The main reason has been the lack of clear understanding of most of the domestic firms of the conditions and requirements set by Samsung.

Therefore, the company conducted a meeting in September with representatives from the ministries, the Viet Nam's Association of Foreign Invested Enterprises (VAFIE) and hundreds of supporting businesses.

Shim Won Hwan, general director of the Samsung Viet Nam complex, said that they produce most of its parts in Viet Nam themselves. This decision was based on the hefty investment costs required for the parts' production, which local suppliers could not cover.

Hwan said local suppliers should learn from vendors and study all the processes involved in the production – from simple methods to complicated procedures.

He also introduced eight requirements, technology, quality, response and delivery. Also part of the requirements are the cost, environment, finance and law. There were also 13 other conditions set for the suppliers to follow.

Nguyen Mai, VAFIE's chairman, said Samsung would produce hundreds of millions of phones in Viet Nam. Therefore, the tech giant will need hundreds of supporting factories.

This would be a great opportunity for Bac Ninh, Thai Nguyen provinces and other localities in the city to develop the supporting industry as the sector's projects have been mostly implemented by the FDI.

Mai disclosed that the Foreign Investment Agency and VAFIE would co-operate with the Mechanics Association and provincial departments in charge of planning and investment to conduct surveys on mechanics enterprises eligible to serve as Samsung's suppliers.

Approximately 35 per cent of Samsung's mobile phones supplied in the world market were assembled and produced in its factories in Viet Nam.

The figure is expected to increase to 50 per cent in the future. This anticipated increase is the reason for the company's higher demand for parts. — VNS