Local supporting industry companies should promote themselves and their products to foreign-owned manufacturing companies in Viet Nam seeking to source components within the country.

Speaking at a sourcing fair in HCM City last week, Vo Van Hoan, vice chairman of the city People’s Committee, said foreign firms in Viet Nam are increasingly looking to source components and parts locally, offering Vietnamese enterprises an opportunity to enter global supply chains.

But to grab that opportunity, they need to improve quality and offer competitive prices, he said.

The COVID-19 pandemic has severely disrupted global supply chains, leading to a slump in production activities, and this underlines the importance of having strong supply chains that do not depend too much on any one country, experts said.

Viet Nam is now attracting great attention from global buyers, including foreign firms operating locally.

Sam Hui, general manager of Global Sources, an international B2B sourcing platform company based in Hong Kong, told Viet Nam News recently that Viet Nam has the potential to be one of the most sought-after sourcing destinations for buyers world-wide.

A 2021 survey by the company found Viet Nam ranked the number one destination from where buyers plan to source from Asia, outside China, in the next 12 months, followed by India, Cambodia and Bangladesh.

Buyers said their top three pain points in sourcing from the country are product quality, choice of suppliers and delivery time.

Another 2021 survey by JETRO on Japanese investment in Asia and Oceania found that 55.3 per cent of Japanese businesses in Viet Nam wanted to expand their operations in the country in the next one to two years, the highest rate in Southeast Asia.

When asked about raw materials and components, 86 per cent said they wanted to increase local sourcing of materials and components, with 88 per cent saying they would prefer to buy from local firms.

The country has emerged as a new production hub in the global supply chain with the presence of high-tech giants such as Samsung, Intel, LG, and Foxconn accompanied by a network of their satellite companies.

Le Nguyen Duy Oanh, deputy director of the HCM City Centre for Supporting Industries Development, said more and more buyers from the US and EU have come to the country to look for new sources of supply.

Foreign firms in electronics, mechanical engineering, robotics, and other sectors have also been seeking to buy components in the local market.

She, however, pointed out that procurement of components and raw materials in Viet Nam is made difficult by product quality and poor techniques.

Vietnamese firms need to resolve quality issues, expand capacity, reduce the rate of defective goods, and address management weaknesses, she said.

Experts said suppliers should also meet the requirements of buyers if they want to enter the global supply chain.

Buyers expect them to have good supply chain management, with a resource management system in place, they said.

They must also develop their own supply system rather than relying entirely on China, they added.

Manufacturing plays a vital role in Viet Nam’s economic structure.

From being a country whose export staples were agricultural produce and goods made by large labour-intensive industries, Viet Nam is gradually moving up the value scale with products such as precision mechanical products, electronics and components.

The two-day event, which ended on Friday, was organised by the Department of Industry and Trade, the HCM City Export Processing and Industrial Zones Authority and the Saigon Hi-Tech Park.

It was attended by 20 foreign-invested firms, who were looking for more than 500 items, and 130 potential Vietnamese suppliers.

According to the Department of Industry and Trade, over four years the annual fair has connected 96 foreign-invested firms with 370 supporting industrial companies. — VNS