Samsung Electronics Viet Nam seeks Vietnamese enterprises as its vendors to serve its increasing production in Viet Nam. — Photo baogiaothong.vn

HA NOI (Biz Hub) — The number of local firms participating in the Samsung supply chain has increased dramatically thanks to Samsung Electronics Viet Nam's efforts to seek domestic vendors.

Currently, there are 11 Vietnamese enterprises which are Samsung's tier-1 vendors, along with 52 local tier-2 vendors. Therefore, 63 Vietnamese enterprises in total were a part of Samsung's supply chain by the end of last month.

The information was released at the field survey at Ngan Ha Printing Company, Phuoc Thanh Plastic Company and Minh Dat Precision Mold Company conducted by Samsung in HCM City.

This field survey is in line with Samsung's programme to provide experts to support Vietnamese suppliers in enhancing their capacity to join Samsung's supply chain. Under this programme, Samsung for the first time has sent experts from Korea to Viet Nam to directly assist Vietnamese companies for three months to improve their production process and meet Samsung's criteria.

Lee Sang Su, general director of Samsung Electronics HCM City CE Complex, said local businesses have seen remarkable changes after the support programme.

However, Lee Sang Su said the support alone would not bring results if Vietnamese businesses did not push themselves to maintain high quality in their production and improve continuously.

Nguyen Van Dao, deputy general director of Samsung Vina, said the part supplying industry's consultative programme for Vietnamese companies has affirmed its strong commitment in response to the call of the Vietnamese Government, which increases the localisation rate and the presence of Vietnamese enterprises in Samsung's component supply chain. It also demonstrates Samsung's desire to be a part of national development as well as long-term and sustainable cohesion with Viet Nam.

Last week, president of Samsung Complex Viet Nam, Han Myoungsup, and other leaders of the company visited and surveyed two companies Ngoc Khanh Wire and Cable Co Ltd and Goldsun Packaging and Printing Joint Stock Company in Ha Noi to check the capabilities of both companies to supply components to Samsung's plants in Viet Nam.

During the capability check, Han carefully examined the production process of the two vendors and provided the evaluation as well as recommendations to help these companies improve. At Ngoc Khanh Company, apart from improving the production areas that had not met the environment criteria regarding dust and scent, he also emphasised on ensuring labour safety. He said the higher the productivity, the more important it was to ensure labour safety.

"With Samsung's experts pointing out our weaknesses, our production has increased 30 per cent. We will keep improving to meet Samsung's expectations of 50 per cent productivity growth in the future. We are confident of meeting all of Samsung's criteria to become its vendor," Vu Quang Khanh, the company's CEO, said.

While Ngoc Khanh is currently a potential vendor, Goldsun is now already Samsung's tier-1 supplier. In 2015, Goldsun's revenue was US$36 million, of which, the revenue from supplying Samsung products accounted for 45 per cent. Even with its official vendors, Samsung still provides support to improve their production process to meet its criteria in the global supply chain. Han said there is still some time-consuming stages in Goldsun's manufacturing process. This is the time to reform in order to reduce the time taken from production to the finished product.

"The number of Vietnamese suppliers has increased significantly over the previous year. Samsung is still considering the possibility of co-operating with other potential businesses, especially those businesses that have a good track record in improving production processes after receiving the support from South Korean experts," Han said.

To date, Samsung Electronics is one of the largest foreign investors in Viet Nam with two manufacturing plants in Bac Ninh and Thai Nguyen, accounting for 33 per cent of Samsung's total production globally.

In the second quarter of 2016, Samsung Electronics HCM City Complex has officially begun operating. This will not only turn Viet Nam into the world's TV and electronic appliance production base, but also create more opportunities for Vietnamese enterprises in the component supplying industry to be involved in Samsung's global supply chain. — VNS