The Vietnamese Minister of Industry and Trade has dismissed recent press reports that no local part suppliers are able to make even the screws and bolts ordered by South Korean electronics giant Samsung to serve its production in the Southeast Asian country.
Vietnamese part suppliers have been capable of producing such parts over the last few years, Minister Vu Huy Hoang asserted in a televised Q&A show on Sunday.
“I must say Vietnamese firms are able to produce screws and bolts, and have been making such parts with assured quality for years,” Minister Hoang said in response to a question from a part supplier in the Citizens Ask – Ministers Answer program on national TV channel VTV3.
The question was from a business owner, whose firm is among 200 Vietnamese part suppliers unable to grab the Samsung order to supply screws and bolts to the electronics giant, as recently reported by local media.
The minister, however, added that “whether these parts can enter the production chain of Samsung is a different story.”
And it is the production cost that matters, he said.
“It’s obvious that if Vietnamese firms cannot ensure a competitive production cost, they can hardly enter any global value or distribution chains,” Hoang elaborated.
Vietnamese part suppliers make their products at high costs whereas their manufacturing capacity is low, thus failing to produce anything at competitive prices, according to the minister.
“That’s what Samsung meant when they said we could not supply parts as per their orders,” he concluded.
Vietnam is now home to the production plants of many of the world’s leading hi-tech manufacturers such as Samsung, Intel, LG, and Nokia, but the localization rates, or the amount of materials and parts that can be domestically sourced, at these firms remain considerably low.
In August, the Vietnamese business of Samsung began seeking domestic suppliers for 170 different types of spare parts for its products, but not a single Vietnamese business was qualified.
Shim Won Hwan, general director of the Samsung Vietnam complex based in the northern province of Bac Ninh, was quoted by Tuoi Tre(Youth) newspaper as saying in an interview on August 28 that Samsung is willing to partner with local part suppliers, but there are in fact few qualified businesses.
Vietnamese part suppliers are even unable to meet Samsung standards to make a smartphone charger, according to Shim.
Minister Hoang did not mention such a claim in his Sunday Q&A program.
The Bac Ninh complex accounted for 30 percent of Samsung smartphones and up to 80 percent of its tablets sold worldwide last year, according to the general director.
The world’s leading smartphone maker is slated to put its second Vietnam complex, located in the northern province of Thai Nguyen, into operation this year.