Manufacturers backing local suppliers

US-based Boeing is accelerating cooperation with Vietnamese suppliers and universities to provide support for long-term industrial growth.

Supply chains can be improved through international support, Photo: Shutterstock

Boeing Vietnam country director Michael Nguyen said the group was creating opportunities and encouraging vendors, such as Mitsubishi Heavy Industry, Nikkiso, Aerospace Composites Malaysia, and Korea Aerospace Industries to either invest in new projects or expand their operations in Vietnam. Boeing also encourages vendors to deeply connect with domestic suppliers to build a complete supply chain.

“The group will also work with its major vendors to support domestic companies via training courses to improve their capacity so they can provide international-standard products for the aviation sector,” Nguyen said. “We had opportunities to meet 10 universities in Vietnam and we have plans to cooperate with them to implement studies and training courses, grant scholarships, and other technical cooperation in the sector.”

Toyota Motors Vietnam and the Vietnam Industry Agency under the Ministry of Trade and Industry are implementing the contents of an MoU signed in June to renew a project to enhance domestic supporting industries.

Toyota Vietnam president Hiroyuki Ueda said, “Domestic part suppliers face difficulties in competing with foreign vendors and importing goods due to lack of experience and production capacity. The production cost for parts and components in Vietnam is double or triple compared to costs in surrounding countries. Through this project, we hope to contribute to improving suppliers’ capability and expand the local supplier network.”

It is the third year Toyota Vietnam and the agency have worked on the project. By joining it, potential suppliers of automotive parts and components will have the opportunity to connect with assemblers and manufacturers in the country and visit the Toyota Vietnam factory and its domestic suppliers. They are also supported for participation in training under local supplier development programmes.

Samsung is also providing training programmes for domestic suppliers.

However, Do Thi Thuy Huong, an executive board member of the Vietnam Electronics Industries Association, said that the traction created by a few names was not strong enough to create breakthrough change for the domestic supporting industry, and more companies needed to come on board.

According to a report by the Ministry of Planning and Investment, the loose relationship between foreign-invested and domestic enterprises is considered the biggest limit on fostering foreign investment. Foreign-invested enterprises’ localisation ratio is estimated at an average of 20-25 per cent, while the ratio in the garment and textile sector is between 40-45 per cent, household electronics sector 30-35 per cent, and automobile assembly 7-10 per cent.

“The gap between global manufacturers and domestic suppliers is large. If local suppliers want to narrow the gap and join the global supply chain, they have to try to improve their internal power, along with international support,” Huong said.

Vietnam will contribute 20 per cent of all production of iPads and Apple Watches, 5 per cent of MacBooks, and 65 per cent of AirPods by 2025, according to a JP Morgan report.

According to the General Statistics Office of Vietnam, the export turnover of mobile phones, computers, and components from Vietnam saw consecutive growth in the 2016-2020 period with an average growth ratio of 23.8 per cent. In the first three quarters of this year, the figure was estimated at $77 billion, accounting for 32 per cent of the country’s export turnover.

Boeing accelerates cooperation with Vietnamese suppliers Boeing, the world’s leading aerospace company based in the US, are accelerating cooperation with Vietnamese suppliers and universities to provide a foundation for long-term industrial growth, according to Boeing Vietnam Country Director Michael Nguyen.