Relocation of production lines fuels local supply chain

Improving the local supply chain is one of the big topics mentioned in the workshop

Under the impact of COVID-19 and the prolonged trade war, plenty of overseas businesses have targeted Vietnam as an ideal replacement for production lines. The wave of relocation to Vietnam is growing sharply, driven by overseas behemoths like Samsung, Panasonic, and LG, among others.

Speaking at the Vietnam Industrial Property Forum 2020 workshop organised by Vietnam Investment Review, Nguyen Anh Tuan, head of the Strategy Department at Samsung Vietnam, said that in the coming time, the group will continue to invest more in the country.

Most recently, the group launched its latest research and development centre in Hanoi.

“Currently, the centre is supporting entire Southeast Asia – a promising area besides the local market,” said Tuan.

Contributing to the flourishing of Samsung Vietnam is the support of local suppliers. As of this October, the company had 42 first-class suppliers and 1,172 second-class suppliers. The target for this year is to grow the number of first-class suppliers to 50.

Accordingly, over the past time, the partners have contributed a lot to the supply chain of the company, helping it avoid interruptions – which were common during the COVID-19 disruptions. Thanks to that, Samsung's performance remained smooth.

“Improving competitiveness will remain the leading target of Samsung. Specifically, the price of new products have to be lower than in previous years. If they are equal to this year, the quality of the products must be better,” said Tuan. “The next direction is to diversify products and constantly recruit skilled labourers.”

To materialise this, the local supply chain is growing more important than ever. Thus, in the longer-term outlook, upgrading the supply chain will be a leading mission. Over the years, despite impressive improvements, the local supply chain still faced issues such as low-skilled labourers, limited infrastructure, and high logistics costs.

Also at the event, Koen Soenens, general sales and marketing director at Deep C Industrial Zones, said that improving the infrastructure is the first mission. Despite the remarkable growths such as the North-South Expressway, the local infrastructure will have to keep improving to resolve prevailing issues like traffic jams.

According to Do Nhat Hoang, director general of the Foreign Investment Agency under the Ministry of Planning and Investment, under COVID-19 disruptions, many foreign companies are wishing to enter Vietnam. Therefore, it is an essential mission to keep evolving to welcome the investment wave. Of this, obstacles have to be removed first.