Samsung aims for more local links in chain

Since September 2015, Samsung has been courting various domestic firms to select eligible suppliers. The number of local suppliers in their chain has surged from 32 to 63 over the past year, including 11 first-tier and 52 second-tier suppliers.

The South Korean tech conglomerate is also offering training with Korean experts to help domestic suppliers raise their productivity and meet global standards, thus enabling it to join its supply chain. These actions reflect Samsung’s commitment to improving the rate of localisation as well as its plan to turn the country into its main production base.

Han Myoungsup, general director of Samsung Vietnam, said that Samsung hopes to co-operate with domestic suppliers that demonstrate an elevated performance after their training with Korean experts.

Most recently, three local firms have qualified as suppliers for the Samsung Electronics Ho Chi Minh City Complex (SEHC) in the Saigon High-Tech Park (SHTP): Ngan Ha Printing Packaging Co. Ltd, Phuoc Thanh Plastic Co. Ltd, and Minh Dat Precision Mold Co. Ltd.

Chau Phuoc, chairman of Phuoc Thanh, said that “As a first-tier supplier for SEHC, Phuoc Thanh is investing $71 million into a hi-tech research, application, and production plant in SHTP with an annual minimum output of 20 million products. The 5-hectare facility is slated to begin operation in June, and supply 30 per cent of the demand for hi-tech and high-quality plastics at the complex.

“We decided to ramp up our investment as Samsung has agreed to support us in improving our production capabilities, minimising our costs, and ensuring quality. Samsung has recently dispatched Korean experts to aid our business performance,” he added.

Similarly, Chu Manh Cuong, director of Ngan Ha printing packaging noted that “We have been supplying Samsung Vina for some years now. When the group expanded their complex in SHTP, we made plans to increase our business activities. Following the training offered by Samsung, we have recorded a higher performance at our facility”.

According to Lee Sangsu, SEHC’s president, these firms have made a significant improvement since the upgrade. However, it will mean nothing if local businesses fail to keep up the pace in terms of product quality, delivery time, and pricing.

In fact, most Vietnamese suppliers to Samsung partake in low value-added segments like printing and packaging because they do not have much experience with multinational manufacturers, and they suffer as a result of their deficiency in marketing, capital, and technology.

With a total investment of $7.5 billion, Samsung Electronics Vietnam’s projects in the northern provinces of Thai Nguyen and Bac Ninh are scheduled to make 200 million smartphones in 2016. Meanwhile, the $2-billion SEHC facility will focus on research and development in addition to making high-end television sets. The group is committed to achieve a localisation rate of 35 per cent by 2020.

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