Vietnam suffers support industry shortcomings

Vietnam’s small and medium sized industries are failing to engage in international supply chains
Photo: Le Toan

Since Samsung Electronics built a $670 million manufacturing plant in Bac Ninh province in 2007, beginning to turn Vietnam into its biggest manufacturing base in the world, the globe’s biggest mobilephone manufacturers expected to develop nearly 100 local vendors by 2015.

After seven years, Samsung Electronics increased its total investment from $670 million to $8 billion with to large-scale manufacturing complexes in Bac Ninh and Thai Nguyen, but only seven Vietnamese companies became vendors of the South Korean corporation. None of them can supply electronic components for Samsung’s smartphones, tablets, camera, TVs or hoovers.

Shim Won Hwan, general director of Samsung Electronics Vietnam, said Vietnamese businesses so far had only proved capable of providing packaging and printed boxes.

At a seminar and exhibition held last week by Samsung Electronics Vietnam in Hanoi to look for potential vendors, the corporation found no company capable of meeting their requirements.

The result reflects the fact that global corporations like Samsung are finding it nearly impossible to source original equipment manufacturers in Vietnam.

Last year, Samsung Electronics Vietnam spent nearly $20 billion on importing electronic equipments and spare parts from overseas vendors.

“If we can’t develop support industries, we can’t avoid reliance on overseas supply. This is a competitive weakness and means it is harder to develop a sustainable economy,” said Hwan.

About 100 local companies attended an event last week, expecting to join the global supply chain of the world’s biggest mobile phone manufacturers. But most of them admitted they could not currently meet Samsung’s requirements at this time.

“Samsung’s requirements are a major challenge. They include many criteria, including protecting the environment, R&D activities, delivery and working conditions that most Vietnamese companies can’t satisfy,” said Tran Anh Vuong, director of the Bac Viet Company, which already supplies products to Samsung Electronics Vietnam through an original vendor.

He added Samsung was not unique, as other global corporations also required similar criteria. “If Vietnamese companies want to join global supply chains, they must improve their production ability and become more innovative and competitive,” said Vuong.