Electronics giant commits to developing Vietnam's support industries at Hanoi conference.
“There are many Vietnamese enterprises with the potential to become a supply partner of Samsung,” Mr. Jang Ho Youn, Vice President of Purchasing at Samsung, told a conference on support industries on July 15 in Hanoi.
Samsung is researching and evaluating the quality of enterprises and expects to have 41 component supply partners in the future. It now has only four Vietnamese enterprises as first-tier suppliers and 28 second-tier suppliers. First-tier suppliers provide components directly to Samsung while second-tier suppliers provide components via other companies.
Further cooperation will increase the development of Vietnam’s support industries while the company’s global competitiveness will be enhanced thanks to it increasing its localization ratio, Mr. Jang emphasized.
Challenges and benefits
Samsung has very strict requirements on quality that very few Vietnamese companies can adapt to, according to four of its existing suppliers: VietHung Packaging (VietHung), Thang Long Packing (I also think I should be 'packaging' but I see the name card and the online they are 'packing') Import - Export and Production JSC (Thang Long Packing), TDBH Pattern Manufacture Mechanical Commercial Co. Ltd, and the Thanh Long Electronic Production JSC (Thanh Long).
Moreover, global competition to become suppliers to Samsung is fierce, said Ms. Dinh Thi Thuy Loan, Sales Manager at Thang Long Packing. While foreign suppliers have an advantage in language skills, she believes that domestic suppliers, such as her company, also have many things in their favor. “Price and service quality are two key factors in our company overcoming our competitors,” she said. A nearby location is another important factor, as her company can deliver goods to Samsung in about 30 minutes.
Despite the difficulties, suppliers can also benefit greatly. After five years cooperating with Samsung, for example, VietHung’s revenue has increased five-fold while the revenue of Thanh Long has increased 150 per cent.
Cooperating with large groups such as Samsung give Vietnamese enterprises the opportunity to be part of significant value chains. But there are only a small number of Vietnamese enterprises that are able to work with Samsung, accounting for less than 10 per cent of all its suppliers.
At the conference, Deputy Minister of Industry and Trade Tran Tuan Anh spoke of the role of support industries in Vietnam. “Without support industries Vietnam’s industrial sector cannot develop stably,” he said. He also stressed the role of large enterprises in increasing the participation of Vietnamese enterprises in supply chains.
Samsung was also presented with a Certificate of Merit at the conference from the Ministry of Industry and Trade for its contributions in Vietnam.