VietNamNet Bridge - More Vietnamese manufacturers who found it difficult to become part of Samsung’s global supply chain, are becoming component suppliers for Samsung.

 

 

Nhip Cau Dau Tu quotes an article published in Business Korea as saying that South Korean investors in Vietnam are worried about the slow product localization process in Vietnam, and attributed it to low technologies used by domestic enterprises.

Some sources quoted in Business Korea said that Samsung has been in Vietnam for seven years, but only 36 percent of parts suppliers are from Vietnam. Most of the enterprises are foreign invested enterprises (FIEs), not Vietnamese-owned.

Thirty-two enterprises owned by Vietnamese now provide components and accessories to Samsung. Only four of them are major suppliers, a modest figure compared with the total number of 90 major suppliers. 

The remaining 28 enterprises work as secondary subcontractors which provide components through FIEs.

The slow product localization process in Vietnam has caused concerns to Samsung and forced the electronics manufacturer to import components to run its factories in Vietnam.

In 2013, Samsung Vietnam exported $23 billion worth of mobile phones, while the figure rose to $32 billion in 2014.

However, the manufacturer had to import $15 billion and $20 billion in 2013 and 2014, respectively, to make exports.

The newspaper reported LG Electronics as also having the same problem. The group announced it would raise the locally made content in products to 50 percent when kicking off investment in a manufacturing complex in Hai Phong City.

However, only one Vietnamese-owned company now provides components to LG.

Meanwhile, though admitting that it is difficult to find Vietnamese enterprises capable enough to join the South Korean supply chains, State officials are optimistic about the future.

Dat Viet quoted a report as saying that 41 Vietnamese enterprises now cooperate with Samsung. These include two first-class vendors and 28 second-class. The figure is much higher than that of last year.

The Thang Long Packaging Production and Import/Export JSC is one of them. After becoming Samsung’s first-class vendor, Thang Long, with 490 workers, has prospered with turnover increasing by 3.8 times in 2009-2014, from $3.41 million to $12 million, a very good result for any small and medium enterprise in Vietnam.

Viet Hung, a packaging manufacturer, began cooperating with Samsung in April 2009. It now employs 1,400 workers and made out $13 million worth of products in 2010 and $42 million in 2014.

After Samsung Electronics said it was looking for Vietnamese manufacturers which could supply 200 different kinds of components, many analysts said Samsung tried to place difficulties on Vietnamese enterprises.

Thanh Lich