Vietnamese enterprises hope to become vendors for Samsung

 
Goldsun became a partner of Samsung in 2010. About 20 percent of Samsung’s phone boxes are provided by the Vietnamese packaging company.

One phone box is valued at $2, or 0.2 percent of the value of the product priced at $1,000. With 0.2 percent of value and 20 percent of market share, the Vietnamese enterprise makes up 0.04 percent of phone value.

A representative of Goldsun said the company had to compete with at least five suppliers, including one Vietnamese and four foreign enterprises.

He said to become a Samsung’s supplier, one needs to ‘make heavy investment’ and ‘do his best’, or he will be weeded out. Samsung also sets requirements on the labor environment and the issues related to human rights.

Minh Nguyen Supporting Industries JSC is another tier-1 vendor of Samsung which provides some products to Samsung Electronics HCM City CE.

The representative of Minh Nguyen also said Samsung sets very high requirements on quality. To ensure the quality of product, Minh Nguyen has to use input materials provided by a company which is a tier-2 vendor of Samsung.

In 2014, Samsung only had one Vietnamese suppliers. The figure has risen to 29 and is expected to rise to 50 by 2020. 

The problem lies in the underdeveloped supporting industries of Vietnam. Truong Thi Chi Binh, deputy chair of the Vietnam Supporting Industries Association, said Vietnam’s supporting industries mostly serve Japanese motorbike manufacturers. 

Making motorbike parts and electronic components are ‘different stories’. The ways of cooperation applied by South Korean and Japanese enterprises are also different.

Japanese manufacturers come to Vietnam to exploit the market. Motorbikes are for domestic sale because they are bulky, while electronics are exported all over the globe.

“In order to sell products to Samsung, one has to offer low prices, high quality and large output.  Vendors also must adapt to changes they require,” Binh said.

According to Binh, the critical weak point of Vietnamese enterprises is that they still follow the old way in doing business. “The entire world has shifted to other business modes, while Vietnamese have not. They only make investments and organize production if partners promise to buy their products,” she said.

“Vietnamese need to take risks and think big to gain success,” she said.

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