Vietnamese firms’ presence in global chains remains modest

Only about 300 of the over 1,800 businesses working in supporting industries in Vietnam have joined production chains of multinational enterprises, a figure described by analysts as too modest.

Vice Chairwoman and Secretary General of the Vietnam Association of Supporting Industries (VASI) Truong Thi Chi Binh released the information at a recent workshop, noting that the problem lies in the capacity of those companies themselves.

A survey of the VASI shows that the organisation, trading and capital absorption capacity, along with the human capital, of many businesses are weak.

Many of them lack appropriate management standards, but when invited to build those standards, they reject the offer, claiming that this work is costly. And when multinational companies come to place orders, they fail to meet their partners’ demand because of the lack of management standards, Binh noted.

Most of the companies in supporting industries are also unable to manufacture products at the prices fixed by purchasers or compete with prices of the same products of other suppliers.

She attributed this fact partly to the high input expenses and cumbersome production.

Pham Nguyen Anh from the International Finance Corporation of the World Bank Group said a number of supporting industry businesses in Vietnam have clear strategies and visions. They have also gained international quality certifications or are striving to seek such recognition. However, they are still weak in practices.

Additionally, they are also weak in the management of supply chains and inventory.

All of the abovementioned shortcomings have hampered Vietnam’s supporting industry firms in satisfying big orders.

In 2018, many domestic auto makers like VinFast and Thaco moved to expand their assembly plants, Binh said, asking the Ministry of Industry and Trade to further assist supporting industry companies to connect with these enterprises to promote supporting industries in Vietnam.

The country has also attracted investment from many giant groups like Samsung or LG, and the ministry should persuade them to allow Vietnamese firms to join their chains.

Entrepreneurship in the manufacturing sector also needs to be encouraged since if there is not a big enough number of businesses in supporting industries, “Vietnamese enterprises will always only be followers in global games”, Binh added. 
VNA