Samsung seeks local suppliers

According to the Vietnam Association of Foreign-Invested Enterprises, Samsung Vietnam, the electronic giant from the Republic of Korea with an approximately US$6.8 billion investment in the country, is expected to meet with around 100 Vietnamese companies next week to work on raw material supplies, after having recently got approval to develop a US$1 billion plant in the Samsung Bac Ninh Hi-Tech Complex.

The association's vice president Nguyen Van Toan said that Samsung Vietnam will place their demands and requirements for local companies wishing to become its suppliers.

He said that Samsung will also provide support to Vietnamese companies in meeting the standards set by FDI enterprises and engaging in the supply chain.

If successful, local companies will benefit a lot from becoming a link in Samsung's value chain, Toan said.

Contributing US$23.9 billion to Vietnam's total exports, which accounted for 18% of its total exports, the Korean phone producer's active move in increasing the local procurement rate would give a boost to the development of the support industry and Vietnamese small and medium-sized enterprises. The current local procurement of Samsung is 30%.

However, amid the rising FDI inflow in the support industry, whether local companies can grab the opportunity to become raw material suppliers remained a difficult question.

In the garment and textile industry, for example, Vietnam witnessed a rising wave of foreign investment ahead of the Trans-Pacific Partnership Agreement even as local companies were still confused by a series of standards, Tran Huu Huynh, from the Vietnam Chamber of Commerce and Industry said.

A Japan External Trade Organisation (JETRO)’s survey in March showed that the localisation rate of Japanese enterprises in Vietnam was 32.2% in 2013, up 4.3 percentage points over the previous year.

The rate was low compared to 64% in China, 53 in Thailand, 42 in Malaysia and 41 in Indonesia.