Samsung Vietnam needs more component suppliers
Kim Dong Hwan, Samsung Vietnam`s (SEV) deputy general director said that the increasing number of Vietnamese suppliers who provide parts and components to Samsung would not only help SEV reduce its production costs, but also develop the country’s auxiliary industry.
“However, SEV has still been hard pressed to search for local vendors who could provide hi-tech spare parts,” Hwan told the media at a visit to three firms joining in its consultation programme for vendors - an event held by Samsung experts last week in the northern province of Bac Ninh.
He said that half of SEV’s 29 Vietnamese tier-1 vendors are providing just simple spare parts and components in its supply chain. Meanwhile, Samsung has been searching for local support firms in the hi-tech area.
Samsung has some 150 support companies, both local and FDI, to maintain its production in Vietnam. This means that Vietnamese firms accounted for only 20 percent of SEV’s demand for auxiliary products, due to the weak ability of local firms.
To increase the local firms’ capacity as well as respond to the call of the Vietnamese Government for improving their competitiveness, Samsung organised the consultation programme for 130 local companies with an aim that some 50 Vietnamese companies would become SEV’s tier-one vendors by 2020.
The number of Samsung’s tier-1 Vietnamese vendors has increased dramatically, from four businesses in 2014 to the current 29 business. These vendors are participating in the supply chain for Samsung’s plants in Vietnam, including SEV, SEVT, SEHC (Samsung Electronics HCM City Complex), Samsung Display Vietnam (SDV), Samsung SDI Vietnam and Samsung Electro-Mechanics Vietnam.
Samsung has also collaborated with the Ministry of Industry and Trade (MoIT) to expand the business consultation programme, by establishing an Advisory Board to build and implement the programme on a large scale.
Chu Thi Thu Phuong, chairman of Manutronics – a tier-2 vendor for SEV, and Samsung Electronics Vietnam (SEVT), producing compact disc (CD, DVD, CD-R) and hi-tech electronics assembly, said the consultation programme helped them expand production, changing management ideas and working habits. It also helped to reduce the error rate by 63 percent, thus increasing productivity by 20-35 percent and decreasing equipment loss rates by up to 82 percent.
The Samsung Group has announced impressive business results during the first three quarter of the year, with a significant contribution by Samsung Vietnam. According to the Korean group’s integrated financial report in the third quarter of 2017, the group’s revenue was 152.45 billion USD, with a profit of 26.2 billion USD.
Samsung’s four companies in Vietnam include SEV, SEVT, SDV and SEHC, which contributed total revenues and profits of 45.6 billion USD and 4.95 billion USD, respectively. Specifically, SEV’s revenues rose 0.5 percent to 13.4 billion USD, while profits rose by 44 percent to 1.64 billion USD during this period.
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Vietnam news in brief - August 24
Read The Hanoi Times to stay up to date on developments in Vietnam.
- Growing number of FDI firms moving to Vietnam
- Vietnam Gov’t committed to facilitating Adani Group’s US$2-billion port project
- Vietnam Railway proposes US$87 million for Hanoi–Dong Dang railway upgrade
- Vietnam’s North-South high-speed railway to be designed for 350km/h
- Vietnamese gov’t urged to address impact of global minimum tax
- Samsung plans drastic investment increase in Vietnam over next three years