When Samsung Electronics put its Vietnamese facility into operation in 2009, the domestic supporting industries held great hope that they can partake in the spare part supplying chain for the world’s leading mobile phone manufacturer.

But it now seems hopeless as most of the current part suppliers for Samsung Electronics Vietnam (SEV), based in the Yen Phong High-tech Park in the northern province of Bac Ninh, are those operated by its home investors.

SEV now deploys 60 part suppliers for its mobile phone, home appliances, and camera productions, 55 of which are 100 percent South Korean invested businesses that are also based in the high-tech park.

The five Vietnamese businesses in the chain are in charge of simple production stages such as packing or wrapping.

The reality even falls short of expectation of the South Korean giant, which also hoped that its Vietnamese facility will become a magnet to attract local businesses from the supporting industries, said Nguyen Van Dao, deputy CEO of Samsung Vina, a Samsung Electronics subsidiary.

 “No companies would want to import spare parts as it will waste time and money,” Dao said.

Below standard

SEV CEO Shim Won Hwan frankly pointed out that local businesses still fail to meet the high standards to be part of the SEV’s supplying chain.

The CEO attributed the shortcoming of the local suppliers to what he said are the unattractive incentive policies from the government to lure more businesses to the supporting industries.

The localization rate of SEV was 16 percent by the end of last year, and the target to increase the rate to 20 percent in 2013 seems hard to reach.

The CEO said the localization rate of the Samsung’s manufacturing plant in China is as high as 40 percent, with the facility producing the same products as its Vietnamese counterpart.

He also added that the situation can be improved in the future, when several foreign partners of Samsung will share their experience and transfer technology to the Vietnamese businesses.

These local companies will then become the official partners of Samsung, he said.

But the problem is when exactly the local businesses will be able to grab that chance, when Samsung has broken ground on its second facility in Vietnam.

The US$2 billion manufacturing plant, scheduled to become operational in northern Thai Nguyen Province by the end of this year, is expected to produce 100 million products per year.