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Samsung Vietnam prioritizes local part suppliers, but few qualify: general director

Thursday, August 28, 2014, 10:46 GMT+7

Samsung is willing to partner with local part suppliers but there are in fact few qualified businesses, the general director of the electronics titan’s Vietnam complex has said.

Samsung is locating its most important production base in Vietnam, Shim Won Hwan, general director of the Samsung Vietnam complex based in the northern province of Bac Ninh, told Tuoi Tre (Youth) newspaper in an interview published Thursday.

Shim said it will both benefit Samsung and Vietnam if there are more part suppliers near the Bac Ninh complex, adding that the South Korean electronics firm will prioritize placing orders at local businesses if they are able to meet three standards.

These standards include product quality, delivery time, and price, he elaborated.

The South Korean general director talked to Tuoi Tre amid concerns from local support industries that Vietnamese part suppliers could hardly join the production chain of Samsung.

The Bac Ninh complex accounted for 30 percent of Samsung smartphones and up to 80 percent of its tablets sold worldwide last year, according to the general director.

The world’s leading smartphone maker is slated to put its second Vietnam complex, located in the northern province of Thai Nguyen, into operation this year, which Shim said will increase the number of Samsung products made in Vietnam and distributed globally.

While local experts are worried that the localization rate – the amount of materials and parts that can be sourced locally – at the Samsung facility remains too low, Shim said the rate is now around 39 percent.

But he admitted that this figure mostly represents the foreign direct investment (FDI) suppliers, while there are indeed very few 100 percent Vietnamese businesses supplying parts to Samsung.

The company executive, however, said it is not really necessary to pay too much attention to the localization rate.

Although the FDI businesses are supplying parts to Samsung, what is important is the fact that the employees there are Vietnamese, he said.

Samsung has recently submitted a list of 170 different types of spare parts the company thinks Vietnamese businesses are capable of making to the Ministry of Industry and Trade to look for qualified partners.

Sadly, no Vietnamese part suppliers are able to grab the chance as they are even unable to meet Samsung standards to make a smartphone charger.

Shim suggested that the Vietnamese government offer preferential treatments to enable local businesses to improve their competitiveness.

But the most important factor is whether Vietnam can train a highly skilled workforce for support industries, he emphasized.

The general director pointed out that while Vietnamese employees are smart, they lack practice and experience.

Samsung products made in Vietnam are now available in more than 50 countries and territories in Asia, Europe, and Africa, and are entering the U.S. market this year, according to Shim.

The two Samsung complexes in Vietnam are expected to post $30 billion export revenue this year.

Samsung is also slated to expand its Ho Chi Minh City facility, a screen making plant operating since 1995. The expanded plant will produce the next-generation LCD screens and include a major research and development center.

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