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Vietnam part suppliers raise white flag even on simple hi-tech items: official

Friday, August 29, 2014, 12:02 GMT+7

Despite given chances to join Samsung production in Vietnam, local part suppliers are not qualified to make even the simplest items of the 170 different types of parts for which the South Korean company is seeking suppliers, a Ministry of Industry and Trade official has admitted.

Samsung Vietnam has submitted a list of 170 different types of parts for its flagship Galaxy S4 smartphones and Galaxy Tab 7 tablets, which the company believed could be domestically manufactured, to the Ministry of Industry and Trade.

“But electronics associations and businesses, even those with up to 50 years of history, all replied when asked about the list that they are unable to make such parts,” Truong Thanh Hoai, deputy head of the ministry’s Heavy Industries Department told Tuoi Tre (Youth) newspaper in an interview earlier this month.

The Vietnamese businesses said they could not meet the technology specs and prices proposed by the South Korean electronics giant, which operates a complex in the northern province of Bac Ninh.

What shocks Hoai the most is that among the parts are simple items such as smartphone chargers, USB cables, plastic cases, and earphones.

The official said Vietnamese part suppliers missed a tremendous opportunity for failing to qualify to be a Samsung partner.

“Samsung said they need around 400 million chargers of various types a year,” he said.

“Provided that Vietnam was able to make the device and the profit rate was US$0.5 per charger, it would rake in $200 million.”

Being the part suppliers for global hi-tech giants such as Samsung will help engage Vietnamese businesses into the global production chain and enhance the country’s technologies, Hoai added.

The official admitted that Vietnam’s support industries are still developing and relying too much on imported parts and equipment, mostly from China.

“This increases production costs and the possibility of a trade deficit, while reducing product competitiveness,” he remarked.

Hoai said the industry and trade ministry has submitted a draft decree on further developing support industries to the government.

Under the plan, centers for support industry development will be set up in the country’s key economic areas.

The centers will assist part suppliers in designing, testing, and checking product quality in order to meet requirements from global hi-tech companies.

“We learned this model from South Korea. Their support industries post a $100 billion trade surplus every year, but still need such centers. The centers are crucial to help the incapable Vietnamese part suppliers,” Hoai emphasized.

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