The increasing number of Vietnamese suppliers who provide parts and components to Samsung would not only help Samsung Viet Nam (SEV) reduce its production costs, but also develop the country’s auxiliary industry, according to Kim Dong Hwan, SEV’s deputy general director.

Shim Won Hwan, president of Samsung Electronics Viet Nam Complex, visits Manutronics Company in the northern province of Bac Ninh. — Photo Courtesy of Samsung Vietnam

“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 South Korea’s 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 Viet Nam. This means that Vietnamese firms accounted for only 20 per cent 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 Viet Nam, including SEV, SEVT, SEHC (Samsung Electronics HCM City Complex), Samsung Display Viet Nam (SDV), Samsung SDI Viet Nam and Samsung Electro-Mechanics Viet Nam.

Last week, Samsung Viet Nam’s management board paid a visit and surveyed six vendors, including Manutronics Viet Nam JSC, Tien Thanh JSC, Bac Viet Technology JSC (Bac Ninh), Nhat Minh Company, Minh Man Manufacturing Trading and Printing Labels Co Ltd, and Vinavit Corporation. The six vendors participating in this consulting programme have gained excellent results in improving production and increasing their competitiveness capabilities.

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 Viet Nam (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 per cent, thus increasing productivity by 20-35 per cent and decreasing equipment loss rates by up to 82 per cent.

Samsung’s 9-month profits

Samsung Group has announced impressive business results during the first three quarter of the year, with a significant contribution by Samsung Viet Nam.

According to the South Korean’s integrated financial report in the third quarter of 2017, the group’s revenue was $152.45 billion, with a profit of $26.2 billion.

Samsung’s four companies in Viet Nam include SEV, SEVT, SDV and SEHC, which contributed total revenues and profits of $45.6 billion and $4.95 billion, respectively. Specifically, SEV’s revenues rose 0.5 per cent to $13.4 billion, while profits rose by 44 per cent to $1.64 billion during this period. — VNS