From having only four suppliers of one supporting industry product in 2014, Samsung Electronics Vietnam Co., Ltd., now has had 42 suppliers. Besides, there are also 679 other suppliers of different tiers. Mr. Jang Yoon Ho - Director of Partner Support - Samsung Electronics Vietnam, said that increasing suppliers is a part of the group's strategy to expand its production scale in Vietnam. Especially, in the context that the global supply chains are interrupted by the pandemic, this network expansion has been accelerated faster.
Currently, Samsung has invested and put into operation six factories producing mobile phones, electrical and electronic products, televisions, and home appliances. Only for mobile phones, on average, Samsung Vietnam makes three million units per year, accounting for 25 percent of the market share of Vietnam's electrical and electronic product exports and 50 percent of Samsung Group's global mobile phone exports. The company plans to put into operation a product research and development center in Hanoi by the end of this year. This is also considered a strategic investment to pave the way for the expansion of the group's production scale in the coming time.
According to a report from the Japan External Trade Organization, the demand for using supporting industry products in Vietnam of FDI enterprises will increase in the coming time. Because many European countries will possibly have to re-establish a large-scale blockade to prevent the risk of a Covid-19 recurrence by the end of this year. This will cause global supply chains to break again in Europe. In the US, the situation of the pandemic still develops quite complicatedly, significantly affecting the supply chains here. As for Japanese enterprises, they are expected to invest heavily in Vietnam next year, as soon as applications for support of investment shift are approved by the Japanese Government. And accordingly, the local supply chains are also the target that many Japanese investors will increasingly seek.
A recent survey by the Vietnam Association for Supporting Industries shows that Vietnamese enterprises producing supporting industry products are small and medium-sized ones. However, the quality of products is not a major barrier but a competitive price. Enterprises are not determined enough to improve and maintain results after improving production capacity.
According to many economic experts, this is the golden time for domestic enterprises to enter the global supply chains of FDI enterprises. This golden time can only last until mid-2021 when the pandemic is expected to be controlled. At present, due to the shortage of supply, many technical barriers to production scale will be loosened by FDI enterprises. Domestic enterprises need to take advantage of this opportunity to participate in the supply chains on the one hand, and on the other hand, build a roadmap to improve their production capacity. It is impossible to enter the global supply chains with high tiers but to start from a low level as tier 3 or 4 suppliers. In the long run, as capabilities gradually improve, the position of suppliers will also increase. More importantly, enterprises need to consider investing in the production of core products, the specific characteristics of end products. Thus, the added-value will be high, and the position of domestic enterprises in the global supply chains will be sustainable.