Samsung has divulged that South Korean firms are grabbing a larger piece of the smartphone maker’s part and equipment pie in Vietnam even though its production base in the northern province of Bac Ninh creates a great opportunity for domestic part suppliers to join its value chain.
Part suppliers from countries other than the homeland of the South Korean electronics titan only occupy a minority place on the list of 67 Vietnam-based part suppliers partnering with the Samsung complex in Bac Ninh, according to a report by Samsung Electronics Vietnam Co. Ltd.
More than 50 South Korean businesses, which followed Samsung to set up Vietnamese units, are now supplying parts and equipment to the Bac Ninh production facility, which produces 11 million hi-tech products a month.
There are a few businesses from Japan, Singapore, and the UK, together with a couple of Vietnamese firms.
Vietnamese businesses only provide printing and packaging services for the hi-tech hub, located in Yen Phong Industrial Park, where Samsung’s flagship products are made.
Shim Won Hwan, general director of the Bac Ninh complex, said in an interview with Tuoi Tre (Youth) newspaper in August that the localization rate – the quantity of materials and parts that can be sourced locally – at the Vietnam facility is around 39 percent.
But he admitted that this figure mostly represents the foreign direct investment (FDI) suppliers, whereas there are indeed very few 100 percent Vietnamese businesses supplying parts to Samsung.
Bac Ninh is Samsung’s most important production base, which made 30 percent of its smartphones and up to 80 percent of the firm’s tablets sold worldwide last year, the general director said during the same interview.
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 the Southeast Asian country and distributed globally.
Last month Samsung announced that it would invest US$1.4 billion in building a factory to make hi-tech home appliances at the Saigon High-Tech Park in Ho Chi Minh City.
The investment accounts for 47.78 percent of the total foreign direct investment the southern business hub attracted in the Jan-Oct period, according to the municipal Department of Planning and Investment.
The factory is expected to become operational in early 2016, generating some 4,000-5,000 jobs.
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