Lack of capital, technology hamper global supply chain participation

13:00 | 27/12/2021 Industry

(VEN) - Limited capital and low technology of domestic supporting industry enterprises undermine their ability to keep up with the technologies and machinery of global corporations.

Bac Ninh Province has great potential opportunities to develop support industries thanks to the operations of many large corporations there, such as Samsung (the Republic of Korea), Canon (Japan), Foxconn (Chinese Taipei) and ABB (Switzerland). Notably, many foreign direct investment (FDI) enterprises investing in Bac Ninh Province want to increase localization rates in order to reduce the need to import parts and accessories. The Samsung Group, for example, has coordinated with some localities across the country, including Bac Ninh Province to develop domestic supporting industry enterprises.

“Samsung's goal is to develop first-class vendors who are domestic enterprises to participate in the supply chain of components and accessories for the group,” said Bui Hoang Mai, Head of the Management Board of Bac Ninh’s Industrial Zones.

Bac Ninh Province has potential opportunities to develop support industries

Bac Ninh Province to the east of the capital Hanoi has also offered many incentive policies to promote supporting industry development. Most recently, it issued Decision 295/QD-UBND approving the Bac Ninh Province Supporting Industry Development Program for the 2021-2025 period with a budget of VND153.97 billion. The program focuses on helping supporting industry enterprises become suppliers for domestic and foreign customers; promoting foreign investment in the supporting industry; supporting the application of management systems meeting the requirements of global production chains; supporting human resources to meet requirements of global production chains in testing components, spare parts, and materials.

Some 1,000 supporting industry enterprises currently operate in Bac Ninh Province, about 400 of them domestically owned and invested, with the rest being foreign invested. However, the number of domestic enterprises reaching the status of first-tier vendors for large corporations like Samsung is very small. Most are second and third-tier vendors due to lack of capital, technology and machinery. Meanwhile, domestic enterprises are unable to keep up with changes in Samsung's capacity level and product designs, technologies and machinery without support from relevant authorities.

Economic experts also believed that in order for domestic enterprises to participate more deeply in the global supply chain, the state needs to adopt additional incentive policies on capital for businesses, especially small and medium-sized ones so that they can invest in new technologies and production lines to meet foreign corporations’ requirements.

Among the many mechanisms and policies Bac Ninh has adopted to develop supporting industry were the

formation of supporting industry zones and clusters, including the Cach Bi Supporting Industry Cluster (Que

Vo District) in 2019 with a total investment of nearly VND958 billion, aiming to attract investment in support

industries.

Chu Huynh