Samsung ups localization rate to 57 percent

09:42 | 01/08/2017 Companies

Samsung Vietnam has achieved a significant breakthrough in increasing the localisation rate of its products from 35 percent in 2014 to 57 percent at present.

Officials and representatives of local companies participating in the “Samsung Sourcing Fair 2017” in Bac Ninh Province - Photo: Samsung

Participants of the “Samsung Sourcing Fair 2017” also heard that the number of Vietnamese enterprises joining Samsung’s supply chain has increased dramatically.

A total of 215 enterprises, including 25 tier-1 vendors and 190 tier-2 vendors, are currently participating in the supply chain for Samsung’s factories in Vietnam, which include Samsung Electronics Vietnam (SEV), Samsung Electronics Vietnam Thai Nguyen (SEVT), SEHC Complex (HCM City), Samsung Display Vietnam (Bac Ninh), Samsung SDI Vietnam (Bac Ninh) and Samsung Electro-Mechanics Vietnam (Thai Nguyen).

The company expects its tier-1 vendors to increase to 29 in 2017.

The annual workshop and exhibition, which has been held in Vietnam since 2014, aims to discover and connect domestic component suppliers with Samsung. It seeks ways to enhance the competitiveness of hi-tech suppliers in particular and boost development of Vietnam’s parts manufacturing industry in general.

This year’s event, organised in the northern province of Bac Ninh on July 26, drew the participation of 26 enterprises that are expected to act as core agents for support industry development in Vietnam.

Company officials noted that there were 15 totally new firms nominated by the ministries and enterprises associations.

Speaking at the event, Shim Won Hwan, chairman of Samsung Vietnam Complex, said the exhibition on supporting industry has been considered the first official connection between Samsung and Vietnamese enterprises, in a series of activities to assist parts suppliers.

“Enthusiastic participation along with great determination of potential businesses in this 4th event gave us impetus to continue implementing practical activities to help them improve their productions and enhance their competitiveness. They will play the very important roles as the core agents to create the spreading effect for the general development of supporting industry in Vietnam.”

Pham Anh Duong, chairman of management board of the An Phat Plastic and Green Environment Joint Stock Company, which produces thin packaging items for exports to Japan, the US and EU, said his company has been considering becoming a local parts supplier for Samsung.

“I think we will surely face difficulties at first time to meet Samsung’s requirements including quality, production process and corporate social responsibility,” Duong said.

However, he added that the company is confident because it has 15 years of experience in exporting to foreign markets.

An Phat planned to invest 50 million USD in its plant and production process to be eligible to participate into the supply chain.

“We expect our revenue to increase by 15 percent over current levels after becoming Samsung’s local supplier. Last year, our company’s revenue was 2.1 trillion VND (92.3 million USD) and the expected revenue this year would be around 3 trillion VND,” he said.

It created opportunities for six enterprises to showcase their best performance after finishing the 3-months programme with Samsung experts.

The consultancy programme with the Republic of Korea’s experts helps enterprises improve their production process and meet the criteria for supplying products and components to Samsung factories with products’ error ratio decreasing by an average of 25 percent and production capacity increasing by 30 percent.

From 2015 to date, 26 Vietnamese enterprises have benefited from the programmes.

Starting this year, Samsung will expand the programme to hi-tech industries, helping local firms to produce sophisticated electronic parts and be part of Samsung’s global supply chain for hi-tech products.

Theo VNS/VNA