Vietnam’s support industry develops links in global supply chain

13:00 | 19/08/2020 Industry

(VEN) - Vietnam’s supporting industry is gradually improving its connections, productivity and training, allowing its products’ greater access to Foreign Direct Investment (FDI) enterprises as well as multinational corporations.

vietnams support industry develops links in global supply chain
TTI expects the localization rate of its Vietnam-made products to reach 80 percent by 2021

Techtronic Industries Co., Ltd. (TTI), for example, is seeking local suppliers to increase the localization rate at its Vietnamese manufacturing facilities. To that end, it organized a Vietnam supplier workshop in early July at the Saigon High-Tech Park (SHTP), where it displayed. Locally made injection moulding, mouldmaking, electricity and metal products. The workshop attracted the participation of 300 domestic enterprises and suppliers.

TTI currently has 12 factories around the globe, and 76 percent of their products are supplied to the US and north European markets, with sales of more than USD 7.6 billion in 2019, more than 88 percent of the total from the sale of electrical equipment, accessories, storage tools and hand tools.

Workshop participants also shared their concerns about investing in production of items meeting the requirements of FDI companies in general, and TTI in particular, asking whether foreign-invested firms would commit to buying their products and thereby provide them with a measure of security for their own investment. Moreover, enterprises noted the length of the payment process - 90 to 120 days, which exerts great pressure on small and medium enterprises.

According to Nate Easter, Executive Vice President of Global Sourcing and Outdoor Products Operations at TTI, in order to join TTI’s supply chain, Vietnamese companies need to meet safety standards on hazardous substances, ensure labor quality and production time of under 14 days.

TTI expects in the next two years to attract about 180-200 Vietnamese enterprises as suppliers, with the goal of reaching about US$2.5 billion per year, and to reach a domestic supply rate of up to 60 percent in 2020 and 80 percent in 2021. To meet expectations, TTI has provided consultancy support to help businesses improve productivity and quality, Nate Easter said.

According to the Ministry of Industry and Trade (MoIT), in order to create momentum for the development of the supporting industry sector, it is important to strengthen promotion activities and promote the linkage between supporting industry enterprises and terminal production and FDI enterprises. Direct connection activities between supporting industry enterprises and FDI companies open a window of opportunities for businesses to expand cooperation and become a supplier for FDI enterprises.

In 2018 and 2019, the MoIT cooperated with Samsung Group to organize the training of Vietnamese consultants in the field of manufacturing innovation and quality improvement. Some 40 Vietnamese enterprises received training support and all have displayed marked results in production improvement. These include increased productivity of at least 70 percent, a 50 percent drop in the rate of errors, increased accuracy of production plans, which makes an important contribution to inventory management, delivery and loss analysis.

Thuy Duong