FDI enterprises and suppliers have not yet met

There are a few enterprises participating in SI production

Only 0.3% of enterprises participate in SI production

According to Nguyen Hoang, Chairman of the Hanoi Association of Industry, at the moment, there are about 0.3% of the nearly 500,000 enterprises engaged in manufacturing industry for SI. This is an alarming number compared to the SI community in some ASEAN countries.

The statistics on the production of SI products of Vietnamese enterprises are as follows: Automobile manufacturing industry, localization ratio of about 5-20%; electronic industry, the localization rate is about 5-10%; footwear localization of about 30%, and textile and garment localization reached about 30% .

"Every year, due to the limitation of the localization of SI products, the volume of imported accessories to Vietnam for assembly, manufacture, and production for export is up to tens of billion. Particularly imported products of electronics and automobiles are about $30 billion," Mr Hoang said.

The Canon Vietnam Co., Ltd is a typical example of how Vietnamese companies are missing opportunities to participate in the global supply chain of FDI enterprises. Ms. Dao Thi Thu Huyen, Deputy Director General Office of Canon Vietnam Co., Ltd. said, “At this time, Canon has about 170 direct component suppliers in Vietnam, accounting for 45% of the total number of suppliers of Canon across the globe. The suppliers mainly supply plastic parts, compressed springs, boxes, packaging accessories, etc. The total number of components from the suppliers of Vietnam and by Vietnam Canon’s own production, Canon's localization rate is 65%.

“Five years ago, Canon set a target to increase the localization rate to 70%, but now there is no change. We can always fìnd more suppliers of components in Vietnam but Canon hasn’t found more suitable enterprises,” Ms Huyen said.

FDI enterprises expect that there are more suppliers from the domestic market, but while many domestic companies want to become suppliers for FDI enterprises, why can not they meet each other? The answer for this question, some experts acknowledge that the problem is Vietnamese companies have certain weaknesses that do not meet the requirements set by FDI enterprises. Regarding the issue, Mr Nguyen Hoang said, “While the resources of enterprises are limited, the policies to support and develop SI companies have not been really useful in reality, creating a change for businesses".

Gradually raise the level

“Like many foreign corporations, Canon is based on many criteria. Firstly, Canon receive information of enterprises, then evaluate on the environmental aspects, quality, cost, delivery, etc. progress. Secondly, Canon Vietnam have to send information about suppliers to the corporation for approval to proceed to set up the supplier. The most important criteria for Canon executives is that the partner has to make an effort to become a long-term partner of Vietnam Canon. In terms of quality, businesses must meet Canon's green coordination standards, and at competitive prices. Canon can support suppliers in management and technique, but does not provide financial support,” Ms Huyen said.

Talking about how to improve the responsiveness of Vietnamese enterprises, by helping more domestic companies to participate in the FDI supply chain, Mr. Bang Hyun Woo, Deputy General Director Samsung Vietnam said, “Not only Samsung but many other FDI companies have high requirements about technology, quality, etc. This can not be achieved in a short time. Therefore, in order to improve the capacity of Vietnamese enterprises, they can invite experts who have a long experience working at Korean and Japanese companies. Working with this team, Vietnamese experts can learn more about technology as well as management skills and gradually accumulate and improve their level.”

From the viewpoint of the companies involved in manufacturing industry, Mr Nguyen Duc Cuong, general director of HIKARI P & T Manufacturing and Trading Company Vietnam, expressed his desire, for State management agencies to have more trade promotion links between FDI enterprises and SI enterprises through departments, branches and associations. More than ever, the partnerships are not only between countries and cities, not just personal relationships or the relationship between the FDI company and the SI enterprise at present.