Vietnamese enterprises step by step participate in the global supply chain

Instead of completely depending on foreign enterprises, the good news is that Vietnamese enterprises are now capable of taking part in the global supply chain.

Join the supply chain by competence and product  quality

Dien Quang High Tech Company Limited is one of the electronic-specialized manufacturing enterprises, which has recently attracted big FDI enterprises.

Said Mr. Tran Ba ​​Linh, Production Manager of Dien Quang Hi-tech Company Limited, several FDI enterprises have come to the company to evaluate as well as examine the product quality and start placing orders in addition to providing them with certificates to be able to participate in the global supply chain.

Besides manufacturing sector, logistics is also a potential field for Vietnamese businesses to join in the supply chain with FDI partners.

Free trade agreements such as EVFTA coming into effect have created a myriad of opportunities for logistics businesses in Vietnam. In particular, along with the trend of shifting supply chain out of China, Vietnam chosen by EU enterprises for investment, has also gained a great number of opportunities for logistics enterprises to work and earn revenue during Covid-19 period. Enterprises like Bee Logistics Group themselves have been ahead and cooperated as subcontractors for European enterprises, helping increase the presence of Vietnamese logistics enterprises with them, shared  by Mr. Mai Tran Thuat, Director in charge of Supply Chain Solutions, Bee Logistics Group. The participation in supply chain is a wise step for domestic enterprises in the context that Vietnam’s capital and competence are not yet as competitive as of other FDI enterprises.

In addition to the supply chain shift of multinational corporations to Vietnam, there are plenty of “giants” in the manufacturing and service industries such as Samsung, Panasonic, LG, Bosch, Marsk… are continuously seeking for auxiliary equipment suppliers in Vietnam. More fortunately, Vietnamese businesses also meet the standards set by these “giants” to get access to the global supply chain.

According to the Department of Industry, Ministry of Industry and Trade, in industry sector particularly, Vietnam has no inspiring leader. However, up to now, it has recorded about 30% of supporting industry enterprises participating in the global supply chain and value chain. In which, textile, leather and footwear industry: 64% supporting industry enterprises supplying to the domestic market (of which 3% supplying to FDI enterprises), 9% export and 27% supplying to both markets; In the electronics industry, 44% of enterprises supplies for the domestic market (of which 22% supplying completely for FDI), 16% for the export market and 40% of the supporting industry enterprises for both domestic and export markets…

Overcome limitations

In the past time, businesses have reflected that the world’s large manufacturing corporations operating in Vietnam are stepping up searching for local suppliers to increase the localization rate. However, the ability of domestic enterprises have been still limited because the requirements to entering into end to end supply chain are extremely strict, which is also the current problem of enterprises.

Ms. Pham Thi Quynh Huong, Source Of ASIA Company, said that foreign investors impose high requirements for quality and price. If incapable of competing with other markets by price, it is difficult for the enterprises to penetrate deeply into the supply chain. Moreover, foreign investors require certificates that Vietnamese businesses are unable to certainly and immediately meet.

Realizing these limitations, Vietnamese enterprises have been boosting investment in machinery, management as well as improving working procedure, improving the quality of products and components. However, this process faces plenty of difficulties.

Mr. Do Phuoc Tong, Chairman of the Ho Chi Minh City Electromechanical Association, said that currently, Vietnamese enterprises’ resources are not large enough. Although there are some considerable investment from enterprises, the amount is still too small compared to current demands of the economy. Therefore, the government needs to create supportive policies for businesses.

For the enterprises, Mr. Tran Ba ​​Linh suggested that in order to participate further in the global supply chain, businesses are looking for opportunities to cooperate with domestic enterprises to expand their supply sources as well as auxiliary materials to ensure the constant supply of materials without interruption.

For state authority, the Ministry of Industry and Trade has been actively cooperating with Government agencies of other countries (Korea, Japan, Sweden, Switzerland, UK…), international organizations and a number of large multinational corporations (for example, Samsung) to implement cooperation projects to reform domestic supporting industry enterprises and improve the connection of domestic enterprises with global production chains.

For long term, the government will support to improve the competitiveness of domestic industrial enterprises, especially in the development of human resources for industry, science and technology, in innovation and creativity associated with realistic demands, and those of domestic enterprises. It is expected to strengthen cooperation between domestic enterprises with the FDI area and the global market and make good use of opportunities from Free Trade Agreements, from the fourth industrial revolution, so that domestic industrial enterprises could participate more deeply in global value chains.

Source: Nhandan.vn