Support industries have a lot of room for improvement
A Hyundai assembly plant in Ninh Binh province. (Photo: VNA)
Pham Thanh Tung, a representative of the Industry Agency of the Ministry of Industry and Commerce, noted that supporting industries consisted of about 5,000 enterprises in 2021, which mainly operate in the sub- textile, footwear and mechanical engineering industries.
About 88% of businesses are small and medium-sized businesses. The proportion of those who engage in high value-added segments is relatively low, with 19% for textiles and 33% for electronics.
Around 20% were certified to ISO 9000 and 9% to ISO 14000. A fifth said they follow the 5S principle, while the figures for other principles, including Lean and 6-Sigma, amounted to about 2%.
More than 30% said they use manually operated equipment, 50% use semi-automatic equipment, 10% operate automatically, and the rest use robots to operate their production lines.
“These numbers indicate that companies in support industries have relatively weak management and technology capabilities,” he said.
The Vietnam Chamber of Commerce and Industry was concerned that domestically produced components would cover a small proportion of industrial production. In the home electronics industry, the numbers are only around 30%.
The same goes for the automotive industry, which has 84 Tier 1 national suppliers and 145 Tier 2 suppliers, 3 component suppliers compared to 20 car manufacturers. Those numbers pale in comparison to Thailand, which has 690 Tier 1 domestic suppliers and 1,700 Tier 2, 3 compared to 16 automakers.
The Association of Automobile Manufacturers of Vietnam pointed out that each automobile assembled in Vietnam is made up of about 30,000 components, but 80% of them come from abroad.
Remarkably, the country has to import between USD 35 billion and USD 50 billion worth of automotive components per year.
According to a survey by the Office for General Statistics, companies in support industries admitted to having no advantage in terms of adaptability, R&D, management systems and operational strategy.
However, when asked what policies they expected from the government, they indicated tax cuts and administrative supports, instead of favorable policies that would help them improve the above factors.
Such a disparity between what they need and what they want has posed a serious challenge to policy formulation and implementation. Meanwhile, government support programs were only available to around 17% of businesses, a relatively limited range.
Choi Kyung-soo, deputy director of Samsung Vietnam’s sourcing center, said his company spares no effort to create an ecosystem to support industries in Vietnam.
To this end, Samsung has cooperated closely with Vietnamese authorities in various programs aimed at stimulating the growth of industries. The company has sent its specialists to domestic enterprises to help enterprises train and advise them on improving competitiveness.
“With a business philosophy of co-prosperity, Samsung’s support for domestic enterprises will continue unabated in the future,” he said.
He also said that Samsung will continue to expand cooperation programs and send more specialists to improve the country’s technology landscape. Samsung hopes that domestic companies will take advantage of this support to improve their operations.
Do Thi Thuy Huong, vice president of the Vietnam Association of Support Industries, said it doesn’t matter how much domestically-made components are used in industrial production, but how much technological value they add to value chains.
“Adding high tech values to their products is what companies should be aiming for,” she said./. VNS