Vietnamese enterprises find it difficult to squeeze into global production chains

Chair of the HCMC Mechanical & Electrical Engineering Association Do Phuoc Tong, at a meeting with HCMC’s Mayor Nguyen Thanh Phong, on July 18 complained that some foreign invested enterprises were creating difficulties for Vietnamese enterprises.

Tong noted the story about Duy Khanh Mechanical Engineering Company.

Duy Khanh has 30 years of experience in making mechanical products in Vietnam, while it has been providing prototypes and machine accessories to foreign corporations with products exported to the US and Canada.

However, in Vietnam, it has failed to become the vendor of Japanese and South Korean multinational electronics groups.

“The information provided by FIEs to Vietnamese manufacturers is general and vague. They only let some small and weak Vietnamese manufacturers try to make some products for them and they came to the conclusion that all Vietnamese manufacturers are incapable,” Tong said. “Meanwhile, large and capable manufacturers cannot try.”

Duc Minh Rubber specializes in manufacturing rubber gaskets for cars and its products are exported to car part suppliers in South Korea. The suppliers later sell the products to an automobile assembling factory in Vietnam and the products return to the domestic market.

Most South Korean and Japanese electronics manufacturing groups bring satellite companies to Vietnam. Therefore, Vietnamese enterprises don’t have opportunities to join the groups’ supply chains.

However, ironically, Duc Minh’s wish to become a vendor of a Japanese automobile manufacturer in Vietnam has been refused.

Nguyen Quoc Anh, chair of the HCMC Rubber & Plastics Association, confirmed that this happens with many Vietnamese enterprises.

Many electronic parts are made by Vietnamese enterprises and exported to multinational electronics groups and then re-exported to third countries.

“The electronic parts made by Vietnamese enterprises are exported to South Korea or Japan and then re-exported by the South Korean and Japanese suppliers back to Vietnam, or to Thailand and Indonesia,” Anh said.

A 16-year-old large packaging enterprise which has a factory located in Long An province, affirmed that it can provide packaging products of different kinds. However, it still failed to become a packaging supplier to a foreign companies that makes dairy products, cereal and instant coffee in Vietnam.

Anh said that most South Korean and Japanese electronics manufacturing groups bring satellite companies to Vietnam. Therefore, Vietnamese enterprises don’t have opportunities to join the groups’ supply chains.

“Vietnamese large and medium sized enterprises all find it very difficult to join foreign multinational supply chains, no matter how professional they are,” Anh said.

Tong said that Japanese and South Korean enterprises prioritize using products provided by enterprises from their home countries and that is why Vietnam’s supporting industries cannot develop.

(Source: VNN)

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