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Support industry faces ongoing obstacles

Released at: 08:32, 01/02/2019

Support industry faces ongoing obstacles

Photo: Minh Nguyen Company

Mr. Chau Ba Long, General Director of the Minh Nguyen Industry Support JSC, tells VET about the development of Vietnam's support industry.

by Khanh Hoa

Many have complained that “Vietnam can’t produce even one screw.” Do you agree with that sentiment?

No, as there are many suppliers of electronic components in the country. Samsung Vietnam is not only a factory for assembling electronic components but also for manufacturing many important electronic components. Thanks to the direct production of electronic components at the heart of smartphones such as 3D glasses, cameras, metal frames, monitors, and batteries, Samsung’s localization rate has increased to 58 per cent. Among these, many factories, including the Minh Nguyen Company, provide components in many categories.

Why is the support industry still so far behind, after Vietnam has spent years trying to become an industrialized country?

I think there are many reasons. We really need support from the government in lower interest rates, easier access to loans and land for factories, and loans for importing equipment. There are two major obstacles. The first is capital. If an enterprise does not have sufficient capital it is difficult to access supply chains because they have continuous orders. If they develop, then I need to develop, but if I don’t have enough capital I can’t go on. The second is human resources.

As soon as I came back from Australia, I recognized that Vietnam is similar to Thailand, and in the near future will develop in automotive technology.

Small and medium-sized enterprises are not level 1 agents, so how can they start becoming suppliers to large corporations?

When I joined the supply chain of major corporations, they were interested in my mindset and efforts. My thinking had to change. These corporations were interested after I changed technology. Or my human resources. If I don’t train human resources, we cannot catch up with technology and cannot produce quality products that meet their requirements.

When a company wants to participate in a supply chain, they have a lot of criteria to meet in becoming suppliers. Not only workers but also management need training. Most corporations have experts providing support. Minh Nguyen has received consultancy from Samsung and the Ministry of Industry and Trade (IT), and the Department of IT. Through this support, we tried to learn and change, control our quality through a one-year evaluation, and make and maintain improvements, and gradually became level 2 and level 3 agents before becoming a level 1 agent.

Free trade agreements contain a roadmap on cutting or eliminating taxes. Do you have confidence in competing with components and parts manufactured in Thailand and China when rates go to zero per cent?

In my opinion, there is a lot of potential for the development of support industries and it is important to have input materials. If Vietnam can control its input materials, it cannot control the cost and create a competitive advantage in the region. Thailand has an advantage in good inputs and their output is large, so their levels of inputs are much less than in Vietnam.

What do you expect for Minh Nguyen’s image over the next five years?

Our desire is to connect enterprises in the industry and support industries in particular to create an ecosystem, but to do that, the thinking of each enterprise must be similar, with the same orientation, risk tolerance, change, and dare-to-share strengths and weaknesses. When I receive an order, I could then share it with the other companies, but we need to control the quality of finished products.

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