HCMCity (VNS/VNA) - Foreign manufacturers who have factories in Vietnamare increasingly looking for local parts suppliers to optimise their productioncosts, according to the Centre for Supporting Industries Development in HCMCity.

Le Nguyen Duy Oanh, its deputy director, said notable among them is the globalcordless power equipment and floor care company, Techtronic Industries Co. Ltd.(TTI), which recently invested 650 million USD in the Saigon High-Tech Park andis looking for 200 local suppliers within a year.

It has so far identified around 50.

“The city Department of Industry and Trade is actively connecting supportingindustry firms in the city and neighbouring provinces with TTI.”

At the Sourcing Fair for Supporting Industry held in HCM City last week, 14foreign manufacturing companies in the electronics, mechanical engineering andhi-tech medical sectors, including Samsung Electronics, Remote Solution, TTI,Panasonic, Bosch, Juki, Nakata Microtechnology, Sankitech, and Won Seal Tech,displayed more than 400 component and part clusters for which they sought localsuppliers.

Panasonic is expected to open its seventh factory in Vietnam this month or nextto manufacture ceiling and electronic fans and other products.

Its factories have made diverse products, ranging from television sets,air-conditioners and refrigerators to electric home appliances, thus opening awide door for qualified local parts suppliers.

Hoang Thu Thuy, head of Global Procurement Group at Panasonic Vietnam Co., Ltd,said, “We have seven factories in Vietnam, so developing local suppliers is oneof our strategies.”

Panasonic’s use of local parts is around 35 percent in terms of value thoughVietnamese firms account for less than 10 percent, she said.

She said her company wants to find Vietnamese suppliers, especially for keyproducts that have high value and would help reduce logistics and productioncosts.

Oanh said: “After three years of the Sourcing Fair for Supporting Industry,some 45 Vietnamese supporting industry enterprises have become suppliers tolarge manufacturing groups.

“Enterprises such as Hiep Phuoc Thanh, Nhat Minh and Tien Thinh have receivedmany orders from a number of large manufacturers and plan to open morefactories.”

Tong Viet Cuong, director of Hiep Phuoc Thanh Production Co., Ltd., said hiscompany is supplying supporting industry products to many global corporationssuch as Samsung, Toyota, Honda, and Panasonic, with a focus mainly on mouldingand plating items.

Cuong said to receive orders from such companies, in addition to meeting manycriteria in terms of quality and prices, vendors must also meet corporatesocial responsibility and on-time delivery requirements.

Foreign firms have verytransparent requirements when seeking suppliers, he said.

Suppliers need to adjustinternal production capacity to suit their requirements, a process that takes alot of time and costs, but once they are accepted by foreign firms, they wouldhave steady orders, he said.

Le Bich Loan, deputy head of the SHTP management, said: “Faced with aninterruption in feedstock imports due to the COVID-19 pandemic, many foreigncompanies are increasingly seeking local sources.  

“This will be an unprecedented opportunity for local firms in the supportingindustries to enter the supply chains of foreign firms.”

But Vietnamese firms still supply only simple products without high valueaddition, not core ones.

There is a great opportunity for local firms to participate in global supplychains, and they need to make an effort to grasp it, she said.

The majority of domestic supporting industry enterprises are small with limitedresources and limitations in respect of production scale and cost control, andso it is not easy for them to do so, she said.

To improve this, both Oanh and Loan said enterprises themselves must make moreefforts and need to change their management mindset, while more support is alsoneeded from authorities agencies and banks.

“It is not too difficult for local firms to meet quality standards to enterglobal supply chains, and the only question is if their managements are reallydetermine to do so,” Oanh said.

Many foreign corporations are committed to sending experts to help Vietnamesefirms improve their production capacity, reduce the rate of defective goods andmitigate weaknesses in their management, she added./.