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Korean Companies Troubled with Slow Localization in Vietnam
Vietnam Uptake
Korean Companies Troubled with Slow Localization in Vietnam
  • By Cho Jin-young
  • August 17, 2015, 04:30
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Korean companies investing in Vietnam are worried about the slow progress in localization attributable to their local partners’ low level of technical standards.

According to industry sources, Samsung Electronics’ local component procurement in Vietnam stands at 36 percent, although the company has invested in the country for seven years. Besides, most of the 36 percent are components supplied by Korean and non-Vietnamese partners doing business in the country.

At present, 32 Vietnamese firms are supplying components to Samsung Electronics, but only four of them are primary partners, while the total number of primary partners amounts to 90 or so. The other 28 are secondary subcontractors supplying components via foreign firms.

Such a delay in localization has caused Samsung Electronics to import a large amount of components. The company exported mobile phones worth US$23 billion and US$32 billion from Vietnam in 2013 and 2014, respectively. However, it had to import components worth US$15 billion and US$20 billion during the respective periods.

LG Electronics has the same trouble. It said that it would raise its local component procurement in Vietnam to at least 50 percent during the announcement of its investment plan for the Haiphong Complex. However, only one Vietnamese firm is supplying components to LG Electronics as of now.

Under the circumstances, the Vietnamese government recently came up with a long-term plan for the promotion of the parts and materials industry. The Ministry of Industry and Trade of Vietnam held a workshop on July 15 with Samsung Electronics Vietnam and asked it to procure more parts from Vietnamese firms.