What is the way for Vietnamese enterprises to enter the global supply chain?

In recent years, Vietnam has become one of the attractive investment destinations for many global corporations and enterprises. However, the number of Vietnamese enterprises participating in global supply chains is still very limited, requiring effective solutions to improve the ability of Vietnamese enterprises to participate in global supply chains.

This was also the issue discussed by experts at the seminar "Vietnamese entrepreneurs with the role of leading key industries" organized by the Industry and Trade Newspaper on September 24.

Seminar "Vietnamese entrepreneurs with the role of leading key industries" - Photo: Can Dung

The story of screws and the injustice of Vietnam's mechanical industry

According to data from the authorities, Vietnam currently has about 5,000 supporting industry enterprises. However, only about 100 of these domestic private enterprises are tier-one suppliers for multinational corporations; about 700 enterprises are tier-two and tier-three suppliers. These figures show that the number of Vietnamese enterprises participating in global supply chains is still quite limited.

Mr. Vu Van Khoa - Deputy Director of the Institute of Mechanical Research, Ministry of Industry and Trade, assessed that currently participating in supply chains is not easy, we have to meet quality, progress and price standards. While domestic enterprises are mostly medium, small and micro enterprises, investing in machinery and equipment and applying the standards of multinational corporations is very difficult.

"That's why there is a story about domestic enterprises not being able to produce screws for phones," Mr. Khoa said, a story that was once a "hot" topic on every forum, and behind the story of screws is a long series of problems that need to be solved.

Mr. Vu Van Khoa - Deputy Director of the Institute of Mechanical Research, Ministry of Industry and Trade

According to Mr. Khoa, it is not that Vietnam cannot make screws, but with the quality requirements of partners, with the output of millions of products in a very short time, no business can meet.

In fact, Vietnam's supporting industry has made many strong developments. In particular, many precision mechanical products requiring high skills such as screws have been produced by some Vietnamese enterprises, meeting the standards of supplying the automobile industry and exporting abroad.

Where are domestic enterprises in the supply chain?

Looking at the reality, economic expert - Dr. Tran Dinh Thien said that Vietnam's economy is currently very open and integrating more deeply. However, domestic enterprises are still unable to participate more deeply in the global supply chain.

Economist, Dr. Tran Dinh Thien - Photo: Can Dung

According to Mr. Thien, the industrial level is still low, Vietnam is still basically doing outsourcing production, not touching much on automation and digitalization.

Besides, the industrial chain system is not clear. Vietnamese industrial enterprises and businessmen have not really created industrial links between the country and the world; have not really led the industrial chain of enterprises, corporations, and the world into Vietnam. The industrialization and modernization of enterprises is still weak.

The capacity of domestic enterprises, especially in the technology sector, is a major obstacle to attracting supply chains of technology corporations to Vietnam as well as limiting Vietnam's ability to participate in upstream stages in the global production network.

If these weaknesses are not promptly overcome, they will increase the risk of falling deeper into the processing and assembly trap, making it difficult to control low-quality investment flows, investment in acquiring domestic markets and enterprises, and "disguised" investment...

Taking the example of domestic enterprises' participation in the supply chain for Samsung, Deputy Director of the Institute of Mechanical Engineering Research Vu Van Khoa said that it is still difficult for domestic companies to participate in the direct supply chain of materials and components for this enterprise.

"The companies that provide technical support to the Samsung complex are "backyard" companies. It is very difficult for Vietnamese businesses to participate in their chain, or if they do, they can only participate in simple technologies, a very small part," said Mr. Khoa.

According to Mr. Khoa, in the trend of shifting global supply chains, Vietnam has become one of the production destinations of many global corporations, so deep participation in the supply chain and production chain is necessary for Vietnamese enterprises.

Deeper integration into the global supply chain in the current context depends largely on the self-efforts of the business community. However, this effort will be much more favorable and easier if institutional conditions, the business environment, and legal regulations are easier and more favorable for the self-efforts of businesses.

In addition, it is necessary to strengthen the connection between domestic enterprises and international corporations. The State should play an intermediary role, creating favorable conditions for domestic enterprises to participate in international supply chains, through organizing seminars, economic forums, and capacity building training programs.

Source: https://congthuong.vn/loi-di-nao-de-doanh-nghiep-viet-vao-chuoi-cung-ung-toan-cau-349870.html