Domestic enterprises are confident to join the global supply chain

5 min read

Need a common voice

Contrary to the previously cautious sentiment “not producing screws to supply FDI corporations,” many domestic enterprises confidently introduced their production capacity. In particular, many businesses do not just produce simple products such as screws, manufacturing molds, plastic shell products, packaging but have produced high value-added products such as motor cores, electronic boards.

Representative of Tuong Vinh Company said that after more than 20 years of establishment and development, the company has built a large supporting industrial product factory with a scale of 40,000m2 and 1,000 workers and engineers. The company’s main product is motor – the heart of all machines. The company has now joined many global supply chains of Japan, Korea and Europe. The company is preparing to build a second factory with the same scale. By the above connection program, the company proposed to cooperate in manufacturing motor products for equipment and machinery products of Techtronic Industrial Group (TTI). The company is proposing TTI to be transparent about supplier selection standards.

On the other hand, a representative of Duy Khanh Mechanical Production Co., Ltd said that in order to invest in a factory supplying supporting products in general, businesses need more than VND 200 billion. However, there will be certain risks when the investment is completed but the enterprise does not receive cooperation from FDI corporations. So if FDI corporations really need to increase the localization of supporting industry products, they should make strategic cooperation agreements on the purchase of products for manufacturing enterprises. This has helped domestic enterprises to firmly invest, on the other hand, FDI corporations will also attach more clear responsibilities in supporting and improving production capacity for domestic enterprises, meeting supplier standards for corporations.

Another problem posed by many businesses is the payment term. Many FDI groups require 14-day order delivery time but the order payment time lasts 90 – 120 days. This negatively affects working capital of enterprises, especially when up to 90% of domestic enterprises are small and medium-sized enterprises. Therefore, it is necessary to have more flexible payment policies so that domestic enterprises can find common ground with FDI corporations.

Improve the competitiveness of Vietnamese products

In the opinion of Vietnamese enterprises, many representatives of FDI groups acknowledged that the capacity of supplying supporting industrial products of Vietnamese enterprises has made great progress. For example, with the 5 requirements that corporations make to join the supply chain are safety of hazardous substances, environment, quality of human resources, product quality, and factory security, there are usually only 3 targets achieved are hazardous substances, human resource quality, factory security. The remaining two targets were not met. However, after nearly 2 months of improvement, Vietnamese enterprises have met the requirements of FDI corporations, especially the product quality has increased from 51% to 88%.

Ms. Le Nguyen Duy Oanh, Deputy Director of Ho Chi Minh City Supporting Industry Development Center, said it is not difficult to meet the standards of joining the supply chain of domestic enterprises. The difficulty is whether business leaders really want to convert or not. There have been many FDI corporations committed to bringing experts to support Vietnamese enterprises to improve production capacity. Only from 2018 up to now, after the center cooperated with FDI corporations to improve production capacity, reduce the rate of defective goods, overcome weak management, etc., there were more than 30 enterprises in the area. City table joined the supply chain of Samsung Group, Schneider, Sony, Honda, Sanyo … As for payment policy, the center as well as FDI corporations have worked with financial institutions inside and outside the city. countries to have more flexible policies to support Vietnamese businesses.

It can be said that it takes on average 30 days for many FDI corporations to launch a new product. This time will be shorter for high tech products. Therefore, the orders that enterprises supply must be shortened to 14 days. Therefore, the formation of on-site supply chains is very important to ensure the production progress of FDI corporations. Not to mention, having support products in place will help these corporations reduce transportation costs, improve competitiveness. Therefore, the growth of domestic supply chain of supporting industry products is considered as the basis for attracting “eagles to nest”.

Ms. Le Bich Loan, Deputy Head of Ho Chi Minh City Hi-tech Park, said that the Management Board of Hi-tech Park is working with many FDI corporations to invite them to invest in Vietnam in general and Ho Chi Minh City in particular. In particular, priority groups produce products applying technology 4.0, research centers to manufacture new products There is plenty of domestic market potential. The remaining problem, Vietnam enterprises need to review the competitiveness of products. Accordingly, the product does not stop at local competition but must compete globally.

650 million USD invested in R&D center

Ms. Le Nguyen Duy Oanh, Deputy Director of Ho Chi Minh City Supporting Industry Development Center, said it is not difficult to meet the standards of joining the supply chain of domestic enterprises. The difficulty is whether business leaders really want to convert or not. There have been many FDI corporations committed to bringing experts to support Vietnamese enterprises to improve production capacity. Only from 2018 up to now, after the center cooperated with FDI corporations to improve production capacity, reduce the rate of defective goods, overcome weak management, etc., there were more than 30 enterprises in the area. City table joined the supply chain of Samsung Group, Schneider, Sony, Honda, Sanyo … As for payment policy, the center as well as FDI corporations have worked with financial institutions inside and outside the city. countries to have more flexible policies to support Vietnamese businesses.

Only since officially investing in Vietnam from 2019 to now, TTI Group has built a domestic supply chain with more than 100 Vietnamese enterprises participating. TTI is planning to increase the export turnover of factories in Vietnam from 1.2 billion USD / year to 3 billion USD / year by 2022. Therefore, TTI is in urgent need of domestic supply from Vietnamese enterprises. Male.

Flexible policies to support capital for businesses

Mr. Nguyen Xuan Vu, Director of the Southern Customer Center of Vietinbank, said that there are many flexible policies to support loans for businesses to invest in production. Specifically, if the enterprise’s factory investment plan is feasible, the enterprise can access medium and long-term loan package with an interest rate of 8% – 10% / year. Also, the amount of loan will depend on the size of the business invested by the bank and assessed by the bank.

For small and medium-sized enterprises that have gone into production, if they meet with difficulties in working capital due to long payment term by FDI corporations, they can borrow short-term loans in the form of unsecured loans. Accordingly, businesses will unsecured by the same orders signed with the group and certified by the FDI group. This level of unsecured loan support can fluctuate between 70% and 100% of the order value. Particularly, the interest rate for this type depends on the time and type of goods that the enterprise produces. This is considered a form of quick resolution of working capital for businesses, especially small and medium-sized enterprises with limited capital.

AI VAN

Source: sggp.org.vn