Boeing urges Korean, Japanese tier 1-2 suppliers to seek partners in Vietnam

Aviation giant Boeing is encouraging tier 1 and tier 2 suppliers in South Korea and Japan to find partners in Vietnam for supplying tier 3 products.

Maxime Dourdan, Boeing’s supply chain development director for Southeast Asia, Japan, and South Korea, revealed this at the Vietnam-U.S. trade forum held in Ho Chi Minh City Wednesday.

Noting that Boeing's tier 1 suppliers were mainly businesses in Japan and South Korea, he added: "Compared to these two countries, Vietnam has a significant advantage in terms of production costs. However, low cost is not all of Vietnam's advantages; Vietnam also has highly skilled engineers."

Dourdan said that Boeing was encouraging tier 1 and tier 2 suppliers in South Korea and Japan to find partners in Vietnam to meet tier 3 needs. The giant will organize training programs for the aviation industry in Vietnam, he said.

Boeing currently has a dedicated team looking for suppliers in Vietnam to find products that meet its standards. However, finding a supplier has to be done step by step. Initially, Vietnamese businesses can only be level 3 and level 4 suppliers, but they will gradually be able to provide more important products, Dourdan noted.

Truong Chi Binh, vice president and general secretary of the Vietnam Association of Supporting Industries (VASI), said that to join the playing field and become a link for the aviation sector in general and Boeing in particular, Vietnamese firms must make long-term preparations.

As an example, Binh noted that 30 years ago, Malaysia adopted a strategy to develop the aerospace industry, which gave the time to develop the strength needed to participate in the international market. In Vietnam, businesses are able to work in electric car sector now and they will have the opportunity to work for other industries, including aviation. If Boeing wanted to find suppliers in Vietnam, Vietnamese businesses were willing, she said.

According to Binh, compared to China and India, Vietnamese mass-produced products have a lower competitive advantage. However, Vietnam also has competitive products like electric wire clusters. She said products that combine machines and people are Vietnam's advantage. Vietnamese products made entirely by machines cannot compete that of China and India. For products with many stages, alternating between machines and people, Vietnam has an advantage.

Meanwhile, national flag carrier Vietnam Airlines has signed a $10 billion deal with Boeing to buy 50 737 Max jets, with handover scheduled for the 2027-2030 period. The MoU was signed September 10 on the occasion of President Joe Biden’s Vietnam visit.

The state-owned Vietnam Airlines now operates four aircraft models, namely, Boeing 787, Airbus A350, Airbus A330 and Airbus A321. The 737 Max is a narrow-body aircraft, designed with 150-230 seats. Currently, 1,150 aircraft of this type are operated by 70 airlines around the world.

American businesses, including Boeing, are seeking more partners in Vietnam after U.S. President Biden's September 10-11 visit. Vietnam and the U.S. have agreed to raise bilateral ties to a comprehensive strategic partnership, the highest in Vietnam’s diplomatic hierarchy. The upgrade puts Vietnam-U.S. relations on par with Vietnam's relationships with China, Russia, India and South Korea.

The U.S. is Vietnam's largest export market and second biggest trade partner, behind only China. The U.S. became the first market to which Vietnam's exports surpassed $100 billion in 2022.