Vietnam’s supporting industry

Vietnam’s supporting industry

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Supporting industries, ie manufacturing supply components, multi-type parts during manufacturing of finished products such as automobiles, electronics. In the process of industrial development of any nation, the industry also plays a supporting role is very important. However, supporting industry in Vietnam is still too young compared to other countries in Southeast Asia, and the development process there are many problems to be solved.

1. Limitation of power supply

Capacity to deliver the products of the industry auxiliary Vietnam is very low, there is not enough capacity to meet the requirements of the foreign firms when they want to build a processing plant in Vietnam products. More specifically, the number of companies operating in this industry was little support, poor product quality and very few businesses can ensure appropriate delivery time. In addition, the product components and parts can be produced is limited only the basic product, easy to manufacture. As a result, these products are competitive in Vietnam by foreign products and reduced market share even in water.
However, even in such a difficult situation, Vietnam enterprises have not made the necessary efforts to improve their production methods. Most companies are currently conducting focus mode of production, from the design model to fabrication, assembly and distribution are conducted in one place. This led to the decline in the quality of human resources and thereby reduce the competitiveness of products.

But private companies with flexible mode of operation than the state-owned companies, but due to reasons such as capital, technology should not be able to expand production lines, and the resulting product quality is not be improved.

The problem of low-quality products is also a fundamental problem of Vietnamese supporting industries.

2. Percentage of high imports

The production cost of the products “made in Viet nam” high cost compared to other Asian countries, and there is no necessary competitiveness. Cause that is, the assembly companies, outsourcing firms do not use products manufactured in Vietnam which relies on imports from other countries.

In fact, in the garment industry – a key export industry in Vietnam, from 50 to 80% of raw materials are imported from other countries. In the automotive industry, this figure is 90-95%. Even the representative of Viet Nam Intel Products must also commented: “The coordination of components in Vietnam is still not able to be at least 5 to 10 years.”

3. Hard to find and select partners

The foreign companies to invest in Vietnam, the first place they will find and select your manufactured goods. However, information about the company public with auxiliary industries Vietnam has very little, and almost all foreign companies have faced many difficulties in the process of finding customers.

As reported by the Institute of Economic Management of central Vietnam, when the company car manufacturer Daihatsu Japan to Vietnam to find manufacturing partners, they have surveyed more than 64 companies to manufacture screws, but they were unable to find a company that meet their requirements in terms of both quality and production scale.

4. The role of the production company supporting foreign origin

The production company supporting foreign origin plays a very important role in supporting industries in Vietnam. The company has a strong economic power, with the ability to manage high and therefore can provide products with high quality. Duong Vietnam as companies tend modeled developing these companies. However, unfortunately, the only foreign companies put their manufacturing processes before finally finished in Vietnam, not actively invest in production of auxiliary products.

However, a different effect from the expansion of the foreign subsidiary company that is attractive and is an invitation to other support companies in Vietnam. For example, the motorcycle industry in Vietnam. Currently, the motorcycle industry in Vietnam has grown from a product to be able to export. According to information from the Ministry of Industry and Trade of Vietnam, the company provides parts for the joint venture motorcycle assembly has now reached 230 companies, including 80 foreign companies, total capital investment of 260 million US dollars.

5. Incentives for industry support

The company wants to invest in industrial production is necessary but ancillary regulations and incentives necessary help to improve competitiveness and reduce production costs. However, existing in Vietnam, Vietnam government almost without any incentives or support measures for companies of this type. Since the production of land use rights, to the tax incentives.