Helping supporting industry enterprises regain momentum

The trend of shifting mechanical production - heavy industry from developed countries to ASEAN and Vietnam creates a great deal of room for enterprises in the supporting industry. Photo: THACO Industries

Enhancing opportunities to link partners

Recently, N&G Group (N&G Group - investor of South Hanoi Supporting Industrial Park - Hanssip and many subsidiaries and affiliated companies in the field of supporting industry) and Onaga Company (representative of the group of enterprises in the Kobe region, Japan, specializing in the production of supporting industry components) have reached a cooperation agreement to create a chain of factories producing aircraft components, products for applications in the fields of aerospace - aircraft - ships – high-speed trains - automobiles, agricultural and fishery equipment, robots, high-tech precision mechanical products and supporting industries.

According to a representative of N&G, this agreement was made after a long period of interruption in trade due to the Covid-19 pandemic. According to the cooperation agreement, N&G Group will provide extensive information on the investment environment in Vietnam.

In particular, N&G Group will arrange premises and build a chain of international standard factories for the supporting - high-tech industry in industrial parks that N&G Group is deploying in North, Central and South regions to enterprises of Kobe area choose to invest.

This is good news for enterprises in the supporting industry because they are all heavily affected by the pandemic. Particularly in Hanoi, according to a survey of the Hanoi Supporting Industry Business Association (HANSIBA), nearly 90% of enterprises under the association have experienced a decrease in sales; 50% of enterprises have to operate in moderation and some had to change production.

However, many enterprises have quickly transformed models and strategies to cope with difficulties from the pandemic.

For example, Hikari Vietnam Manufacturing and Trading Co., Ltd., Viet Nhat Industrial Development and Production Joint Stock Company (INDEMA) have shifted to manufacturing medical equipment products or joined the production chain of medical equipment for large corporations and enterprises. Many enterprises invest in digital transformation, product research and development (R&D), increasing the ability to link with foreign partners.

A representative of Vietnam Haast Industry Co., Ltd. said that the company had invested in factories and high-tech lines, with the expectation of connecting many domestic and foreign partners. The products are developed from the concept stage, product design, and cooperation with foreign firms.

Similarly, Mechanics and Supporting Industries Corporation - THACO Industries (under THACO Group) invested and upgraded factories with a system of modern technology lines, transferred from Germany, Switzerland, Japan and Korea.

A representative of THACO Industries said that the company was currently a partner supplying products for enterprises such as: Doosan Vina, GE, Makitech, Agata, Three Star, OGS, PTSC.

In addition, THACO Industries also associated with partners to develop production and business, processing according to the value chain; supported and created conditions for enterprises to participate in the company's production chain, towards the formation of a sustainable development ecosystem.

Taking advantage of export opportunities

According to experts and enterprises, FTAs are an opportunity for Vietnamese supporting industry enterprises to connect and participate more deeply in the global value chain. Currently, many Vietnamese enterprises have been able to supply large FDI corporations, so they are fully eligible to export to international partners.

In addition, the THACO Industries representative said the demand for machining and manufacturing mechanical products in the ASEAN region and the world was very large. In particular, the trend of shifting mechanical production - heavy industry from developed countries to ASEAN and Vietnam also created great opportunities for these industries.

However, in order to take advantage of these opportunities, Vietnam's supporting industry enterprises still face many challenges. According to statistics of the Ministry of Industry and Trade, the number of enterprises operating in the supporting industry currently accounts for nearly 4.5% of the total number of enterprises in the processing and manufacturing industry.

However, domestic supporting industry products are still mainly simple components and details, with medium and low technology content, and have a low value in the product value structure. Vietnam does not have enterprises in the regional and international production chains that play a leading role in development and diffusion. The domestic market capacity is still small, it has not yet ensured the economic production capacity for supporting industry products, and there are almost no key industrial products that are capable of competing with imported products.

Therefore, enterprises all want the management agencies to remove difficulties and create more open conditions for supporting industry enterprises to continue to grow.

Ministries and branches have coordinated to promote the implementation of many international cooperation programs and projects in the supporting industry to expand the market and improve the level of Vietnamese supporting industry enterprises.

This includes the project of cooperation with Samsung in the Supplier Development Program; training program for Vietnamese consultants in the field of production and quality improvement; business improvement consulting program.

The Ministry of Industry and Trade has established three technical centres to support industrial development in three key economic regions of the Northern, Central and Southern regions to support industrial manufacturing enterprises and supporting industry in innovating, transferring experimental production technology, improving productivity and quality, creating added value as well as participate in the global supply chain.