Opportunities for supporting industries to join the global supply chain

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Preparing to seize opportunities

A report from the General Statistics Office showed that the industrial production index in the first seven months of 2024 increased by 8.5% compared to the same period last year. The processing and manufacturing industry grew by 9.5%, with electronics being a key sector. Vietnam is emerging as a bright spot in new investment areas such as semiconductors, artificial intelligence, and high-tech industries.

Many Vietnamese suppliers have noted that global corporations are increasingly interested in finding domestic suppliers. Mr. Matsumoto Nobuyuki, Chief Representative of the Japan External Trade Organization (JETRO) in HCM City, stated that Vietnam remained an attractive investment destination for Japanese businesses. Notably, according to surveys, 56.7% of Japanese companies in Vietnam plan to expand their business in the next 1-2 years, with the manufacturing industry accounting for 47.1%.

“Các cơ quan chức năng cần sớm đầu tư xây dựng các trung tâm nghiên cứu và phát triển sản phẩm, hỗ trợ doanh nghiệp trong nước nâng cao năng lực thiết kế, phát triển sản phẩm mới, sản phẩm công nghệ cao, tiến tới kiến tạo chuỗi cung ứng Made in Vietnam”, ông Đỗ Phước Tống, Chủ tịch Hội Doanh nghiệp cơ khí- điện TPHCM đề xuất.

“Authorities should soon invest in establishing research and product development centers, supporting domestic enterprises to enhance their capabilities in design, development of new products, and high-tech products, aiming to create a "Made in Vietnam" supply chain”, Do Phuoc Tong, Chairman of the HCM City Mechanical and Electrical Enterprise Association, suggested.

A report from the MoIT indicated that some domestic supporting industries have improved their production organization, increased productivity and efficiency, and reduced costs, thereby enhancing competitiveness. These companies have become direct suppliers to manufacturers, assemblers, and multinational corporations, participating in regional and global production networks and value chains.

The supporting industry is increasingly developing, providing raw materials for domestic production, with the localization rate increasing in many industries such as textiles and footwear (45-50%) and mechanical engineering (over 30%).

Nguyen Ngo Long, Chairman of the Board of Directors of Nhat Long Company, stated that the company has undergone a "transformation" by restructuring, upgrading its capacity, equipment, and technology, successfully weathering the most challenging period due to global economic impacts. Consequently, Nhat Long has gradually grown from a small enterprise to a supplier of industrial parts and components to foreign direct investment (FDI) enterprises and domestic factories, reducing dependence on imported products.

Opportunities in the semiconductor industry

According to Vu Trong Tai, General Director of RX Tradex Vietnam, Vietnam is emerging as a bright spot in new investment fields such as semiconductors. Therefore, enhancing the quality and competitiveness of Vietnamese supporting industries within this supply chain is becoming increasingly urgent. Especially as foreign investors are looking for partners in Vietnam to increase the localization rate and deepen integration into the global supply chain.

Discussing the ability of local industries to participate in the semiconductor supply chain, Le Nguyen Duy Oanh, Deputy Director of the HCM City Supporting Industry Development Center, noted that Vietnam has a technical advantage in the production of semiconductors, which has attracted significant interest from FDI investors and international corporations in this field.

Moreover, domestic supporting industries will have opportunities to meet the investment needs in Vietnam’s semiconductor industry. However, they must continue to improve their technical skills, enhance production standards, invest in ISO certifications, and boost production capabilities and workforce. This preparation is crucial for Vietnam to secure a position in the semiconductor supply chain, Oanh emphasized.

However, according to businesses, the influx of FDI companies presents a substantial market share opportunity for domestic supporting industries, but accessing it is not easy. Tran Thanh Lam, General Director of CNS Amura Precision Co., Ltd., mentioned that although the company's products are stably supplied to supply chains in Japan and South Korea, they faced pressure to reduce prices by 3% annually. This has resulted in increasingly thin profit margins, making it challenging to maintain long-term customer relationships. Therefore, to secure a place in the supply chain, domestic businesses must engage in the production of core technology products.