Supply chain disruptions draw Japanese interest in shift to Vietnam

15:00 | 13/11/2021 Industry

(VEN) - Many Vietnamese supporting industry products were introduced at the Mechanical Components & Materials Technology Expo (M-Tech) held recently in Japan’s Osaka Prefecture, prompting Japanese interest in moving some production to Vietnam.

Japanese enterprises are interested in Vietnamese supporting industry products

The M-Tech Osaka 2021 is one of the largest annual exhibitions of mechanical engineering, support industries and machining techniques in Japan. This year's exhibition included participation by many big brand manufacturers from industrial powers around the world such as the UK, France, Germany, the US, the Republic of Korea, and China, presenting a good opportunity for Vietnamese businesses to introduce products and seek cooperation opportunities to participate in the global value chain. At the same time, the show provided Vietnamese enterprises with access to advanced production technologies and techniques.

The booth of the Vietnam Trade Office in Japan drew a large number of visitors during the three-day event. Vietnamese Trade Counselor in Japan Ta Duc Minh said that with the support from the Vietnam Trade Office in Japan, many Vietnamese enterprises had the opportunity to attend this year’s exhibition to introduce products, find business cooperation opportunities and deal directly with foreign partners, thereby contributing to the development of Vietnam's supporting industry.

According to economic experts, the outbreak of the Covid-19 pandemic in early 2020 disrupted parts of the supply chain, leading many Japanese businesses to shift the entire or part of their supply chains from China to neighboring countries in Southeast Asia like Vietnam and Thailand. In fact, when foreign enterprises choose the location of their factories, they are no longer only interested in factors such as labor costs but also take into account the development of support industries to ensure a smooth supply chain.

Opportunities for support industries

Thus, the development of support industries will help Vietnam's manufacturing industry strengthen linkages, improve the stability of supply chains, form an ecosystem of support industries, increase the localization rates and improve the product mix given the significant increase in the proportion of Vietnamese medium and high-tech products.

Three sectors related to support industries currently benefit from the Vietnam-Japan cooperation frameworks – electronics, agricultural machinery and automobile manufacturing. International exhibitions provide Vietnamese enterprises with an opportunity to introduce their capabilities in supplying supporting industry products to Japanese partners and to seek additional partners.

Vietnam and Japan are signatories of a Comprehensive Economic Partnership Agreement (VJEPA), Vietnam’s industrialization strategy within the Vietnam-Japan cooperation framework, and of the Action Plan of the Vietnam-Japan Joint Initiative Phase VII. These agreements, strategies and plans have been and will be the levers for cooperation and technology transfer, as well as production capacity improvement for their enterprises.

Thu Thuy