Support industries urged to improve competitiveness

Domestic support industry enterprises need to improve their equipment, technology, management, human resources and control systems if they are to become suppliers of foreign manufacturers

Large market

The government has set targets for the support industry sector to meet 45 and 70 percent of the domestic demand for support industry products and reach an export rate of 25 percent by 2020 and 2030, respectively. According to the Institute for Industrial Policy and Strategy (IPS), as of the end of 2017, Vietnam had 1,383 support industry enterprises, accounting for only 0.3 percent of all (over 500,000) businesses in the country.

Nguyen Thi Xuan Thuy from IPS told seminar participants that the support industry market in Vietnam is large, with automobile and electricity-electronics industries becoming its biggest consumers. However, these two industries still have to import the vast majority of components and spare parts they need, as domestically made ones do not meet manufacturers’ standards. Truong Thi Chi Binh, Vice President and General Secretary of the Vietnam Association of Support Industries (VASI), said manufacturers in Vietnam have to import more than 90 percent of plastics, rubber, electric and electronics parts and components they need, and this offers both opportunities and challenges for support industry enterprises in the country.

Capacity improvement

Nguyen Duong Hieu, General Director of the Lidovit Trading and Industrial Joint Stock Company, said the impact of the fourth industrial revolution was still new to many Vietnamese. “I think local producers firstly need to invest in upgrading their technology, and integrate management systems to better manage their production and approach the market,” he said.

He said that management agencies should provide local part suppliers with specific requirements of foreign firms so they can prepare to meet their standards.

VASI Vice President and General Secretary Truong Thi Chi Binh said that while foreign manufacturers have strict requirements in terms of quality, price, delivery, environmental protection, finance, responsibility and law, very few domestic support companies satisfy these standards. Support industry enterprises should have a long-term vision and appropriate development strategies, she added.

Experts say the presence of strong financial institutions is important to help support industry enterprises develop and improve competitiveness. Support industry enterprises should identify key products that can be developed into internationally recognized and international standard goods. This, in turn, requires new thinking, methods and modes of industrial production, and application of high technology and modern, professional management methods.