Vietnamese supporting industry enterprises seek entry into supply chains

Domestic supporting industry enterprises are facing numerous development opportunities amid the global supply chain shift, in which Vietnam is emerging as a key link. However, in reality, the sector continues to face significant challenges.

Vietnamese enterprises participate in a business networking conference between Vietnamese and Japanese companies organized by the Provincial People’s Committee in 2024. Photo: Vuong The

Alongside investments in infrastructure, human resources, technology, and state support policies, supporting industry enterprises are making efforts to enhance their capabilities to meet international standards and integrate more deeply into production supply chains.

The challenge of enhancing industry capacity

Dr. Can Van Luc, Chief Economist of Bank for Investment and Development of Vietnam (BIDV) and a member of the Prime Minister’s Policy Advisory Council, noted that in recent years, the policy framework and industrial development orientations have been relatively well-completed, creating a favorable legal environment for enterprises. As a result, the number of supporting industry enterprises has continued to rise, particularly within supply chains for key sectors such as textiles, footwear, electronics, and agricultural processing. Many products now not only meet domestic demand but are also exported, with some major enterprises moving further up the global value chain.

However, supporting industry still shows many limitations: the localization rate remains low, many high-tech fields depend on imports, and Vietnamese enterprises’ products mostly stop at simple components with low added value. This challenge poses risks of failing to meet the criteria of free trade agreements (FTAs), potentially facing high tariffs. In addition, Vietnam’s products risk being considered “transshipment goods” since the localization rate in some strategic manufacturing sectors is still low.

Sharing the same view, Vo Son Dien, Chairman of the Ho Chi Minh City Association of Supporting Industries (HASI), acknowledged that despite its potential, Vietnam’s supporting industry sector remains fragmented, lacks cohesion, has not formed a complete “ecosystem,” and still depends heavily on imported components and equipment.

According to Dien, the Southeast region is the hub of Vietnam’s manufacturing, exports, and supporting industries. As such, strengthening connectivity and development in this sector within the area has a significant impact on the overall growth of the industry. This occasion is a timely opportunity for enterprises and industry associations to collaborate in forming highly competitive supply chains that meet the demands of key sectors, while also enhancing integration and expanding export markets.

Currently, Dong Nai is making efforts to develop more industrial parks and expand clean land funds to attract investment. The province gives priority to sectors with modern technology, supporting industries, and aims at several strategic industries such as semiconductor technology and aviation…

Enterprises strive harder to join the supply chain

To meet the increasingly high standards of import markets as well as the demands of FDI (foreign direct investment) partners in Vietnam, businesses must constantly make efforts.

Cat Thai Production and Trading Co., Ltd. (Ho Chi Minh City) now has thousands of products and components. Its main product lines focus on high-tech plastics, plastic pallets, recycled plastic pellets, rubber parts, plastic injection molds, stamping molds, metal parts, metal stamping, mechanical processing such as cutting, drilling, threading, industrial solutions, hardware and software design.

According to Le Tuan Anh, Director of Cat Thai Production and Trading Co., Ltd., in order to gradually develop, the company has spent many years building its supply chain with the capability to supply many different companies.

In Dong Nai, although still operating at a small and medium scale, several enterprises have gradually built an international client base. Dai A Thanh One Member Co., Ltd. (Long Binh Ward, Dong Nai Province) specializes in the production, assembly, and supply of cable products for electronic appliances such as air conditioners, washing machines, refrigerators, and televisions. Through persistent efforts, Dai A Thanh has successfully established partnerships and supplied products to major brands including Aqua, Nidec Sankyo, Cicor Anam, and Sowel.

According to Le Tri Minh, Director of the company, enterprises strive to participate in industry development support programs from the State and local authorities. For example, with support from the Dong Nai Support Industry Promotion Coordinator (Coordinator Team), Dai A Thanh has been able to cooperate with Japanese enterprises. Working with FDI companies helps Vietnamese manufacturers gain more experience, improve capacity, gradually attract more partners, increase the localization rate of products, and contribute to promoting production development.

According to enterprises, alongside general policies on supporting industry development and investment in infrastructure and human resources, the self-driven efforts of businesses also play a vital role. Amid the ongoing shift in global supply chains and production, Vietnam’s supporting industries are expected to integrate more deeply into global supply chains, thereby elevating their position on the world industrial map.

By Vuong The - Translated by Quynh Giao, Minho