Elevating Dong Nai’s mechanical engineering and manufacturing industry

Dong Nai currently has more than 500 mechanical engineering and manufacturing enterprises in operation. Many of these enterprises have joined supply chains that serve both domestic and foreign-invested enterprises.

However, a closer look at the products manufactured by domestic enterprises reveals several issues that require attention and solutions. Most products remain concentrated in relatively simple, low-value-added stages of production. This requires Dong Nai’s mechanical engineering and manufacturing sector to upgrade its products and generate greater value for the industrial sector.

The value of mechanical engineering and manufacturing lies not so much in the volume of products made as in the ability to design, master technology, achieve high precision, use appropriate materials and meet required standards. Enterprises that only provide machining services based on customers’ drawings will find it difficult to secure a higher position in the value chain. When enterprises can independently design and manufacture components and equipment, the value they create is much greater than simply processing products according to customers’ designs.

Dong Nai has a well-developed manufacturing sector producing machinery, equipment and parts for transport vehicles. Each year, the city exports more than USD3.8 billion worth of these products, while also importing nearly USD2 billion worth of inputs for these industries. Most enterprises in these sectors want to source inputs domestically to shorten transportation times, reduce costs and gain greater control over production. This represents an important market opportunity for domestic mechanical engineering and manufacturing enterprises to strengthen their capabilities, become long-term suppliers and participate more deeply in supply chains.

To achieve this, support policies for mechanical engineering and manufacturing enterprises need to directly address their current shortcomings. First is technology. Dong Nai needs programs to support investment in modern machinery and the adoption of high-tech solutions. However, support should not stop at helping enterprises purchase equipment. More importantly, enterprises need assistance in selecting the right technologies for specific products and markets.

The next issue is standards and quality. These are the “passports” for entering global supply chains. Many enterprises are capable of manufacturing products but lack the capacity to demonstrate consistent quality, manage processes, ensure traceability and exercise effective control. Therefore, enterprises need support to establish quality management systems, testing laboratories, metrology capabilities and certification systems that meet the requirements of each industry.

Human resources are another bottleneck, as even a modern production line cannot reach its full potential without workers capable of operating equipment, programming, designing, analyzing data and troubleshooting. Vocational schools and universities need to forge closer ties with enterprises and provide training based on enterprises’ specific requirements and actual industry needs.

Another issue is funding for technological innovation. Most mechanical engineering and manufacturing enterprises are small or medium-sized and often lack sufficient capital for investment. Appropriate credit packages and support mechanisms are therefore needed for technological innovation, research and development, and pilot production. Timely support can help enterprises bridge the gap and meet international standards.

The performance of the mechanical engineering sector should be measured not simply by the number of enterprises participating in supply chains, but by the types of products they can produce and the value they can retain. Enterprises need to shift from contract manufacturing to mastering technology, and from simple products to those with high technical content. This is the necessary step toward elevating Dong Nai’s mechanical engineering and manufacturing industry.

By Khanh Minh – Translated by Mai Nga, Minho