Limited capacity

Vietnam’s supporting industry has not developed to its full potential. Participating in this field are mostly small and medium-sized enterprises (SMEs), which face difficulties in terms of markets, technology, human resources, and capital.

According to the Ministry of Industry and Trade (MoIT), among the total number of about 300 automobile-related manufacturers, 50 specialize in assembling, 45 manufacture chassis and perform bodywork, and 214 manufacture components and spare parts.

These numbers are modest compared to other countries in the region like Thailand, where nearly 700 enterprises are tier-1 parts’ suppliers, while Vietnam has less than 100. In addition, Thailand has about 1,700 tier-2 and tier-3 suppliers while Vietnam has less than 150.

Vietnam’s supporting industry can produce less than 300 spare parts while about 30,000 parts are needed to make a car. Furthermore, Vietnamese parts manufacturers can produce simple items, including windshield tape, energy consumption labels, registration stamps, fuel pipes, water tank covers, tyres, tubes, electric wires, seats, tubeless tires, while few have invested in producing car bodies. These do not include engine parts such as gearboxes, safety and electronic systems.

Linkages with Samsung, Toyota

Foreign-invested enterprises are the locomotives of Vietnam’s supporting industry development. For example, in the electronics industry, the MoIT and Samsung Vietnam are jointly developing a smart factory project that aims to train 100 Vietnamese experts and provide consultation to help 50 businesses set up smart factories.

This is also an opportunity to standardize enterprises according to the smart factory model, providing them with greater opportunities to participate deeply in global supply chains and become partners of leading enterprises like Samsung Vietnam.

In the automobile industry, a cooperation project between Toyota Vietnam and the Vietnam Industry Agency (VIA) under the MoIT helps domestic enterprises in the field of supporting industry through training, competency building, and production efficiency.

In 2018, Toyota Vietnam established a department dedicated to training, developing personnel and managing production for suppliers, which has significantly increased the number of all-Vietnamese enterprises in its supplier system.

Truong Thanh Hoai, Director of the VIA added that the MoIT had established three technical centers that assist industrial growth in three key economic regions in northern, central and southern Vietnam, in order to help supporting industry enterprises innovate, transfer production technology, improve productivity and quality, create added value, and join in the global supply chain.