What should Vietnamese SMEs do to join global supply chains?
What should Vietnamese SMEs do to join global supply chains?
Nearly 200 people who are leaders of central-level agencies, localities in the southeastern region, associations, and enterprises as well as local and foreign experts discussed ways and made suggestions to boost the building of Vietnam’s independent industries at a seminar held in Ho Chi Minh City on Tuesday.
The seminar 'Supporting Small and Medium Enterprises (SMEs) in Joining Global Supply Chains' is part of a series of activities, including visits, exhibitions, and seminars held by Tuoi Tre (Youth) newspaper in association with the Industry Agency under the Ministry of Industry and Trade and the Ho Chi Minh City Department of Industry and Trade.
Multiple solutions to develop supporting industries
Hailing the seminar, vice-chairman of the Ho Chi Minh City People’s Committee Ngo Minh Chau said the event would benefit the SME community in the city and be an opportunity for management agencies to listen to the opinions of experts, scientists, business associations, and enterprises to remove difficulties and propose solutions and policies to develop supporting industries, thus furthering industrial development.
Chau added that in Ho Chi Minh City, supporting industries are considered a priority for development.
Therefore, since the 10th plenum of the Party Central Committee of Vietnam, the Ho Chi Minh City Party Committee and People’s Committee have requested the employment of solutions to develop supporting industries, such as establishing a municipal steering committee for supporting industry development and a municipal supporting industry development center under the municipal Department of Industry and Trade.
In his opening remarks at the seminar, editor-in-chief of Tuoi Tre Le The Chu said Vietnam is becoming an alternative destination which plays an increasingly important role in global supply chains amid the capital shift and many multinational groups’ enhancement of investment in Vietnam.
In particular, Truong Hai Auto Corporation (THACO) put its mechanical center into operation and broke ground on a research and development (R&D) center project in Quang Nam Province, central Vietnam in December last year.
Furthermore, the corporation concluded a cooperation agreement with Binh Duong Province in southern Vietnam to develop a mechanical support industrial park with an investment of over VND25 trillion (US$1.06 billion).
Chu also informed that the seminar organizer, leaders of agencies, experts, and representatives of enterprises had visited the production lines and affiliate models of Dien Quang Lamp JSC and Nhat Long Mechanical Trading Co. Ltd., which have successfully got involved in global supply chains of their Japanese, South Korean, and European partners.
These stories prove that Vietnamese enterprises have grasped opportunities from the shift of supply chains, turning them into real orders.
“The seminar is expected to be a premise and database for the seminar ‘Orientations for Industrial Development in Ho Chi Minh City until 2030 with a Vision to 2050,' slated to take place in the metropolis in April this year,” Chu added.
Publicizing a survey on the current situation of enterprises, Bui Thi Hong Hanh, managing director of NC Network JSC, said domestic enterprises are facing difficulties in accessing customers and market information, ensuring human resources and equipment, resolving financial issues, and getting certificates related to supply chains and materials.
Vietnam has yet to have a machinery manufacturer. Many local enterprises have bought new equipment from other countries, while some are using second-hand machines from Japan.
While Japan has strengths in stamping, milling, and welding, Vietnamese enterprises have found it hard to manufacture clusters of accessories. They are short of machines, so they cannot secure orders.
Difficulties in building a process of formulating, managing, monitoring, and executing manufacturing plans are also an obstacle.
Moreover, local enterprises have encountered many difficulties in personnel recruitment, training and management, corporate culture building, and technology transfer.
They have also been reliant on foreign sources of materials. Vietnam has no such materials, but enterprises cannot order small volumes of the materials from China.
In addition, up to 71 percent of the enterprises surveyed said they had faced delivery tardiness.
There is a case that a company manufactured its products in Vinh Phuc Province, northern Vietnam but the products underwent thermal treatment in another locality, thus delaying the delivery time.
A Japanese company interested in investing in Vietnam is concerned over the thermal treatment as it will have to do the job in Quang Ninh, and the investment in a thermal treatment facility also raises concerns over environmental issues.
According to Hanh, although the number of supporting industry enterprises has surged, they are not enough. There is a lack of molding, casting, plastic injection, welding, and thermal treatment enterprises.
Despite the abundant opportunities to take part in global supply chains, risks and crises remain, so enterprises should wait until the third quarter of the year to make investment decisions.
Preferential policies in taxes, training, finance, and market expansion should be enhanced.
“Enterprises also expect reasonable interest rates and the use of machines as collateral instead of properties only," Hanh said.
“Industrial parks should be planned to meet supply chain requirements. Additionally, the state should issue long-term strategies and determine key industries to reduce domestic enterprises’ reliance on imports and set their mind at rest for production.”
The seminar 'Supporting Small and Medium Enterprises in Joining Global Supply Chains' is part of a series of activities of the ‘Building Independent Industries’ forum initiated by Tuoi Tre in July 2022.
Through the forum, many media activities and events have been carried out to attract the attention and opinions of leaders of enterprises, experts, policymakers, and other relevant agencies.
Solutions and policies have been later proposed to remove difficulties of enterprises, especially SMEs, in participating in global supply chains.
