Japanese firms see Việt Nam as key supply chain link

Japanese firms see Việt Nam as key supply chain link

Many Japanese enterprises regard Việt Nam as an indispensable link in their supply chains.

Việt Nam's supporting industry is drawing increasing interest from Japanese businesses and investors, according to B&Company Inc, a Japanese investment research and consulting firm.  

Many Japanese enterprises regard Việt Nam as an indispensable link in their supply chains.

B&Company Inc asserted that, by spurring the processing and manufacturing sectors, Việt Nam's supporting industries have significantly improved the country's overall economic structure.

Việt Nam’s supporting industry presents substantial growth opportunities thanks to its geostrategic advantages, strong government support and foreign investment from leading global manufacturers.

B&Company Inc emphasised that, with its strategic location in Southeast Asia, Việt Nam enjoys favourable conditions for accessing major regional markets, including China, Japan and South Korea.

If its geographical advantages are combined with an efficient transportation and logistics network, costs can be reduced while market accessibility is enhanced.

Việt Nam has emerged as an attractive destination for global corporations, including Apple, Canon, LG, Samsung, Google and Panasonic.

As multinational corporations expand their supply chains into Việt Nam, their top-tier suppliers, including Foxconn, Jabil, Pegatron and Wistron are also following suit, further strengthening the country’s industrial infrastructure.

In addition, the Vietnamese government helps the development of supporting industries through various policies, including tax incentives, financial assistance and access to specialised training programmes.

Additionally, the government has signed numerous free trade agreements (FTAs), further boosting the country’s exports and global trade connectivity.

Despite Việt Nam's significant success in attracting foreign investment, its supporting industries still face substantial challenges.

According to B&Company Inc, 88 per cent of domestic companies in these industries are classified as small- and medium-sized enterprises (SMEs), which often struggle with limited financial and human resources.

Việt Nam also lacks major industry-leading companies with strong market influence and investment in research and development (R&D) and product innovation remains minimal.

These challenges hinder the country’s ability to integrate fully into the global value chain.

Moreover, foreign companies tend to rely on well-established suppliers or reputable firms in the domestic market, putting Vietnamese companies at a disadvantage.

Weak relationships with major global brands often place local businesses in a passive position, making it difficult for them to secure favourable terms and partnerships.

B&Company Inc suggests Việt Nam must develop stable domestic supply of raw materials and components which will enable businesses to create more flexible supply chains, reduce costs and drive the growth of domestic manufacturing and processing sectors.

According to a Japan External Trade Organisation (JETRO) survey, the localisation rate of Japanese enterprises in Việt Nam has increased from 28 per cent a decade ago, to 37 per cent in 2022. However, companies are facing difficulties, particularly regarding supplier quality.

The demand for reliable and high-quality suppliers offering competitive pricing remains a key challenge for further advancement. 

Bizhub