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The Mechanical Industry Welcomes The “Wave” Of Integration

07/12/2021

With many Free Trade Agreements (FTAs) signed, Vietnam has been receiving the wave of supply chain shift from foreign investment (FDI) flows, this is an opportunity for domestic mechanical businesses improve production capacity, breakthrough.

The ability is not strong enough

The report of the Department of Industry (Ministry of Industry and Trade) shows that Vietnam currently has more than 25,000 mechanical enterprises operating and having business results, accounting for nearly 30% of the total number of processing and manufacturing industrial enterprises, with net revenue is more than 1,465 trillion dong. However, the common domestic mechanical enterprises are small-scale, low-competitive, and have not yet mastered complete core technology in the mechanical field. At the same time, product quality is not good, prices are high and there are almost no key industrial products capable of competing with imported products. Therefore, the mechanical market share in the domestic market still largely belongs to foreign enterprises. Mechanical products, human resources… are inferior to other countries in the region. The connection between Vietnamese mechanical enterprises is still limited; Market-making factors, regional linkages, human resources, etc. are still weak.

Mr. Pham Tuan Anh – Deputy Director of the Department of Industry – said that the mechanical industry is facing relatively fierce competition with imported products. Market expansion still faces many difficulties due to lack of market information and weak domestic competitiveness.

The mechanical field continues to receive the attention of investors

Although Vietnam has formed a number of key industries of the economy such as oil and gas exploitation and processing; electronics, telecommunications, information technology; metallurgy, iron and steel; textile, garment, footwear… creating an important foundation for long-term growth, as well as promoting the process of modernization and industrialization of the country. However, Vietnam’s industrial production is currently still focusing mainly on production activities in the final stage, bringing low added value. Along with that, the development lacks synchronization, lack of connection between links within the industry and between industries, including mechanical engineering, leading to unsustainable development. This requires further improving the capacity of domestic mechanical enterprises, increasing the linkage for mutual development in the coming time.

Change to take advantage of opportunities

Many economic experts said that the investment shift has changed positively in recent years, in which, investment capital is increasingly concentrated in the field of processing and manufacturing. A large amount of FDI is still finding its way into the processing and manufacturing industries, the mechanical industry… Accordingly, the mechanical industry continues to receive the attention of investors, especially in the context that Vietnam has been participating in new generation FTAs. Catching up with the trend, FDI enterprises operating in the field of mechanical engineering are tending to increase investment in high-tech production projects.

Sharing about this opportunity, Mr. Tran Van Tuan – General Director of Vietnam Steel Structures and Lifting Equipment Joint Stock Company (Vinalift) – commented that businesses need to create markets by improving product quality, create products with competitive prices, focus on marketing (which is weak for mechanical enterprises) to introduce products. Along with that, develop design, manufacturing and management standards in accordance with international and regional standards. In addition, businesses should choose a few products for intensive research and production, strengthen mutual cooperation to avoid spreading investment.

According to Mr. Dao Phan Long – Chairman of Vietnam Mechanics Association, in 2021, manufacturing enterprises will have many opportunities, because many orders, investors will turn to Vietnam. To catch this opportunity, enterprises must standardize products, from raw materials, production stages to competitive prices. “Supporting Vietnamese enterprises to connect to the global supply chain, improve production and business capacity is very necessary. In the future, the mechanical industry requires the development of materials and molds. This forces businesses to link stronger, those who are still small, weak in capital and qualifications have to sit together to share information, technology and orders” – suggested Mr. Dao Phan Long.

In addition to extensive integration, Vietnam is also expected to implement many important projects with a large total investment such as the electricity master plan for the period 2021-2030, high-speed railway, Long Thanh international airport, and other major projects. urban railways, traffic works, irrigation, oil and gas, marine economy, shipbuilding, automobiles, motorbikes… Therefore, it is necessary to have strict regulations on the reasonable ratio in the volume and value of the project to ensure opportunities for domestic mechanical enterprises to participate as international practice. This has both created a market and helped improve the capacity and linkages of domestic enterprises.

To support the mechanical industry, the Ministry of Industry and Trade said, the Ministry will continue to strongly develop downstream industries, including a number of industries such as the energy industry, the precision engineering industry as well as a number of other mechanical engineering industries to ensure the development of supporting industries. This will attract multinational corporations to invest in large-scale projects in Vietnam. By promoting the manufacturing and assembling industries of finished products, the market for the domestic supporting industry will be maintained and expanded, creating a premise for domestic mechanical enterprises to become suppliers, participating in the competition. participate in the supply chain of enterprises producing and assembling final products.

Source: Cong Thuong

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