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Associate to join the production chain to develop the Mechanical industry

27/04/2022

In 2021, despite the pressures of the Covid-19 pandemic, many domestic mechanical enterprises still maintain regular production and product supply to the market.The demand for processing and manufacturing mechanical products in ASEAN and the world is very high. In particular, the trend of shifting heavy mechanical – industrial production from developed countries to ASEAN and Vietnam also creates a large surplus for these sectors.

According to the General Statistics Office, the production index of mechanical products in 2021 only increased by 0.4% compared to 2020. Industrial products to support the mechanical industry with high output include: Other DC electric motors and DC generators; DC electric motors with power ≤ 37.5 W; Other mechanical machines and equipment with separate functions… manufactured mainly in provinces and cities: Dong Nai, Da Nang, Ho Chi Minh City, Binh Duong, Hanoi…

In particular, mechanical support industry products with increased output compared to 2020 are: Rotary electric transformers increased sharply – 106.9%; electric transformers using liquid dielectric with a capacity of no more than 650 KVA increased by 13.06%; other generating units increased by 12.06%. In contrast, some products with reduced output such as: Other DC electric motors and DC generators decreased 11.61%; Other mechanical machines and equipment with separate functions have not been classified 11.52%; Other electric transformers with power > 16 kVA but ≤ 500 kVA decreased 10.97%; DC electric motors with power ≤ 37.5 W decreased 0.97% slightly.

In the announcement on the proposal to order scientific and technological tasks at ministerial level starting from 2023 in the field of mechanics, the Ministry of Industry and Trade emphasized that it is necessary to strengthen cooperation with major automobile companies to select the type of spare parts and components that Vietnam can produce to assume a chain role in the global production – supply chain, on the basis of which advanced technology and production for export are invested.

In exporting mechanical products to large markets like today, the role of large domestic enterprises with strong potential is very important. Because, with such large enterprises, there are enough financial resources to invest in technology, standardize products from raw materials, production to cost and form a chain of linkages from production to distribution. Especially, businesses must know how to apply 4.0 technology appropriately. In particular, the focus on mass production, automation but according to the individual requirements of international customers is extremely necessary.

Except for some large domestic enterprises (typically THACO), other enterprises invest in a mechanical engineering factory in the current conditions with many difficulties, because investment from the beginning to the end requires a very large capital. This is one of the reasons for Vietnam’s lack of branded mechanical products when exporting. According to experts, the limited side of domestic enterprises in the mechanical engineering industry is limited capital.

In order to export mechanical products to large markets, the first thing requires enterprises to invest in equipment lines, produce sample products, and then give the products to the inspection partners. If the partner sees a reasonable product, then proceed to mass production. Meanwhile, local mechanical enterprises do not have the conditions to produce such mechanical products.

In addition, bank interest rates for this sector compared to other countries in the region have not been as expected of mechanical enterprises. Thus, it will be difficult for enterprises to invest in equipment lines to produce mechanical products for export in large markets.

In the context of production recovery at the end of 2021, although the interest rate of bank loans has been reduced but only reduced by an average of 0.5%/year, it does not mean much to the business. The other problem is that enterprises have to mobilize themselves, find their own solutions to overcome this difficult period.

The forecast of domestic and international mechanical processing demand is very large, the mechanical processing in 2021 alone has doubled, especially for export. By 2022, mechanical exports could reach $200 million. That is why THACO invests more strongly, estimated at VND 2,000 billion in 2022 to develop the mechanical and industrial complex to become a multi-use mechanical center of the Central region. On that basis, THACO is promoting the association with partners and manufacturers in the mechanical, electrical and electronic support industry to form the mechanical industry ecosystem, thrive in the whole country and reach the international level.

With the desire that Chu Lai industrial center is one of the centers confirmed global brand rather than simply an assembly complex, automobile production, multi-use mechanics as currently, Quang Nam province will establish a sustainable cooperation relationship between small and medium enterprises, production in the mechanical engineering cluster, support and linkage to participate in this production chain. Since then, it has established an ecosystem to develop Vietnam’s mechanical engineering and supporting industries, in which THACO is identified as the flagship, other enterprises will participate in the production value chain in the mechanical engineering and supporting industries.

For THACO, the development of the supporting industry on the basis of mechanical engineering is a strategic orientation to improve competitiveness, increase the attraction of foreign direct investment, promote the acquisition and transfer of technology, create a premise for developing other economic sectors, thereby implementing a localization strategy, deeply and effectively participating in the global value chain. After 16 years of investment in Chu Lai, THACO has formed a mechanical manufacturing and processing complex for the production of automobiles and spare parts, and also performs processing for customers such as Doosan Vina, General Electric (GE), Makitech (Japan), Agata, Three Stars and businesses that come to invest in Chu Lai.

In order to implement the strategy of expanding mechanical production, besides the existing factories and companies, the joint venture and association is THACO’s strategic solution to expand into new mechanical fields, namely agro-forestry mechanics, construction mechanics, traffic mechanics, industrial equipment mechanics… To achieve success like THACO, businesses in the industry need strong capital and focus on investing in technology, as well as developing a variety of products to improve their competitiveness, meet the needs of international customers.

Source: Bo Cong Thuong

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    MTA Vietnam 2022 Is Ready To Welcome The Return Of Our Exhibitors
[Vietnamese below]
With the latest news of ZERO QUARANTINE for international travelers entering Vietnam, MTA Vietnam 2022 is ready to welcome all of the international exhibiting companies to this years exhibition at SECC, District 7, Ho Chi Minh City, Vietnam from 06-09/07/2022. MTA Vietnam is the leading prestigious exhibition of the engineering and manufacturing industry in Vietnam with a lot of experiences from organization to marketing promotion, promising in this return, MTA Vietnam will bring up many surprises to the community in and out of the country. Contact us to BOOK YOUR STAND NOW!
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