Supporting industries weak, Vietnamese products uncompetitive

The Vietnamese biggest private run automobile manufacturer once could not make deliveries on schedule because it had only four tires to assemble for each vehicle instead of seven. Electronics manufacturers have to import 100 percent of components from China and South Korea to assemble TVs. The pale supporting industries make Vietnamese products uncompetitive in the world market.

100 percent of TV parts are imports

Pham Thanh Tri, Director of VVC, a TV manufacturer, said that now his company can use domestically made plastic covers or boards for assembling CRT 21 inch TV. Sam Company in Binh Duong province proves to be the only TV part supplier to all the manufacturers that make CRT 21 inch TVs. A plastic TV cover is priced at 130,000 dong, while a set of board at 450,000 dong, which are some 70,000 dong cheaper than the imports from China.

However, Tri said, other important TV parts, especially TV tubes, still need to be imported.

Meanwhile, as for other types of TVs, such as 25 inch or 29 inch TVs, domestic assemblers would not find any domestic TV part supply sources and they have to import 100 percent of TV parts needed. If Vietnamese assemblers import TV parts in small quantities, they will have to pay high for the products, thus making their products uncompetitive. Therefore, Vietnamese electronics manufacturers such as VVC, VTB or VTD only focus on making 21 inch TVs only.

Tri went on to say that VVC is planning to make low cost tablet PCs for the domestic consumption. However, VVC still cannot find any part suppliers, except the TV packing suppliers, therefore, the plan has been delayed.

Lacking tires, manufacturers cannot sell autos

Bui Ngoc Huyen, General Director of Vinaxuki, the biggest Vietnamese private automobile manufacturer, complains that it is very difficult to find domestic car part suppliers.

Vinaxuki now uses domestically made Sao Vang or Dong Nai brand tires, because these products have high quality. However, the suppliers sometimes cannot provide enough products on schedule. It once happened that the tire factories could only satisfy 40 percent of the demand.

Due to the lack of tires, Vinaxuki could only sell 4000 trucks a year instead of 6000 as planned. Also due to the lack of tires, many autos only have four tires instead of seven as per standards. Therefore, the autos could not be delivered on time.

Huyen said that he has found some enterprises which can provide leather seat cushions. However, the enterprises are too small and cannot provide the volumes of products he wants. In order to cooperate with Vinaxuki, the enterprises need to expand their production scale. However, this proves to be unfeasible in the current conditions, when the bank loan interest rates are sky high, and the workshop premises rents keep increasing.

Since Vinaxuki finds it hard to seek domestic auto part suppliers, it has to spend multi-million dollars to set up auto part centers in Thai Nguyen province and Dong Anh district in Hanoi, which specialize in making parts for Vinaxuki’s truck assembling factories.

70-90 percent of components needed are imports

Vietnam now has tens of 100 percent domestic invested auto assembly enterprises. The locally made content ratios of the enterprises are very low, with 70-90 percent of auto parts imported from China or South Korea. The enterprises just undertake some phases of the car manufacturing, including welding, painting and testing.

Nguyen Can Tuan, Director of the Hoang Tra Automobile Company, said that his company cannot use many types of car parts provided by domestic producers, because the samples do not fit its specific products.

In fact, Vietnamese enterprises many times thought of joining forces to develop domestic supporting industries. However, the dream has not come true yet. In order to set up workshops to make car parts, producers need big capital and advanced technologies, which prove to be far beyond the domestic enterprises’ capability.

It is quite a surprise that Vietnam not only has to import hi-tech parts for domestic assembling, but simple products such as buttons or thread also. Kim Khang Company in HCM has a button production line which can make 700,000-800,000 buttons a month. The production line was bought back from a Japanese company which went bankrupted in 1990s. Meanwhile, no enterprise intends to invest in the field.

Tags: Vietnam Supporting industries