Vietnam vows to develop supporting industries

CNS Amura Precision, a mechanical engineering company specializing in precision molds and plastic parts, was chosen by JICA (Japan International Cooperation Agency) to assist Vietnam’s SMEs to improve production capability to join supply chains.

CNS CEO Nguyen Trong Van said CNS began applying the Japanese 5S model that describes the steps of a workplace organization process: Sort, Straighten, Shine, Standardize and Sustain.

“First of all, you need to answer why you chose Japanese partners and if your capability can satisfy their requirements,” Van said.

“Businesses should not answer ‘we can do it’, but they’d better be honest. Once you confirm ‘I can’, you have to keep your promise and do exactly as you committed,” he said. “Once you can maintain your credibility, other problems can be settled with the cooperation of the two parties.”

CNS is one of 10 enterprises chosen by JICA for the 2018 supporting program. 

According to Ide Takamichi from JICA, the program will help settle specific problems faced by Vietnam’s SMEs in the manufacturing sector. 

Vietnamese enterprises have problems in productivity improvement, inventory reduction and technology development. Most of them cannot set up business promotion plans due to weak and unclear sales and marketing strategy.

The program on developing domestic suppliers has been promoted by JETRO (Japan External Trade Organization) for years. Many activities and exhibitions are organized annually to tighten relations among enterprises in supporting industries of Vietnam and Japan, and accelerate the development of Vietnam’s electronics and automobile industries.

Initial achievements have been gained, but they are still far below expectations.

A survey by JETRO found that Japanese registered investment in Vietnam soared from $2.15 billion in 2016 to $8.64 billion in 2017. There are nearly 2,500 Japanese companies operational in Vietnam, 50 of which are in the manufacturing sector.

Seventy percent of Japanese enterprises said they would expand business in Vietnam in the next few years, the highest level among six surveyed countries - the Philippines, Indonesia, Malaysia, China, Thailand and Vietnam.

However, Japanese enterprises complained that most input materials and components are imported from Japan or China as they find it difficult to find suppliers in Vietnam.

Idei Ippei of JETRO said the localization ratio in Vietnam in 2017 was the lowest among the six surveyed countries, at 33.2 percent, though the figure from foreign invested enterprises in Vietnam was higher than in other countries. 

The figure was relatively low for Vietnamese enterprises, 13.1 percent, which was even lower than the 14.1 percent in 2016.

RELATED NEWS

Vietnam still struggling to develop supporting industries

EU offers golden opportunity for supporting industries

Mai Lan