What do manufacturing enterprises in Vietnam need to prepare in the future?
In recent years, the manufacturing industry in Vietnam has recorded many changes due to global economic fluctuations. At the same time, difficulties and challenges in production activities are still besieging Vietnamese enterprises, when the supply of raw materials is disrupted, currency inflation and many outstanding issues have not been resolved. And to answer the question “The future of the manufacturing industry, what do Vietnamese enterprises need to prepare?”, you can follow the following article by RX Tradex.
1. Overview of Vietnam’s manufacturing industry in 2023.
According to VnEconomy, the situation of the manufacturing industry in Vietnam is facing great challenges. In particular, production orders and export turnover decreased, growth is still at a low level due to difficulties and challenges of the world affecting production and business activities. In particular, the manufacturing and processing industry in previous years was the main economic growth engine, now only achieved an estimated growth rate of 0.37%, much lower than the same period in 2022 because of the decline in world market demand and shortage of orders. [1]
In addition, facing poor purchasing power both at home and abroad, manufacturing companies have had to cut jobs to ensure business operating budgets. At the same time, many manufacturing enterprises in Vietnam have had to lower product prices, seek opportunities in new markets and change their business models to overcome the period this difficulty.
According to the Ministry of Industry and Trade, in the first 2 months of 2023, the industrial production index (IIP) of some key industries has decreased much compared to the same period last year, specifically:
- Electrical equipment production decreased by 50.7%.
- Metal production fell 12.2%.
- Apparel production fell 11.7%.
- Textile and garment production decreased by 11%.
- Production of motor vehicles decreased by 6%.
- Production of leather and related products decreased by 5.3%.
However, there are still bright spots of growth in the manufacturing industry, typically such as:
- Beverage production increased by 32.4%.
- Production of coke, refined petroleum products increased by 20%.
- Production of medicines, medicinal chemicals and medicinal herbs increased by 6.1%.
- Production of products from rubber and plastic increased by 6%.
- Metal ore mining rose 4.2%. [2]
2. Predicting the future of Vietnam’s manufacturing industry.
According to many experts, the strong development of science and technology 4.0, will change Vietnam’s competitive advantage in capital, creating a growth engine for the manufacturing industry. In the current economic context, Vietnam is in the process of deep integration. Therefore, in order for the manufacturing industry to develop, Vietnamese enterprises need to have a breakthrough approach in implementing industrialization and modernization. Since then, focus has been focused on the development of smart production based on the application of science and technology and innovation.
According to the Ministry of Finance Web Portal, Vietnam is continuing to transition to high-value industries. In particular, businesses are focusing on improving technology and promoting production along the value chain, shifting to a sustainable green model to adapt to the demand from the world market. [3] In addition, all levels of Government will continue to organize the connection of domestic enterprises to participate in the global supply chain. Since then, gradually restoring the manufacturing industry through solutions on market stability, financial support, especially loan and tax issues.
3. Things manufacturing businesses need to prepare for in the future.
3.1. Towards sustainable production.
This is a trend that needs to be invested by businesses in the near future. Towards sustainable production is the control of raw materials and outputs to ensure that the factory always operates in the best conditions. In addition, sustainable production also aims to integrate issues such as product design, production processes and waste flow management into the environment.
At the same time, in recent years, Vietnam has signed many environmental protection agreements such as CPTPP, which has made the production of sustainable green goods one of the more important criteria than ever.
3.2. Focus on the development and training of human resources in production.
With the current speed of breakthrough scientific and technical development, the application of 4.0 technology in production is an indispensable thing to improve the working process. However, the application of new technologies in production needs appropriate human resources that can effectively use modern machines and equipment.
From there, enterprises need to prepare well the training of personnel, with the aim of improving capacity and strengthening professional skills in the field of production. In the long-term future, this will help employees develop enough abilities to take on important roles, without being dependent on technology or external resources.
3.3. Improvement of production technology.
Facing the fluctuations of the global economy, in order to be able to steadily develop in the future, businesses need to apply modern technologies to production. In particular, enterprises prepare activities for improvement including: Replacing production machinery/components, planning for each stage of process innovation,…
However, this process requires the enterprise itself to have strong enough financial resources to implement. In turn, the methodical preparation for an effective improvement strategy will help businesses develop breakthroughs, build sustainable competitive advantages in the future.
3.4. Prepare output in new markets.
Besides big markets such as Europe, the United States, Japan,… other potential regions are: Africa, Southeast Asia, Middle East,… also promises to bring a lot of development potentials to Vietnam’s manufacturing industry. Especially in the current period when the European economy is suffering from a serious crisis, Vietnamese enterprises that have cut export orders can seek opportunities in other developing countries to ensure output for products.
In addition, the Government also actively supports manufacturing enterprises in Vietnam to export goods to the global market. By signing many international trade agreements in recent years, Vietnam’s manufacturing industry has great advantages from tax incentives, cooperation and development policies.
3.5. Digital transformation in production activities.
Currently, digital transformation is helping to change the way businesses operate, improve business models and bring higher efficiency in quality, schedule, and production costs. Many advanced countries in the world such as USA, China, UK, France ,… has applied digital transformation in the manufacturing sector and has achieved great success.
However, in Vietnam, not many manufacturing enterprises have implemented digital transformation in their workflow. Therefore, this is one of the things businesses need to focus on promoting in the future, starting to bring technology solutions into production activities, including: Automation, Internet of Things, AI technology,…
4. Summary.
Above is RX Tradex’s article on “The future of the manufacturing industry, what do Vietnamese enterprises need to prepare?”. Hopefully, through this article, businesses have found a direction for strategic development in the future. And this year, if you want to learn more about the latest production methods, you can immediately participate in the Vietnam Manufacturing Expo organized by RX Tradex Vietnam, with the participation of hundreds of leading brands. In addition, in 2023, RX Tradex will also organize other exhibition events such as NEPCON Vietnam, METALEX Vietnam and Waste and Recycling Vietnam.
Note:
[1]: VnEconomy.
[2]: INSTITUTE FOR STRATEGIC STUDIES, INDUSTRIAL AND TRADE POLICY.
