Why is supporting industry important in terms of the manufacturing sector?
Supporting industry plays a crucial role in the manufacturing process in adding value to the final items and helping the economy develop significantly toward industrialization and modernization. With the target objectives of enhancing workforce efficiency followed by boosting business competitiveness, these major sectors thus definitely play an important role in contributing to the national economic growth.
1. Potential for supporting industry development in Vietnam
Due to the fact that supporting industries provide auxiliary goods and services for the main sectors, Vietnam now has a great deal of room for supporting industry growth in this area, covering manufacturing key elements and components and offering shipping and maintenance services to manufacturers.
Vietnamese offers several benefits for growing ancillary businesses in supporting industrial sectors, including affordable labor, a youthful, dynamic workforce, and a prime position in Southeast Asia. With supporting regulations as well as adjustments in the working environment, the Vietnamese government continues to attempt to promote the development in this industry.
Manufacturing of electronic components, automobiles and replacement parts, furniture, footwear, and textiles are some of the burgeoning Vietnamese supporting industry. In the modern business environment, support services including transportation, maintenance, and data processing are expanding significantly.
In addition, Vietnam’s supporting industry has improved significantly, particularly with the aid of modern protocols and laws. Representations from 2018 show that the number of businesses involved in supporting industries accounted for 4.5% of all participants in the processing and manufacturing sector. Compared to the nowadays benchmark, this sum represents around 0.3% of the current Vietnamese enterprises.
More than 600,000 people now have jobs thanks to the growth of the supporting sector, which accounts for 8% of all manufacturing industry employees and generates an estimated VND 900,000 billion in income. 11% of the processing and manufacturing sector’s total revenue is represented by this number. The consumer electronics sector has a localization rate of from 30 to 35%, with the supporting electronics sector for cars and motorcycles making up roughly 40%.
However, Vietnam must make infrastructural investments, invest in high-quality human resources training, and enhance the business climate if it is to build supporting sectors in a sustainable and efficient manner. In order to encourage innovation and boost this industry’s competitiveness in Vietnam, cooperation between the government, corporations, and research institutes is also necessary.
The importance and influence of supporting industries on other industries.
2.1 Mechanical production
The demand for mechanical products in Vietnam is anticipated to reach more than 300 billion USD by 2030. However, only roughly a third of the demand for mechanical items in the country is satisfied by the mechanical engineering sector. The production capacity of supporting industry businesses in the field of mechanical engineering appears to be still constrained at the same time.
Since the bulk of our raw materials remains required to be imported from industrialized countries, the connection between production in different industries is still precarious. It should be noted that numerous well-known brands that are also produced in Vietnam for local consumption are even more notable.
The Vietnam Association of Mechanical Enterprises predicts that between 2019 and 2030, the value of the mechanical manufacturing sector would reach roughly 310 billion USD. Moreover, Vietnam’s involvement in a number of FTAs has created prospective chances for the development of the country’s mechanical manufacturing sector in the years to come, as has the potential for production to be transferred from China to multinational firms in other nations.
In order to assist the expansion of the northern and southern areas, the Ministry of Industry and Trade is additionally attempting to make two developing centers more operationally efficient. Additionally, these hubs are actively collaborating with several international corporations located in Vietnam, including Toyota, Mitsubishi, and Canon, in order to eventually join the value chains of these powerful businesses.
2.2 Electronics
Over 80% of the value is accounted for by the electronics-supporting industry in Vietnam. Despite the negative effects of measures like lockdowns, restrictions, and supply chain disruptions, investment and industrial expansion have continued in Vietnam, particularly in the northern provinces of Bac Ninh, Hai Phong, Bac Giang, Thanh Hoa, and Da Nang.
For instance, Samsung has spent more than 17.5 billion USD in Vietnam, contributing more than 20% of the country’s total export revenue through major goods like smartphones and electronic components. While electronic businesses automate their gear and equipment, both professional and unskilled workers are still in limited supply. Additionally, the majority of Vietnamese workers lack high-level professional qualifications and adequate training, which presents significant challenges for e-businesses.
2.3 Government support
For Vietnam’s industrial growth between 2025 and 2035, the supporting industry in the electronics sector is now given priority. Vietnam has started initiatives to promote the training of domestic workers and businesses to foster conducive conditions for intra-regional growth in order to solve the problem of labor quality.
Added to that, ASEAN labor mobility aims to make the electronics sector a flagship industry, laying the groundwork for the growth of other sectors in our economy. By 2025, Vietnam’s exports of computer devices will account for 4% of all worldwide exports, analysts predict.
2.4 Automobile production
In recent years, the automobile manufacturing industry in Vietnam has grown significantly thanks to the rapid development of the middle class. The main automobile supply markets for Vietnam in 2021 include Thailand and Indonesia, which account for 82.3% of the country’s total car imports. However, the production and assembly of new cars is at the basic assembly level, not yet specialized between production and assembly facilities.
The reason is that the level of technical technology is still limited, not meeting the strict requirements of joint ventures. And partly due to the lack of specialization, components made in Vietnam cost 2 to 3 times higher than other countries in the region.
Considering the existing specific constraints, the company’s environmental conditions for the supporting industry in the field of transport manufacturing additionally have not truly generated many benefits. According to standard credit rules, foreign-invested companies operating in comparable ancillary fields frequently request funding from their “parent” corporations and international banks at interest rates of around 1% to 3%, whereas Vietnamese players must pay borrowing costs of 8–10% annually.
Vietnam, therefore, has options to solve two bottlenecks that are dependent on imported components or adopt preferential policies to not only supporting industrial sectors but also properly nurture the economic growth in the domestic scale. At the same time, Vietnam’s automobile industry is rising thanks to preferential policies as well as promotion offers from the Government such as special sales tax reduction, import tax incentives for components and solutions to promote the supporting industry development (08/2020), tax incentives for automobile production & assembly, thus approval of the “Strategy for the development of supporting industries in the field of automobile manufacturing until 2025, vision to 2035.”
2.5 High-tech production
According to the Ministry of Industry and Trade, several high-tech initiatives have been carried out between 2011 and 2020, assisting businesses in acquiring new technologies and generating considerable benefits for socio-economic growth. Vietnam has become a hotspot for high-tech investment because of Samsung, Microsoft, Intel, and LG’s investments in chip production, mobile phones, and R&D.
More especially, the Prime Minister made a decision in March 2021 outlining the standards for recognizing high-tech organizations, which became effective on April 30, 2021. This Law is applicable to Vietnamese businesses that provide high-tech products and services.
In order to increase the export value of items in this sector until 2030, Vietnam also seeks to become proficient in a number of technologies while establishing an ecosystem of advanced business enterprises.
3. The 2023 NEPCON Electronics Show
The I.C.E International Exposition Center in Hanoi will play host to NEPCON Vietnam 2023, a significant and distinctive electronic exposition event in Vietnam, from September 6–8, 2023. With the involvement of more than 300 leading companies from 20 countries and 8 international exhibition booths, this expo focuses on displaying the newest technology appropriate for global entrepreneurs. Over 10,000 individuals are scheduled to attend NEPCON Vietnam 2023. Investors in particular get the chance to network with potential prospective collaborators in the sector.
In addition, the main topic of NEPCON Vietnam 2023 is “Innovation trends for the electronics industry – The future of global supply chain.” In sectors including SMT, Surface Component Welding, Testing Technology, Equipment, Supporting Industry, Smart Manufacturing, and several other connected electronic manufacturing fields, the show brings together hundreds of the world’s foremost leaders.
The large-scale electronics expo NEPCON Vietnam 2023 provides industrialists, manufacturers, planners, sellers, and buyers with access to electronics and technology suppliers, as well as technological conferences and product demos. Furthermore, the exposition booth provides beneficial business matching activities and insider knowledge about the most recent technology, items, and advancements from industry professionals. With more than 300 brands from Asia in attendance, the electronics exhibition lasted for hours and attracted more than 5,000 experts, managers, and industrial engineers.
3.1 What opportunities will this event bring to the unit in the field of supporting industries?
The Supporting Industry Exhibition is a significant exhibition that helps to advance commercial relationships, diversify and grow markets, and promote Vietnam’s involvement in the supply chain with major corporations. Additionally, participation in the expo will present firms with fantastic prospects, including:
- To reach new audiences in the field of manufacturing technology
- To experience the most advanced machinery and equipment
- To access to in-depth solutions to existing problems in production
- To learn to grow your personal business
- To look for novel innovations and creativity
3.2 The benefits for manufacturing enterprises
The NEPCON Vietnam International Electronics Exhibition offers businesses the chance to interact, trade, learn, and strive toward sustainable growth while staying up to date on cutting-edge technology, innovative production techniques, and new trends. Businesses will also have the following opportunities when attending NEPCON Vietnam 2023:
- To meet and connect with potential customers
- To learn about new inventions in the industry
- To search for the latest production model to help the business grow
- To Find out what your competitors are doing
- To quickly expand your database of potential customers
- To connect and interact directly with the target market
- To optimise sales strategy and lead generation
- To Introduce new products/services of the business
3.3 Impressive numbers and successes of NEPCON Vietnam 2022
NEPCON Vietnam 2022 has the presence of leading exhibitors from more than 20 countries with more than 300 brands of technology and machinery, electronics, SMT, welding surface components at exhibition areas and online international booths from countries with modern technology such as Japan, United States, South Korea, Taiwan, China, Singapore, Thailand, Germany, India,…
Throughout the e-exhibition are domestic and international business-oriented trade activities such as a series of seminars, participation in certified training courses, IPC electronic hand welding competition and updates on outstanding advanced technology from leading brands in the world.
In particular, at NEPCON Vietnam 2022, there is also a free business consulting support program under the Business Initiative Community Project to support e-businesses with the will to recover during and after the COVID-19 pandemic. According to the Foreign Investment Agency, Ministry of Planning and Investment, from the beginning of 2022 until now, more than 578 projects have been granted investment registration certificates, foreign investors have invested in 18 sectors out of 21 national economic sectors.
NEPCON Vietnam 2022 is an opportunity for businesses to share, exchange and learn from each other towards sustainable development as well as update trends, advanced technologies and smart technology production solutions. Previously, the E-Business Association in Vietnam also cooperated with RX Tradex Company to sign a cooperation agreement on the Enterprise Initiative Community Project 2022 within the framework of the International Electronics Exhibition series – NEPCON Vietnam 2022.
In addition, there are community projects of business initiatives with the participation of major partners, aiming to support Vietnamese and international enterprises, especially small and medium enterprises in the fields of manufacturing, industry, supporting industry and electronic manufacturing sector. Take advantage of face-to-face and online business opportunities, adapt to changes in production and business activities to overcome the challenges of the times.
3.4 Highlights at NEPCON Vietnam 2023
NEPCON Vietnam 2023 is an important event for industrialists, manufacturers, policy makers, sellers and buyers in the electronics industry. This show more deeply offers any kind of material, part-related technology, electronic components, surface-mount innovation, and auxiliary industrial equipment. In addition, at NEPCON Vietnam 2023, technology seminars and typical product demonstrations will also be held, helping attendees keep up to date with the latest information in the industry. This is the best location to find and exchange information, solutions and connect with new partners.
The spectacular product displays, which included over 300 Asian firms, lasted more than 35 hours and drew more than 5,000 specialists, managers, and industrial engineers over the course of three days. The venue for bringing in-depth knowledge about merchandise, technologies, and market trends from industry specialists along with concrete company matching activities is NEPCON Vietnam 2023.
In general, the Auxiliary industry exhibition show is expected to establish Vietnamese supporting industry as a premier manufacturing base in Southeast Asia, fostering growth as well as making a significant contribution to the global supply chain. Join the NEPCON Vietnam 2023 to find out more about the fascinating aspects of the mentioned supporting industrial sectors.
