What is the supporting industry? What is the role of supporting industry?
Vietnam, a nation with a developing economy potential, has made tremendous progress in recent years in accelerating the industrialization and modernization process. However, in comparison to certain nations like China, Japan, or Korea, our nation’s supporting industry is said to be evolving more slowly since it cannot keep up with the need for manufacturing and assembly. What exactly is supporting industry then? What is the role of supporting industry? Learn more about RX Tradex in the article that follows.
1. Introducing the concept of what supporting industry is.
1.1. The concept of supporting industry.
What is the supporting industry?
Supporting industries are those that strive to offer the services, spare parts, supplies, or components for the manufacture and assembling of final goods. Typical activities in the supporting industry include the provision of raw materials, the manufacture of components, the upkeep and repair of machinery and equipment, quality control, transportation, technical assistance, and managing all supply chain stages.
Organizations are able to concentrate on their core competencies thanks to the growth of supporting industry, which allows them to build strategies that fit their business models and increase productivity and efficiency at work. Additionally, depending on the economic conditions of a given nation, the definition of supporting industry will be different for various nations.
The idea behind several nations’ supporting industries.
The term “supporting industry” was first mentioned in Japan. The Japanese Ministry of Economy, Trade and Industry (METI) has explained the concept of supporting industry as a field specializing in the supply of raw materials, components and some basic goods for production and assembly activities.
The term supporting industry was first mentioned in Japan. The Japanese Ministry of Economy, Trade and Industry (METI) has explained the concept of supporting industry as a field specializing in the supply of raw materials, components and some basic goods for production and assembly activities including: automotive, assembly, and electronic.
On the other hand, supporting industries, as defined by the U.S. Department of Energy, are those that make use of the raw materials and manufacturing techniques required to shape and produce goods before they are distributed to their final area of use.
The idea of supporting industries in Vietnam.
The phrase “supporting industry” was just recently adopted in Vietnam. In its basic form, what is known as “supporting industry” refers to the following activities: manufacturing, supplying parts, accessories, as well as other items for simultaneous gathering and producing final goods that demonstrate marketable quality.
1.2. Popular supporting industry trends in Vietnam.
Mechanical engineering supporting industry.
This is a supporting industry that includes industries that provide solutions, materials and meet the needs of the manufacturing process and mechanical engineering. Currently, the technology applied in Vietnam is still simple and outdated whereas the equipment and machinery are lacking in precision, spare parts, and innovation. However, with technology transfers from many developed countries, Vietnamese businesses are progressively growing and catching up with the most recent global trends in the supporting industries of mechanical engineering.
Products in the supporting industry for the mechanical engineering industry include:
- Mechanical processing services: Providing machining services for mechanical components using techniques including CNC turning, milling, grinding, welding, surface machining, and other machining operations.
- Product design and simulation: Offering services in product design, mold design, simulation, and 3D modeling for the design and simulation of products.
- Maintenance and repair services: Serving maintenance, repair, and upgrade services for mechanical machinery and equipment items.
Automotive supporting industry.
The sector of the economy known as “automotive supporting industry” creates goods like oil hogs, brakes, headlights, headlamp assemblies, and other components that go into making entire automobiles. In recent years, the automotive supporting industry in Vietnam has made great progress, notably the self-manufacturing of components including: mechanical, electrical cables, plastic, rubber, etc. This sign thus significantly demonstrates a good sign of potential growth rate in both domestic and international automotive supporting industries.
Products in the automotive supporting industry include:
- Automotive components manufacturing: Includes parts and components such as: Engines, transmissions, suspensions, electrical systems, brakes, and interiors for automobile manufacturers.
- Automobile assembly: The world’s major auto brands set up assembly lines or cooperate with partners in Vietnam, such as: Hyundai Thanh Cong Factory, Thaco Auto,…
Textile-garment supporting industry.
The textile and garment supporting industry refers to a collection of manufacturing and service industries that provide products and technical solutions for economic players operating in the textile and garment sector. In Vietnam, the textile and garment supporting industry has grown significantly in recent years. Numerous Vietnamese businesses now are more and more intended to create a strong collaboration with several leading textile and apparel manufacturers in the area and throughout the globe.
Products in the textile supporting industry include:
- Textile material manufacturing: Providing fabrics, yarns, sewing threads and other accessories.
- Textile processing services: Providing outsourcing, designing, cutting and sewing services for partners in the textile industry.
- Printing and embroidery sector: Provide printing and embroidery services on textile products, creating unique motifs, images and logos.
2. The role of supporting industry.
2.1. To serve as the foundation for the growth of industrial output.
Nowadays, the supporting industry plays a crucial role in building a firm foundation for the rapid expansion of production by offering goods such raw materials, production-supporting machinery and equipment, spare parts, or electronic components, consequently enhancing output quality.
2.2. Supporting firms’ efforts to specialize their operations.
Many industrialized nations’ businesses are currently functioning in the specialization trend, concentrating on the steps of manufacturing and assembly that result in the final finished product. By connecting with many suppliers of raw materials and supporting the supply chain, enterprises gradually focus on their strongest points to improve products and improve work efficiency.
2.3. Establishing a foundation on which businesses may join the global market.
Right now, supporting industries are essential to the global system of specialized production. International businesses have made significant investments in the manufacturing supply chain and have exploited the supporting sector as a connection between all commercial and trade operations. From there, firms in developing nations will have the chance to take part in this supply chain by concentrating on supporting industries, serving as partners, and supplying goods like raw materials or electronic components for the global economy.
2.4. Attracting funds from international investors.
Future international firms are unlikely to be as drawn to emerging nations’ advantages as they once were, such as their accessible labor markets and fair tax regimes. Instead, the current tendency is for economic groups and investors to concentrate on production and business operations and to construct factories in places where they can benefit from a strong supporting industry, fulfill their requirement for components, or simply order the necessary production line components.
Due to the fact that corporations and international enterprises have already invested in this stage, businesses involved in the domestic supporting sector are also spared the expense and time of doing research and development. As a result, small businesses in the auxiliary sector may modify their product lines rapidly, introduce new manufacturing techniques, and adapt to changes in the global market.
2.5. Encouraging businesses to take advantage of technological and scientific innovations.
The supporting industry will have a positive impact on the application of technological and scientific innovations. Because of this industry’s propensity to adapt to market trends, the workforce gets the chance to engage, acquire new knowledge, and develop their skills. In addition, workers in the supporting sector should also be inspired to foster the innovation and creativity spirit and to approach global technological and scientific innovations.
2.6. Accelerating the nation’s industrialization and modernization processes.
The majority of emerging nations want to industrialize and modernize. As a result, the supporting sector plays a crucial role for a nation like Vietnam and holds out the possibility of resolving the issue of low-paying employment, adding value to the economy and avoiding paying for the expense of importing parts and product information from outside sources,
3. The development of supporting industry in Vietnam.
3.1. Overview of the supporting industry market in Vietnam.
Many sectors in our nation, including those that assemble automobiles, motorbikes, electronics, or textiles, primarily rely on imported raw materials. According to data provided by the General Statistics Office, our country’s import turnover of raw materials, fuel, materials, components, equipment and spare parts accounted for 93.5% in the first two months of 2022. [1]
Vietnamese businesses employ imported raw materials as a result of the stark differences in component prices between domestic and international suppliers. Businesses in the automobile sector need between 20,000 and 30,000 components to be able to put a final product together. In Particular, just 287 parts and assemblies have been created by Vietnam’s automobile-supporting industry. [2] Alternatively, the lack of spare parts in the mechanical engineering sector negatively impacts metalworking’s heat treatment. The completed product lacks precision, uses low-quality materials, and requires several preparations. Vietnamese businesses are unable to compete with foreign businesses due to their high production costs and low selling prices.
Despite the aforementioned amazing circumstances, Vietnam continues to have extremely successful businesses in the auxiliary sector. Typically, Thaco, Hyundai Thanh Cong, and VinFast, three of the largest companies in Vietnam, have made significant investments in modern machinery, production lines, and related support sectors for the automobile industry. This demonstrates how many companies have progressively turned their attention to investing in ancillary sectors and indicates that they will soon make significant progress on the global stage.
3.2. Opportunities to develop supporting industries in Vietnam.
Our nation’s government has consistently released regulations in recent years to encourage the growth of the ancillary sector, with a primary emphasis on the creation of input materials. Industrial development support facilities also regularly test goods like parts for machines and other products. Additionally, the government also enacts laws and regulations that help manufacturing businesses. exporting supporting sectors including the electronics, textile, and footwear industries.
An excellent opportunity for our nation to increase input material production capacity and assist businesses in joining the global supply chain is the simultaneous deployment of all government-issued solutions. The demands of local production may be met by a large number of Vietnamese component manufacturing companies, enabling the steady growth of the auxiliary sector.
4. Summary.
RX Tradex believes that the aforementioned essay has given the business owners enough knowledge to respond to the question, “What is the supporting industry? What is the role of supporting industry?”. In which, firms who are interested in learning more about solutions for assisting industrial growth in Vietnam are encouraged to attend the prestigious international event Vietnam Manufacturing Expo, which is being hosted by the RX Tradex Vietnam. On top of that, this year, RX Tradex also organized the well-known events like NEPCON Vietnam, METALEX Vietnam, and Waste and Recycling Vietnam.
Note:
[2]: https://bnews.vn/sau-30-nam-cong-nghiep-ho-tro-o-to-san-xuat-duoc-bao-nhieu-chi-tiet/213271.html
