Vietnamese firms raise capacity to brace for orders due to supply chain shifts

Many Vietnamese enterprises, including Truong Hai Auto Corporation (THACO) and Duy Khanh Engineering Co. Ltd., have sought ways to improve their manufacturing capacity so that they can fulfill orders ushered in by the global supply chain shifts, these firms’ leaders said at a seminar held in Binh Duong Province on Thursday last week.

“Many partners and customers have immediately rushed to our factories after they arrive in Vietnam to see our production capacity," said Do Minh Tam, general director of Truong Hai Supporting Industries and Mechanics Limited Liability Company (THACO Industries), an arm of THACO.

“We are expanding many factories to increase the capacity to grasp opportunities coming from the shift of supply chains from other countries to Vietnam."

Tam was addressing the ‘The shift of supply chains – opportunities for Vietnamese enterprises’ seminar jointly held by Tuoi Tre (Youth) newspaper, the Industry Agency under the Ministry of Industry and Trade, and the Binh Duong People’s Committee.

He added that THACO Industries plans to enhance its investment in the southern key economic zone through various affiliate investment models.

This is an indispensable move when the firm has penetrated deeply into global supply chains. 

THACO has taken the initiative in production and outsourcing to its partners who can help the group fulfill orders meeting standards in quality and progress. 

“During the COVID-19 pandemic, which disrupted supply chains and caused a stagnancy of orders, the combination helped us satisfy the surging demand and remove the production pressure. Above all, this is an inevitable step to expand production,” Tam said.

According to the Vietnamese manufacturer, the supply chain shifts show that no manufacturers can produce all parts and accessories of a product themselves. This is also a challenge of large-scale industrial producers.

The outsourcing to other firms will go hand in hand with the technical and capital support and even the technology transfer, thus helping smaller enterprises get involved in global supply chains.

The sharing of orders and experience in governance also helps THACO’s business partners become more mature and standardize their product quality.

Meanwhile, Do Phuoc Tong, chairman of Duy Khanh Engineering Co. Ltd. and chairman of the Ho Chi Minh City Association of Mechanical and Electrical Enterprises, said global supply chains are being shifted strongly.

So as to brace for this trend, enterprises must make investments to refresh themselves and improve their competitiveness.

As for Duy Khanh Company, Tong has seen opportunities in the mechanical engineering sector since 2016, so he has invested in a new factory at the Saigon Hi-Tech Park in Ho Chi Minh City.

At the end of this year, the factory is expected to be put into operation and participate in global supply chains with multiple products ordered by its partners.

“With more support policies to pave the way for local manufacturers to foray into the mechanical engineering sector, enterprises will have more opportunities to become part of global supply chains,” Tong noted.

According to Bui Ta Hoang Vu, director of the Ho Chi Minh City Department of Industry and Trade, from the connectivity of local and foreign supporting industry and manufacturing enterprises, the department realized that foreign direct investment (FDI) firms and industrial producers tend to increase their localization rates and most of them have their own localization strategies.

They always want to purchase domestic products due to more efficient logistics services, specifically a short distance from suppliers, a smaller inventory volume, faster delivery, easy control of suppliers, and competitive prices.

“If Vietnam promotes and optimizes these advantages, enterprises will have ample opportunities to participate in regional and global supply chains, and attract large hi-tech groups with a demand of shifting their production and supply chains,” Vu affirmed.

Source: Tuổi Trẻ News