Auxiliary industry encouragement to hold the initiative of manufacturing enterprises

In recent years, Binh Duong industrial production has continuously grown at high rates, including the important contribution of the auxiliary industries. However, in order to develop sustainably and hold the initiative of manufacturing enterprises, Binh Duong need to keep stimulating investment in auxiliary industries.

Manufacturing activities at Phuong Vy Company (Thuan An City).

 To hold the initiative

Nguyen Van Le, Deputy General Director of Dong Hung Footwear Company (Di An City), said that due to the difficulties in terms of raw materials caused by the Covid-19, more than ever enterprises perceived the importance of raw material supply and auxiliary industries from domestic enterprises. Dong Hung company, since 2012, has endeavored to connect with domestic raw material suppliers to hold the initiative in production and meet strict requirements of goods origin from big partners. However, there are products must be imported from overseas, namely Chinese market, because the domestic market cannot meet the demand of export enterprises. Mr. Le said that domestic auxiliary enterprises needed to further improve their technology level. In addition, the State need to create good conditions for domestic auxiliary industries to develop and meet the requirements of export goods.

According to Phan Le Diem Trang, Vice Chairwoman of Binh Duong Textile and Garment Association, the domestic supply of raw materials now meets only 60% of demand. Products requiring high technology now have to be imported from abroad to meet strict requirements of customers, especially big partners. Ms. Trang also expressed her desire that in the coming time auxiliary industries of domestic garment industry would develop to create favorable conditions for manufacturing enterprises.

Currently, the wood industry is heavily influenced by raw materials in context of the epidemic. Besides, many small-scaled businesses are facing difficulties because of the high price of domestic auxiliary products, leading to the heightened price of finished products, unable to meet the price requirements of partners ordering. If production continues, the loss will be huge. However, wood enterprises also understand that high prices are not desirable to domestic enterprises. These enterprises are also in a passive position when they do not hold the initiative in technology to lower production costs.

Market development, close connection

According to assessment of experts group of Industrial Management Faculty, Ho Chi Minh City University of Technology, Binh Duong is among the top 5 localities with strong development of supporting industries of the whole country, including: Ho Chi Minh City, Hanoi, Binh Duong, Dong Nai and Bac Ninh. The development of auxiliary industries initially formed a production link between domestic and FDI enterprises, while creating favorable conditions for domestic enterprises to gradually access advanced technologies and participate in the global value chain of this industry. In the coming time, it is necessary to strengthen the bond of domestic enterprises to stimulate industrial growth.

According to Tran Thanh Trong, Chairman of Binh Duong Mechanical and Electrical Association, currently M&E enterprises are meeting the requirements of exporters, but cannot provide much for the domestic market. Mr. Trong expects all governmental levels and sectors to create favorable conditions for businesses to enhance bonds to have more advantages.

Dao Minh Ngoc, Director of Phuong Vy Company (Thuan An City), said that the State needed to promote its supportive role, especially for SMEs to ensure a favorable business environment, low market entry costs, encourage private capital. Currently, M&E enterprises in the province master manufacturing technology of some types of engines, machines, tools ... of high quality to serve the domestic and foreign manufacturing industries, but there are still difficulties. Although his company is a partner of big brands, Mr. Ngoc acknowledged there were many limitations. First of all, in terms of the market, Vietnamese mechanical engineering industry is quite diverse in terms of products but is fiercely competing with imported products.

In addition, the market expansion still has difficulties, due to the lack of information and weak domestic competitiveness, as well as ineffective branding. The level of science and technology is considered as a typical weakness of Vietnam's mechanical engineering industry. This clearly shows that the domestic M&E industry has very few inventions and patents registered; equipment and technological level of the whole industry are still slow; mechanical enterprises lack consumption for products, so they do not have the opportunity to accumulate and invest in technological innovation.

Meanwhile, technical barriers in the field of mechanical engineering in Vietnam have not yet developed strong enough to protect domestic consumers from imported goods of inappropriate quality. In addition, the limitations of M&E industry are demonstrated by the fact that raw materials and accessories must be imported; human resources are insufficient and weak both in quantity and quality; the role of professional associations has not been effective. Mr. Ngoc suggested that the province should continue to attract investment from all economic sectors in auxiliary industries in order to increase the number and quality of businesses; assist enterprises in training to improve the quality of human resources, research and development, application transfer and technological innovation in test production of components, spare parts, raw materials and materials.

Reported by Tieu My - Translated by Ngoc Huynh