Manufacturing and mechanical engineering enterprises expand their markets thanks to technological innovation.

Difficulty in expanding the market

According to data from the General Statistics Office updated in early September 2024, our country's economic situation after 8 months of 2024 continues to have positive progress. The industrial production index (IIP) in August 2024 is estimated to increase by 2.0% compared to the previous month and by 9.5% compared to the same period last year. In the first 8 months of 2024, the IIP is estimated to increase by 8.6%. In particular, the processing and manufacturing industry continues to play a fundamental role, being the driving force for economic growth, with an increase of 9.7%, contributing 8.4 percentage points to the overall increase.

In 2023, the processing and manufacturing industry attracted over 23.5 billion USD in FDI capital, accounting for 64.2% of the total registered FDI capital in Vietnam, an increase of 39.3% compared to 2022, becoming the industry attracting the largest FDI capital among 18 economic sectors with foreign direct investment. In terms of the number of new projects, the processing and manufacturing industry is also the leading industry in terms of the number of projects, accounting for 33.7% and capital adjustment, accounting for 54.8%.

The results of attracting FDI into the processing and manufacturing industry last year showed that foreign investors continue to believe in the potential and favorable business environment of the industry in Vietnam. Not to mention, in recent years, many northern provinces and cities have had breakthrough growth in the processing and manufacturing industry, along with technologies and solutions for sustainable production, minimizing waste and fuel, raw materials to build smart, modern factories.

Vietnam currently has about 25,000 mechanical enterprises, accounting for 30% of manufacturing and processing enterprises. Photo: KL

The above results demonstrate the efforts of the entire industry, but according to the Ministry of Industry and Trade, Vietnam currently has about 25,000 mechanical enterprises, accounting for 30% of the total number of manufacturing and processing enterprises. However, in reality, these enterprises are mainly small-scale, have low competitiveness and find it difficult to compete with imported products. Therefore, the mechanical market share in the domestic market still largely belongs to foreign enterprises.

Explaining further the reason, Mr. Dao Phan Long, Chairman of the Vietnam Association of Mechanical Enterprises (VAMI), said that partly due to the domestic market, mechanical enterprises do not have much market share. There are many large projects in construction, transportation, irrigation works, oil and gas, marine economy, shipbuilding, automobiles, motorbikes, etc. that still mainly use imported mechanical products or are undertaken by FDI enterprises. The constraints in the bidding mechanism make it impossible for many Vietnamese mechanical enterprises to participate in domestic projects and works and suffer losses right at home. The main reason is that domestic enterprises are still limited in terms of technology.

Seeking market share from technological innovation

To overcome difficulties, in the context of general difficulties, in recent times, many businesses in the mechanical industry have changed their business plans and strategies, especially focusing on investing in technology to survive and develop. To support businesses in improving production capacity, meeting increasingly diverse market needs, international exhibitions on the mechanical industry such as MTA Vietnam and MTA Hanoi have brought advanced, smart and sustainable manufacturing technologies closer to Vietnamese businesses.

Accordingly, recently, in Hanoi, the 10th International Exhibition on Precision Engineering and Manufacturing - MTA Hanoi 2024 was officially opened. This is an opportunity for manufacturing and mechanical engineering enterprises in the Northern provinces to access advanced equipment and technology, while promoting trade relations.

MTA Hanoi 2024 is a special edition of the MTA exhibition series dedicated to the Northern market, held annually at the ICE Hanoi International Exhibition Center, Hoan Kiem District, gathering more than 90 exhibitors on a total area of ​​4,000m2, from 13 countries and territories... to bring opportunities for trade cooperation for businesses in the mechanical industry as well as opening up opportunities for personnel working in the mechanical field to update the latest trends in the industry, through a series of seminars led by leading experts.

According to VAMI representative, this exhibition not only creates conditions for manufacturers to promote their new products and technologies, but also helps businesses find the most optimal technical solutions for production lines.

Businesses have the opportunity to seek new technology solutions at MTA Hanoi 2024. Photo: Moit

In addition to investing in technology, according to the Ministry of Industry and Trade, in order to overcome this difficult period, mechanical engineering enterprises need to identify market demand, identify gaps for development, and areas in which the industry can compete. In particular, enterprises need to flexibly take advantage of free trade agreements (FTAs) to promote exports to markets, while attracting foreign investment to Vietnam.

The Ministry of Industry and Trade also suggested that currently, Vietnam's mechanical engineering industry has strengths concentrated in three sub-sectors including motorbikes and motorbike spare parts, household appliances and tools, and automobiles and automobile spare parts. These are sub-sectors mainly oriented towards export or serving FDI enterprises with the role of supporting industry, that is, participating deeply in the global supply chain.

Statistics show that these three sub-sectors account for nearly 70% of the total industrial production value of the country's mechanical engineering. This is the market segment that businesses need to focus on. In addition, the Ministry of Industry and Trade will continue to strongly develop downstream industries, including some industries such as the energy industry and precision mechanical engineering industries. This will create conditions for mechanical enterprises to have room to develop.

Source: https://congthuong.vn/doanh-nghiep-san-xuat-co-khi-che-tao-mo-rong-thi-truong-nho-doi-moi-cong-nghe-351591.html