Stimulate consumption, expand market for processed and manufactured industrial products

Stimulate consumption, expand market for processed and manufactured industrial products

Continuing the recovery momentum from the end of 2023 and the first months of 2024, industrial production continues to show improvement and makes a positive contribution to the overall growth results of the entire economy. The added value of the entire industrial sector in the first 6 months of 2024 is estimated to increase by 7.54% over the same period last year; in which, the processing and manufacturing industry affirms its leading role with a growth rate of 8.67%, contributing 2.14 percentage points to the total added value growth of the entire economy.

Along with that, the consumption index of the entire processing and manufacturing industry increased by 10.8% over the same period in 2023, the export value of some items in the processing and manufacturing industry in the second quarter was higher than in the first quarter of 2024. The group of processed and manufactured industrial exports is estimated at 160.3 billion USD, up 14.1% over the same period in 2023 and continues to account for the majority (84.3%) in the export turnover structure.

Sharing about this issue, Mr. Pham Tuan Anh - Deputy Director of the Department of Industry (Ministry of Industry and Trade) said that recently, through the "Supporting Industry Development Program", the Department of Industry has implemented support for processing, manufacturing and industrial enterprises to improve production and business capacity and have the opportunity to participate in the global production chain. Typical support activities include: Support for research, application, technology transfer and human resource training; connecting with multinational assembly corporations and world-class suppliers to find product outlets, gradually participating in the supply chain of FDI enterprises...

However, Mr. Pham Tuan Anh also pointed out the current difficulties. Accordingly, the scale of Vietnamese supporting industry enterprises is mainly small and micro, so most of them have low technology and management levels, limited human resources, etc., leading to difficulties in meeting the increasingly high requirements of partners in terms of standards, quality, price, delivery time, etc.

The lack of connection between enterprises is also hindering the development of supporting industries. Accordingly, domestic enterprises have not been able to participate deeply in the ecosystem and value chain of leading enterprises and foreign enterprises.

Besides, the majority of supporting industry enterprises are small and medium enterprises (88%), lacking market information and opportunities to reach customers.

Expand export orders, clear inventory

According to the Ministry of Industry and Trade, in the last months of 2024, the international and domestic context has favorable factors, but production and trade development faces many difficulties and challenges. Geopolitical tensions and competition between major countries are increasing, and the recovery of major trading partners is still slow. Along with that, the risk of disruption to the global supply chain, production chain, and high freight rates directly impact import-export activities and Vietnam's highly open economy.

On the side of the Department of Industry, Mr. Pham Tuan Anh said that to regain growth momentum, it is necessary to have support and facilitation from the Government, ministries, branches, banking system, and localities to continue to have more active measures to support industrial production, especially output for production through measures to stimulate domestic consumption, strengthen trade promotion to expand export orders, and clear inventory. Specifically:

Firstly, localities need to urgently have policies and solutions to provide financial support to industrial enterprises, especially processing and manufacturing enterprises, so that enterprises can have stable production and business conditions. Develop and effectively implement industrial and supporting industry development programs in the area, focusing on improving the capacity of small and medium enterprises.

Second, production and business units need to closely follow the market to expand activities to find new customers; strengthen the connection of the production - consumption chain; balance inventory and consumption to ensure cash flow as well as product quality, and arrange production flexibly to maintain optimal production activities. It is important that associations and industries need to strengthen business connection activities, promote the consumption of each other's products. Enterprises restructure, reduce costs and production prices to enhance product competitiveness, thereby improving efficiency and adapting flexibly to the new situation. At the same time, enterprises and industry associations need to make the most of opportunities from new-generation free trade agreements to find new orders and customers. Be more active in coordinating with enterprises in the industry, associations and state agencies to seek and expand new export markets in addition to traditional markets, reducing inventory pressure.

Third, the Department of Industry will focus on key solutions to effectively implement business support policies approved by the Government to remove difficulties and obstacles in production and business activities of enterprises; especially in key export industries such as textiles, footwear and foundation industries such as automobiles, mechanics, steel, etc. Promote the operation of new industrial production projects to serve export and domestic consumption, increase production development capacity and goods sources for export.

Regarding trade promotion and expansion of export orders, Ms. Tran Thi Thu Quynh - Vietnam Trade Counselor in Canada - said that currently, the structure of Vietnam's domestic industrial exports to Canada is mainly textiles, toys and wooden furniture (40% of turnover value), this group of products is forecast to be unlikely to maintain high growth in 2024 and the following years.

For the group of telephones, components, machinery, equipment and electronic products (50% of total turnover), the main product group supplied by FDI enterprises currently depends heavily on the input supply of intermediate products and components; currently, the Canadian market is experiencing a slowdown in demand and a trend of shifting partners to allied countries such as the United States, South Korea and Germany. Ms. Tran Thu Quynh forecasts that in the coming years, the product groups that still have the potential for good export growth are: footwear, leather products, and headgear.

The group of input materials for production such as rubber, iron and steel, raw plastics and chemicals (5%)... has a sharp decline and the potential for growth depends on the speed of order recovery and industrial production growth in Canada.

“ The marine engineering, automotive, precision engineering and handbag industries are still areas that maintain growth and have competitive advantages. Notably, these are mostly Chinese industries that account for a large market share, so Vietnam has many advantages to be sought by Canadian businesses as an alternative source of supply. For these industries (except handbags), Vietnam has a small market share and has the potential to expand its market share in the coming time, ” Ms. Tran Thi Thu Quynh emphasized.

In addition to organizing many events to promote industrial and investment potential in all Canadian provinces to introduce Vietnam's high production capacity and industrialization level, the Trade Office also has a section to introduce and promote the Database of Vietnamese industrial enterprises as well as to introduce specific enterprises on the English website to communicate with Vietnamese enterprises. The Trade Office also closely coordinates with Associations (Leather, Footwear and Handbag Association, Supporting Industry Association, etc.) and the Department of Industry to transfer trade connection opportunities and orders from Canadian enterprises upon request. Enterprises in need can send information to the Trade Office for support. In addition, in the Doing Business in Canada section, the Trade Office has articles guiding specific enterprises by industry as well as orders in Canada.

Following the success of the delegation of nearly 200 Canadian businesses to Vietnam in March 2024, during the week of November 21-23, 2024, the Trade Office is coordinating with the Asia-Pacific Foundation to organize for 25 Canadian technology businesses in the fields of food, energy, biomedicine... to enter Vietnam (Ho Chi Minh City) to seek opportunities and business cooperation partners in Vietnam.

Regarding effective trade promotion measures with the market, Ms. Nguyen Thi Hoang Thuy - Vietnam Trade Counselor in Sweden also shared. Nordic countries are always pioneers in new consumption trends and applied technologies. Therefore, in order for Vietnamese enterprises to access new production technologies, it is necessary to further promote cooperation activities, organize research groups, and exchange experiences. In addition, there should be policies to attract foreign direct investment from the Nordic region, helping to accelerate the process of technology transfer, develop supporting industries, increase on-site exports and train domestic human resources.

Source: https://moit.gov.vn/tin-tuc/phat-trien-cong-nghiep/kich-khich-tieu-dung-mo-rong-thi-truong-cho-san-pham-cong-nghiep-che-bien-che-tao.html