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| Building a National Brand for the Mechanical Industry, bringing Vietnamese products deeper into the global supply chain. |
"Promoting the export of mechanical products" is the theme of the latest trade promotion conference with the system of foreign trade offices (August 2023) organized by the Ministry of Industry and Trade in the form of direct and online cooperation with 63 provinces and cities and Vietnamese trade offices abroad.
Driving force of national economic growth
In today's modern, strongly integrated and constantly developing economy, the more national goods and brands dominate the international market, the more powerful the national economy. It can be said that product brands, business brands and national brands have a very close relationship and interact, directly influencing each other.
Mechanical engineering is one of the industries with a long history and is identified by the Party and State as a "backbone" industry, playing the role of a driving force for the growth of the national economy, expanding production and business, especially in some groups of industries such as mechanical molds, high-tech mechanical engineering, machinery, equipment, spare parts, etc.
Speaking at the Conference on "Promoting the export of mechanical products", Director of the Trade Promotion Agency (Ministry of Industry and Trade) Vu Ba Phu assessed that the mechanical industry has made remarkable growth, increased the localization rate, creating a driving force to promote industrial and economic development. Thereby, directly and indirectly creating jobs for millions of workers.
However, according to the assessment, although Vietnam's industrial competitiveness index is increasingly narrowing, ranking 44th in the world. However, the above figure includes industrial products held by foreign direct investment (FDI) enterprises, while Vietnam's mechanical, processing and manufacturing enterprises are much lower.
At the same time, the rate of industrial labor productivity growth is also very low compared to other countries in the region; technology innovation is slow, largely lagging behind the world average; high-quality, skilled human resources in industry are still lacking. On the other hand, the internal restructuring of the processing and manufacturing industry is still slow, mainly processing and assembling activities in the low segment of the global value chain. Vietnam has not been proactive in input sources for production, having to import up to 91.2% of production materials, leading to low localization rates and domestic added value. Many products of the Vietnamese mechanical industry are not competitive enough, partly due to the lack of "branded " products.
However, in reality, although there are not many "famous" brands, the Vietnamese mechanical industry has also contributed typical brands that have established a certain position in the world market, such as Hoa Phat, Vinfast, Thanh Cong, Thaco... The domestic mechanical industry has also manufactured a number of product sub-sectors with competitive advantages domestically and regionally, such as sub-sectors of steel structure manufacturing products, non-standard goods manufacturing, manufacturing a number of machines, equipment, spare parts to serve the needs of the electricity, oil and gas, mineral exploitation, construction materials production, manufacturing a number of farming machines, processing, preserving agricultural, forestry and seafood products, assembling automobiles, building ocean-going ships, passenger ships and water transport...
According to Brand Finance's evaluation data, Hoa Phat brand is valued at 620 million USD and is the only Mechanical - Steel manufacturing enterprise in the Top 16 most valuable brands in Vietnam 2023.
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| Hoa Phat Group was honored at the ceremony to announce products achieving National Brand in 2022. (Source: hoaphat.com) |
Hoa Phat currently holds the No. 1 market share in Vietnam in the fields of construction steel and steel pipes, and is in the Top 5 largest galvanized steel sheet manufacturers. In the international market, Hoa Phat's products and brands are present in 30 countries and territories across 5 continents and are protected in many large countries. For many consecutive years, Hoa Phat brand has been selected as a National Brand, Top Strongest Brand in Vietnam.
Or the THACO brand, although not in the Top, has been honored as the National Brand of Vietnam for the sixth consecutive time. THACO is a multi-industry corporation, in which automobiles play a key role, creating sustainable values. Currently, THACO distributes a full range of types: passenger cars, buses, trucks, specialized vehicles from international automobile brands (KIA, Mazda, Peugeot, BMW; Foton, Mitsubishi Fuso). Up to now, the localization rate of vehicles manufactured by THACO AUTO has reached 20 - 60% (the highest in Vietnam today); at the same time, it creates opportunities to develop fields such as mechanics, agriculture and other industries, attracting many investment enterprises, contributing to the progress of the country's economy.
It can be said that building and developing the country's mechanical industry is very difficult, but it is indispensable. When a country has a strong mechanical manufacturing industry, not inferior to other countries, it can be self-sufficient, ensure national defense - security and socio-economic development, especially in the current volatile world situation. Therefore, the State needs to have specific policies to invest in developing the mechanical industry with strong brands.
Bringing mechanical products deeper into the global supply chain
According to preliminary figures, over the past years, our country has imported from abroad about 40 billion USD/year of equipment, machinery, and production materials for the entire economic sector including industrial production, agriculture, infrastructure construction, services, and defense - security. This is a fairly large market that many countries want to have but cannot.
Mr. Nguyen Chi Sang - Vice President and General Secretary of the Vietnam Mechanical Engineering Association said that although the current import and export figures of the mechanical engineering industry are large, most of them are in the foreign direct investment (FDI) sector, while the proportion of Vietnamese enterprises is quite modest.
In reality, foreign customers recognize many limitations of Vietnamese mechanical enterprises; among them, limited customer search skills. Furthermore, there are no traditional products; no sales representatives by block and no close connection in customer search; reluctance to change production scale and limitations in using e-commerce to serve production and business.
At the same time, businesses compete mainly on labor and material prices, depending on China, and do not yet fully understand the provisions of trade laws in some markets such as the EU, the US, Africa, etc. Therefore, the association recommends that the Vietnam Trade Office in foreign markets strongly support domestic mechanical enterprises, especially in providing market information. At the same time, the Ministry of Industry and Trade needs to support connecting businesses in the industry with foreign buyers. Support businesses to participate in e-commerce channels; support the synthesis of data and market demand.
According to Ms. Truong Thi Chi Binh - Vice President and General Secretary of the Vietnam Association of Supporting Industries (VASI), the mechanical products market has seen a decline of about 20% in orders, with some businesses experiencing a more severe decline of 30-40%. However, the mechanical sector has also gained many new customers due to the shift in production. Meanwhile, the capacity of domestic enterprises has seen positive changes. Along with that, many production stages of Vietnamese enterprises are capable of competing with Chinese and Indian enterprises.
Ms. Truong Thi Chi Binh also pointed out that the United Arab Emirates (UEA) is considered a potential market for Vietnamese mechanical products, however, businesses are facing payment difficulties.
The United States is also an attractive destination but requires high standards. Therefore, support from the Trade Office is needed so that businesses can seize opportunities to access the market and meet the requirements of partners.
Mr. Nguyen Manh Hung - Chief Representative of the Vietnam Trade Promotion Office in New York shared that the mechanical engineering sector plays an important role in the US economy, especially automobile manufacturing. In the coming time, the US mechanical engineering sector will focus on the trend of applying advanced technology, producing electric vehicles, sustainable and environmentally friendly products.
Besides being a major manufacturer of mechanical engineering, the United States is also a country with diverse import needs, imported products are industrial machinery, civil aircraft, computers, semiconductor accessories, agricultural machinery, paper industry; automobiles, automobile parts.
Therefore, there is still much room for export to the US market. Domestic enterprises need to proactively source goods, comply with market regulations, and have quality certificates that ensure safety standards, depending on each specific industry and product.
As a traditional export market for Vietnamese mechanical products, the export turnover of mechanical products accounts for 5% of Vietnam's total export turnover to Japan. According to Mr. Ta Duc Minh - Commercial Counselor, Vietnam Trade Office in Japan, Japan is implementing a new policy to avoid dependence on China for supply and expand to ASEAN countries; including Vietnam.
On the other hand, Japanese mechanical enterprises are mainly small and medium-sized, long-standing, and the owner of this enterprise wants to transfer, but in a country with an aging population, this is relatively difficult, so he plans to go to Vietnam to find opportunities for production cooperation.
There are many opportunities, but Vietnam's mechanical industry still depends on imported raw materials such as high-tech steel and aluminum, which is a weakness for the industry's development. Therefore, the Trade Office recommends that domestic mechanical enterprises need to invest more in research and product development, thereby being able to participate more deeply in the global supply chain.
Mr. Ngo Khai Hoan - Deputy Director of the Department of Industry (Ministry of Industry and Trade) emphasized that in order to support businesses, the Department of Industry has coordinated to implement many support programs for the mechanical industry, especially promoting trade in the processing and manufacturing industry. On the other hand, the Department has coordinated to implement activities to improve the capacity of businesses such as organizing training activities for consultants with the aim of spreading this knowledge to domestic businesses.
Regarding FDI enterprises, the Department has coordinated to implement two typical programs such as training mold engineers and participating in connections. Regarding the association's proposal on expanding the subjects and scale of participation in important specialized exhibitions, it will study and have appropriate implementation activities in the coming time.
According to experts from the Ministry of Industry and Trade, although the market potential of the industry is very large, diversifying and expanding the market for businesses in the mechanical industry is still very difficult due to insufficient competitiveness, not being able to build a brand and not being known by potential customers. Therefore, the Government and the Prime Minister have resolutely and closely directed ministries, branches and localities to implement many solutions to remove difficulties and promote growth.
In addition, the Ministry of Industry and Trade has synchronously deployed many measures to support domestic production and business, diversify supply sources and partners, enhance trade promotion, expand markets, continue to maintain and consolidate its position in markets with free trade agreements; coordinate with relevant ministries and branches to support businesses in responding to trade barriers and trade defense measures.
Hopefully in the coming time, the Vietnamese Mechanical Industry will contribute many new names to the List of products achieving the Vietnam National Brand, firmly advancing to the world.
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