Vietnam’s process manufacturing sector, which makes up around 60% of Southeast Asian nations, has drawn US$252 billion in foreign direct investment (FDI) as a result of businesses moving their operations from China to Vietnam.
Vietnam is both both a technology powerhouse and a battleground.
According to data from the Foreign Investment Agency under the Ministry of Planning and Investment, there are now 34,898 legally authorized FDI projects valued US$426.14 billion in Vietnam.
More specifically, in the first half of 2012, Vietnam attracted FDI worth a total of US$16.03 billion. 63 percent of the total, or $8.84 billion, came from the process manufacturing industry.
As seen by their ongoing investments, Fortune 500 businesses like Samsung, LG, Canon, Honda, and Toyota have been drawn to Vietnam.
Additionally, it is anticipated that the move of Compal will encourage nearby producers of electronic components to become Compal’s suppliers.
According to a survey of American businesses conducted by the American Chamber of Commerce in China and published in May 2022, more than half of respondents said they would decrease Chinese investment if China’s COVID-19 control measures persisted through 2023, according to the Vietnam Investment Review (VIR).
As the pandemic continues to disrupt global supply chains, investors from Europe, the US, and Japan, including Arevo, Fujikura Fiber Optics, Mabuchi Motor, Premo, and Lixil, are searching for raw materials and intermediary products in Vietnam. according to Duong Nguyen Binh, vice president of the Vietnam Association of Automation.
He continued by saying that local vendors have sold more than 400 items to international technology firms for usage in sectors like power, electronics, precision machinery, 3D printing, robotics, and automation.
Local Vietnamese producers of electrical components are likewise attempting to grow their businesses.
To satisfy the rising demand from partners, Haast Industry Vietnam, for instance, is quickening the development of the second and third production bases. By the end of 2022 and 2023, the second and third facilities’ construction should be finished, respectively.
One of the 14 local vendors supported by Samsung Smart Factory in collaboration with the Ministry of Industry and Trade of Vietnam is Haast Industry (MoIT). As the global tech group relocated from China to Southeast Asia, the company obtained more new business prospects and built its first production plant in 2019.
However, Vietnam’s component production costs are two to three times higher than those of its neighbors due to a lack of knowledge and production capacity.
Local component suppliers in Vietnam still struggle to compete with Fortune 500 corporations and import items, despite the cooperative initiative.
Toyota Motor Vietnam has inked a memorandum of collaboration with the Vietnam Industrial Bureau, a division under MoIT, to revise their strategy for boosting regional supporting industries in Vietnam.
Since then, Toyota has used a new program that sends specialists to suppliers’ sites to monitor their performance. They are setting an example and contributing to increased productivity.