However, to meet its target of 70% localization by 2030, supporting industry enterprises need to move beyond low-value outsourcing to upgrade their position in global supply chains.

FDI wave expands room for supporting industries

Vietnam’s supporting industries are entering a decisive phase as global supply chain shifts converge with rising inflows of foreign direct investment. In 2025, the country attracted about US$38.42 billion in registered FDI, of which US$27.62 billion was disbursed, the highest level recorded in the past five years. The country is now ranked among Asia’s three most attractive manufacturing destinations, particularly in areas such as artificial intelligence, electric vehicles, semiconductors and Internet of Things (IoT) devices.

The surge in FDI inflows reflects growing confidence among international investors while opening greater scope for domestic firms to integrate more deeply into global value chains. Under existing development orientations, supporting industry products are expected to meet around 45% of domestic demand by 2025 and contribute about 11% of industrial output value. By 2030, these figures are set to rise to 70% and 14%, respectively.

Demand for components serving high-tech industries has also grown rapidly. Supporting industry exports were estimated at about US$29.5 billion in 2025, up more than 10% from the previous year, with Japan, the United States and South Korea as the main markets. Electronic components alone were projected to reach US$19.8 billion, up 11.6%, making Vietnam Samsung’s second-largest electronics components manufacturing base globally.

Some domestic companies have gradually improved their standing within supply chains. By 2025, 43 Vietnamese firms had been recognized as tier-1 suppliers to multinational groups such as Samsung, Toyota and Canon, while 12 enterprises obtained IATF 16949 certification for the first time. Even so, these numbers remain modest compared with the scale and pace of expansion of FDI-led production networks.

According to Chu Viet Cuong, director of the Industry Development Support Center under the Ministry of Industry and Trade, domestic enterprises remain limited in both scale and depth of participation in supply chains.

“Although the number of supporting industry enterprises has grown rapidly to nearly 7,000, most are still involved in simple, low-value stages,” Cuong said. “Only about 300 firms have the capacity to participate in the supply chains of major groups such as Samsung, Toyota and Honda, while localization rates in many sectors remain at just 30-40%.”

Nguyen Van, Vice Chairman of the Hanoi Supporting Industry Business Association (HANSIBA), also warned that without innovation and technology investment, domestic firms would struggle to gain a foothold in the value chains of FDI corporations.

Cao Van Hung, Director of international market development at Smart Vietnam Co., said increasing technological content was “the only way out” for Vietnamese enterprises seeking to escape the low-cost outsourcing cycle and upgrade their position in supply chains.

Slow technology upgrades hinder breakthroughs

Alongside major opportunities, Vietnam’s supporting industries continue to face structural constraints. According to Vietnam Credit, about 88% of supporting industry firms are small and medium-sized enterprises with fewer than 300 employees. Limited scale makes it difficult for them to invest in machinery, standardize processes and raise productivity.

A survey by the General Statistics Office showed that only around 20% of supporting industry enterprises hold ISO 9000 certification, while 9% meet ISO 14000 standards. Adoption of advanced management tools such as Lean, Six Sigma, total quality management (TQM) or total productive maintenance (TPM) stands at just 1–2%. In terms of technology, more than 50% of firms still rely on semi-automated equipment, over 30% manage production manually, and levels of automation and robotics adoption remain low.

These gaps make it difficult for domestic suppliers to meet requirements on quality, delivery schedules, data traceability and rapid response within global supply chains. As FDI corporations increasingly prioritize suppliers that meet international standards, ensure data transparency and demonstrate stable capacity, slow progress in technology and management has become a major barrier.

Access to finance remains another challenge. According to the OECD, about 21% of Vietnamese enterprises face difficulties in obtaining credit. While support funds such as the Small and Medium Enterprise Development Fund (SMEDF) and the Credit Guarantee Fund (CGF) are in place, by 2023 SMEDF had disbursed less than VND600 billion to fewer than 40 companies, indicating that policy support has yet to spread widely across the manufacturing sector.

Looking ahead, Nguyen Le Quang Vinh, a consultant on productivity and quality improvement and a senior advisor on comprehensive digital transformation solutions at Think Next Co., said the 2025-2030 period would be pivotal for supporting industry enterprises.

According to him, FDI corporations now prioritize suppliers that meet international standards, respond quickly, maintain strong quality control and ensure transparency in production data.

To upgrade their position, enterprises need to start by standardizing operational processes, strengthening quality management from the outset of production lines, streamlining operations to reduce waste and monitoring production in real time, Vinh said.

Digital and green transformation should follow roadmaps suited to each firm’s scale and resources, rather than rely on scattered investments.

Experts agree that only by crossing minimum thresholds in technology, management and data transparency can Vietnam’s supporting industries fully capitalize on the record FDI wave, gradually move beyond the outsourcing trap and secure deeper participation in global value chains.

Vietnam set to retain strong FDI inflows in 2026 on macro stability

VOV.VN - Vietnam is expected to maintain solid foreign direct investment (FDI) inflows in 2026, backed by macroeconomic stability, strong long-term growth potential, and its expanding role in global supply chains, according to economists.