Vietnam moulding demand increases

However, foreign investors have said Vietnam’s mould and die-cutting industry suffers from severe shortcomings.

Challenge and potential
Mould and die-making is the foundation of the manufacturing sector, electronics, plastics, automotive, electrical, instruments, meters and all sorts of home appliances. However, Nguyen Van Hung, chairman of Tan Phu Plastic Joint Stock Company, one of leading plastics manufacturers in Vietnam, said due to weaknesses in Vietnam’s support industries, most of the raw materials were still imported, while mould and die-making skills remained lacking.

Hoai Nam, a representative of Japan’s Vina Miuld and Metal Products Co., Ltd, a mould manufacturer specialising in extruded aluminium shapes for architecture, car and food industries, told VIR that his firm had to import parts for stamping moulds. “For machines processing mould and die-cutting, the machine service and repair facilities aren’t good. We have to ask engineers from abroad to fix any problems”, he said.

Investments into mould and die production are regarded as capital-intensive and carry many risks which seem to have deterred local interest.

According to Vietnam Custom’s figures, Vietnam imported US$22.5 billion worth of machinery, mechanical appliances and electrical equipment in 2014, up 20.4% against 2013 or US$3.82 billion.

General Director of Sodick Vietnam Company Asada Kiyoji told VIR that “foreign countries have continuously increased direct investment in Vietnam over the past decade.

But the capacity of the local supply chain in terms of moulding and die-cutting support industries remains at a low level. And this is also a major weakness that Vietnam support industries need to address to win investor approval.”

He added that “robustness is really needed to deal with this situation. In the next couple of years, Japanese suppliers are going to come to Vietnam increasing numbers. But the local supply chains have to improve.”

Vietnam already boasts significant investment from Samsung, LG, Canon, Microsoft, Intel, Bosch, and Nokia.

Samsung Electronics has pledged US$11.2 billion to Vietnam to build three manufacturing complexes in Bac Ninh, Thai Nguyen, and Ho Chi Minh City. Two of the complexes have entered operation, with the last preparing to begin production.

In a meeting with the Ministry of Planning and Investment, Hironori Funahashi, chief representative of Japan’s Sojitz Corporation, also said that many Japanese small and medium-sized enterprises wanted to supply major foreign direct investment projects.

Race to compete
“In my view, Vietnam needs to resolve this issue, particularly with greater inward investment. Furthermore, with the upcoming formation of ASEAN Economic Community, there will be fierce competition. Therefore it is necessary that Vietnam quickly finds a way to be more competitive than other ASEAN countries”, said Asada.

The Ministry of Industry and Trade last year issued Decision 9208 approving a new plan on support industries with three main areas of focus being spare parts, industrial textiles and hi-tech products.

According to the plan, by 2020 Vietnam is expected to see 1,000 businesses supplying support industrial products, accounting for  11% of manufacturing industry.

This would meet 45% of essential domestic production demands and account for 25% of the total industrial production export value.

By 2030, Vietnam will be able to produce 70% of domestic support industry product needs.

In 2020, Vietnam would, if this plan becomes a reality, satisfy 60% of the demand of metal, plastics, rubber, and electrical-electronics parts.

Vietnam has had two supporting industry development complexes in Vung Tau and Haiphong following a co-operation deal with Japan, however, after 13 years they have largely operated without focus. As a result, most of the support industry products are provided by the foreign-invested firms themselves.

Asada suggested that “we can’t forget about enhancing the abilities of local firms. There are too many new independent companies which are still weak.

They will die in this battle, even if they think they can continue churning out products at their current quality levels. Local firms need to understand we need on-time delivery and good quality products in order for them to survive.”

He said Sodick provided wire-cut electric discharge machines which were used to press dies and parts processing.

“Many customers want resin mould making, therefore our product form carving electric discharge machines are indispensable. And I also think that plastic injection moulding machines which are indispensable manufacturing facilities are under-developed. In short, we also help clients that want to enhance their technology.” he added.