Japanese firms boost investment in precision mechanics

Takimoto Koji, chief representative of the Japan External Trade Organisation’s (JETRO) HCM City office, said with its stable economic development, Vietnam is recording an increasing inflow of Japanese investment from China.

In September 2017, Nakano Precision began the construction of its factory at the Tan Binh Industrial Park in Ho Chi Minh City. The Japanese company is planning to invest in another branch in Da Nang city.

Earlier this year, Japanese-invested Sanko Metal Vietnam injected some US$2 million into the second phase of its plant manufacturing sunshade louvers at Nhon Trach 3 Industrial Park. The plant hopes to generate 40 tonnes of metal louvers and 110 tonnes of other metal products per year.

At the International Precision Engineering, Machine Tools and Metalwork Exhibition (MTA) last year, 12 Japanese firms inked contracts with their Vietnamese partners.

According to Koji, 24 Japanese companies participated in this year’s edition, 11 of them for the first time.

They brought labour-saving components and equipment; worker protection equipment and materials, such as press load monitoring devices, safety valves, and rust removers that are safe for human contact; and devices and inspection tools that can help increase local content, he said. 

Osamu Hata, manager of the Sales Department at NMC Co Ltd, which supplies rust removal and prevention solutions, said the company is seeking partners for product distribution in Vietnam.

Meanwhile, Seiji Ushiyama of the overseas sales division at Shinko Denshi Co., Ltd, which provides solutions to industries requiring high-accuracy weighing and measurement, said his company wants to find new customers and an agent in the north.

JETRO’s latest survey showed that the localisation rate of Vietnamese firms was 33.2% in 2017, relatively low compared to China at 68% and Thailand at 57.1%.

The localisation rate plays an important role in the efficiency of Vietnam’s manufacturing sector, Koji noted.

Japan’s foreign investment into Vietnam has enjoyed steady growth over the years. In 2017, Japan topped the list of countries and territories investing in Vietnam with US$9.11 billion, accounting for 25.4% of total capital.

In the first six months of this year, Japan also overcame 86 countries and territories to become the largest foreign investor in Vietnam, with US$6.47 billion, or 31.8% of the total registered capital.