Competition & Cooperation To Develop Support Industry (09/9)
09/09/2011 - 25 Lượt xem
It is important to develop the support industry as most domestic industries have to import production materials.
Source: Saigon Times.
Reasons
For years, the textile and garment industry has been one of Vietnam's key export industries recording the biggest export value. During early months in 2011, the textile and garment industry recorded an important mark as Vietnam becomes the second world’s largest textile and garment exporter to big markets such as Japan and the United State. However, the industry still has to import nearly 70 percent of production materials, resulting in low added value. According to the Vietnam Textile and Garment Association, the export value of textile and garment industry in the first six months of 2011 totaled US$6.16 billion. However, the industry had to import US$5.76 billion of materials. It means that the added value of the industry just recorded US$400 million.
Another example shows the limited development of the support industry is the automobile industry. For the last few years, despite great efforts, domestic supporting industries have only met from 5-10 percent of the automobile industry's needs. Vu Tien Loc, the chairman of the Vietnam Chamber of Industry and Commerce said the great dependence on import materials has not only reduced economic value but also made big enterprises leave Vietnam market. Joint venture companies in Vietnam said that by 2015 if local support industrial market will not be able to meet about 60 percent of their needs, they will go.
In the first six months of 2011, the import value of goods and commodities amounted to US$49 billion, 85 percent of which are production materials such as fiber, cotton and footwear materials.
Luu Tien Long, the director of the Hanoi Industry and Trade Department said that there are two major reasons for the limited development of the domestic support industry. First, the capacity of domestic enterprises is limited as they are mostly small and medium in size which results in low quality products. Second, the domestic support industry hasn't developed as rapidly as other countries. Therefore, it is not easy for the industry to join any phase of the global chain.
Competition and Cooperation Needed
"If the production of a complete product is compared to a mountain, the production of support products as well as assembly and completion will be compared to the mountain foot and the mountain top respectively. However, we just get access to the mountain top without paying attention to the mountain foot" Vu Tien Loc says.
In the long term, Vietnam will become an attractive destination to investors. Therefore, it is important to develop a good infrastructure system. However, Japanese enterprises are moving to several countries including Vietnam after two disasters in early 2011. Hirokazu Yamaoka, the representative of Japan External Trade Organization (JETRO) said Vietnam is more attractive compared to other countries in the region. Some 950 Japanese enterprises are operating in Vietnam at the moment. They expect that Vietnamese enterprises will supply more support industrial products. However, Vietnamese enterprises should pay more attention to product quality if they want to become partners of Japanese enterprises.
To develop the support industry, Chainarong Limpkittisin, the chief executive officer of the Reed Tradex, a company that has strong experience in organizing support industrial exhibitions in Vietnam, said that Vietnamese enterprises should pay attention to product's quality and prices as well as delivery deadline and workers' skills. Production enterprises should develop a proper business strategy to maintain their growth rate so as to increase the quality and production efficiency to develop the support industry.
Le Gia Bao, the deputy director of the FC Hoa Lac Company shared his experience that big enterprises have four major requirements for support industry's enterprises. First, products have to meet technical requirements. Second, the delivery deadline is met. Third, prices are reasonable and stable. Finally, added value services are incorporated such as quick response to customer' requirements and shipping service.
As most enterprises of the support industry are small and medium in size, to meet support production requirements, enterprises should both compete and cooperate with each other. As quality and delivery deadline are considered the most important requirements, they should cooperate with each other to meet these requirements. The cooperation between small enterprises will help them use equipment and workers more effectively. Along side cooperation, enterprises who involve in making support industrial products should compete with each other. The competition depends on the effective exploitation of inner strength (technology, human resources and reputation), development of high technology and special products, detection of market slit and an increase in providing added value services. /.
Source: Saigon Times.
