Vietnam’s Opportunity to Join the Global Supply Chain
Speaking at a recent event on supply chains, Dr. Nguyen Quoc Viet, Deputy Director of the Institute of Economics and Policy Research (University of Economics – Vietnam National University, Hanoi) shared: As global supply chains shift, Vietnam has become a manufacturing hub for many global corporations. He emphasized the necessity for Vietnamese businesses to deeply engage in supply chains and streamline production processes.
Vietnam has numerous opportunities to join global supply chains (Photo: KL)
Dr. Viet also noted that since late 2023, many large technology corporations have shown interest in relocating their supply chains to Vietnam. In the first months of 2024, Vietnam ranked second in the region in attracting investment, indicating not only a favorable business environment but also the country’s strategic position in the diversification of production and supply chains for leading global countries, corporations, and enterprises.
“Additionally, some large corporations and enterprises, although not yet investing directly, have started to source from Vietnamese manufacturers for raw materials and input devices for production, including renowned high-tech companies such as Apple and Amazon,” informed Dr. Viet.
Mr. Ha Gia Ke, Vice Chairman of the Guangxi Enterprises Federation (under the China Enterprises Association in Vietnam), shared similar sentiments. He highlighted that Vietnam has successfully attracted investments from top 500 global electronics corporations. These corporations heavily rely on suppliers for electronic components and accessories, presenting opportunities for Chinese enterprises investing in Vietnam to meet these demands and integrate into the country’s global supply chain.
On the other hand, Ms. Do Thi Thuy Huong, Vice President of the Vietnam Supporting Industries Association (VASI) and a member of the Executive Committee of the Vietnam Electronics Enterprises Association (VEIA), attributed Vietnam’s success in attracting FDI and forming a global supply chain to four key factors. These include the legal framework and investment attraction policies, the development of the electronics industry, labor and wages, the impact of new-generation free trade agreements, and the latest trends in global supply chains, as well as the influence of the Covid-19 pandemic.
In the race to join global supply chains, domestic businesses face limitations compared to FDI enterprises (Photo: KL)
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Dr. Viet asserted that participating in supply chains offers Vietnamese businesses a chance to foster sustainable development, enhance competitiveness, and adapt to market expansions. He emphasized the importance of collaboration within supply chains, focusing on research and development, and technology transfer to promote sustainable growth, enhance competitiveness, and effectively expand export markets, leveraging the advantages of new-generation free trade agreements.
While acknowledging the abundant opportunities to join global supply chains, economic experts candidly shared that foreign-invested enterprises (FIEs) hold several advantages in this race. Domestic businesses face limitations concerning capital, experience, and connections with global corporations. To integrate into the supply chains of prominent corporations, stringent requirements regarding delivery time and technology must be met.
Addressing these challenges, Dr. Viet suggested that despite the opportunities, businesses confront significant obstacles. Vietnam’s strength in human resources primarily benefits foreign-invested enterprises. Furthermore, the physical infrastructure of domestic enterprises needs upgrading to satisfy the demands of global electronics corporations, encompassing workshops, warehouses, advanced machinery and equipment, and transportation means. Some domestic enterprises struggle with environmental waste treatment standards, particularly small-scale businesses that cannot afford investments in modern waste treatment systems.
To effectively join the global supply chain, Dr. Viet recommended that Vietnam should innovate to better support businesses in their supply chain endeavors. He emphasized the importance of sufficient resources to enable businesses to invest in technological innovations and meet the conditions set by large manufacturers.
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