Many Japanese investors have complained that they cannot expand investment or production in their Vietnamese projects because the local supporting industry is not adequately developed.
Japan is currently the largest investor in Vietnam, but most firms working here still have to import spare parts and materials from other countries for the Vietnamese plants, which results in higher production costs. While spare parts account for as much as 90 percent of the total production cost, Japanese investors say they have no choice but to import as the Vietnamese supporting industry fails to supply the products they want.
All the local companies can do is to assemble the imported parts, the investors said.
Kubota Vietnam, a Japanese combine harvester manufacturer which entered Vietnam in 2005, said it has attempted to source parts from a local supplier, but the effort eventually failed.
“The local suppliers either failed to make the parts, or were only able to sell them at higher prices than the imported ones,” a company representative said.
When they began their Vietnamese projects, many Japanese investors were upbeat that they could take advantage of the domestic supply of spare parts and materials.
However, even now the only benefits are cheap labor and infrastructure leasing fees, an investor said.
A representative of YKK Vietnam, a zipper manufacturer, said they have to import 90 percent of the materials needed for production, as the local supporting industry “cannot make the equipment that requires a high level of accuracy.”
Poor localization rate
What most challenges the Japanese investors in Vietnam is the fact that they have to bear high production costs due to import of parts and materials, according to Hirotaka Yasuzumi, managing director of the Japan External Trade Organization (JETRO) in Ho Chi Minh City.
Many Japanese firms have complained that production costs in Vietnam are double compared to other countries, he said.
A survey conducted by JETRO in 2012 also found that local companies can only supply 28 percent of the input needed by Japanese firms, while the rates in China and Thailand are 61 percent and 53 percent, respectively.
While a Japanese automobile manufacturing plant in Thailand is surrounded by many spare part plants, the Vietnamese facilities have to import the parts from Thailand and Indonesia, according to JETRO.
Đăng ký: VietNam News