Workers are sewing car seat covers for export. — Photo courtesy of THACO
The Government has in recent years issued policies to promote the development of supporting industries, which are key to raising the value of other industries.
However, supporting industries remain limited in their capabilities, their output is low and their products do not meet quality standards required by multinational companies.
Viet Nam's supporting industries need pioneering enterprises to play a leading role in spurring development so that the former can play a role befitting their potential.
THACO AUTO belonging to THACO Group is one of the bright spots in developing supporting industries.
Over nearly 20 years it has created a positive transformation, both for itself and supporting industries, increasing domestic production value and the rate of use of local parts and also increasing exports of components.
In Viet Nam, companies spend billions of dollars each year to import spare parts and accessories, which causes production costs to be 10-20 per cent higher than in other countries in the neighbourhood and often makes enterprises wait for shipments, and reduces the rate of use of local parts to low levels.
So many look for capable suppliers who can meet their needs so that they can increase the rate of use of locally made parts in their products as directed by the Government.
Based on its automobile production and assembly activities, especially demand for parts, nearly 20 years ago THACO AUTO devised a large-scale supporting industries development strategy and built Viet Nam's largest automobile parts manufacturing industrial park in Quang Nam to meet the dual goals of increasing the use of local parts and exports of automobiles and parts.
This was the right direction for developing supporting industries, meeting domestic and export needs and attracting investments into the park for the manufacture of accessories for the automobile, mechanical engineering and other industries.
This explains why THACO AUTO was successful in both exporting autos and parts even as many businesses switched to imports.
It has exported a number of products and parts to South Korea, Japan, Malaysia, Italy, Russia, Cambodia, Turkey, and Kazakhstan. From 2021 THACO AUTO’s products have also been available in new markets such as the US, Canada and Australia.
Besides, the company has entered into joint ventures and tied up with domestic and foreign manufacturers with advanced technologies to make products that meet international standards and produce OEM parts.
With this approach, THACO AUTO is both a supplier to the domestic market and an exporter.
In order to supply to foreign-invested firms and compete with foreign firms in the supporting industries, products must be of good quality and price. Therefore, investing in technology is very important and that is also THACO AUTO’s top priority.
In 2021 alone the company has invested over VND300 billion (US$13.1 million) in new technologies, including upgrading plastic injection moulding and blow moulding technologies with machines of 100 to 2,000 tonnes for the former and 2500ml for the latter, installing SMC closed moulding thermal forming technology and 400-tonne hydraulic press machines and building a digital-based production system.
A 200-tonne hydraulic press machine – SMC composite moulding. Photo courtesy of THACO
Expanding both domestic and export markets
Investing in supporting industries has been a success story for THACO AUTO, helping increase the rate of local parts -- cars manufactured by the company currently have a rate of 20 – 60 per cent, the highest in Viet Nam -- and create a premise for the development of other sectors such as mechanical engineering, agriculture and others.
This has helped increase the value of domestic production, gradually reducing the trade deficit.
The strategy for developing Viet Nam's automobile industry, both serving the domestic market and exporting to regional markets, is being realised gradually.
Being a manufacturing and assembly partner of international car companies, THACO AUTO thoroughly understands the global component manufacturing processes and standards, and on that basis builds a road map for increasing the use of locally made parts in accordance with local and foreign manufacturers’ requirements.
THACO AUTO has supplied OEM components (glass windows for trucks and buses, bumpers, tweezers, flooring, ceiling panels, paints for motorcycle plastic components, and others) to many car and motorbike manufacturers in Viet Nam.
It is expected that in 2021 THACO AUTO's sales of parts and accessories in the domestic market will triple from the previous year.
It targets earnings of $25 million from exports of parts and accessories this year to South Korea, Australia and Laos, including by expanding sales of new products such as glass windows for buses, ventilation panels for pickup trucks and mezzanine trucks and CNG tank covers. VNS