A plan to develop a self-reliant industry put forward by Truong Hai Auto Corporation (THACO) is winning the approval of many other Vietnamese enterprises and received positive feedback for further improvement.

Doan Vo Khang Duy, deputy chairman of the Ho Chi Minh City Association of Mechanical and Electrical Enterprises (HAMEE) and director of Ameco Industrial JSC, highly appreciated THACO’s initiative, which is called the ‘one-stop’ model.

Substantial synergies

The model, which encourages cooperation among Vietnamese enterprises to increase Vietnamese industry’s self-reliance, has proved a success in other countries, according to Duy.

It brings important synergies to businesses in terms of capital, equipment, technology, and many more by using resources and joining the ecosystem that THACO has built.

It helps increase the size of the business, thereby boosting revenue.

Enterprises will also be able to improve the quality and stability of their products, and overcome the weaknesses that has hampered the growth of Vietnamese supporting industries.

More professional assignment allows each enterprise to focus on certain businesses, stabilizing and maximizing product quality.

The model will also help enterprises enter more foreign markets as a whole as well as introduce Vietnam’s industry to more potential customers.

However, Duy emphasized the importance of building a platform to connect firms that express an interest in participating in THACO’s ecosystem and validate their capacity.

In this way, the enterprises can take advantage of each other’s potential, instead of merely moving factories into a cluster or gathering them in one place.

Excitement from enterprises

Many businesses expressed their excitement about the option to link production with THACO to form a value chain.

Tran Hoai Nam, another deputy chairman of HAMEE, pointed out that letting THACO process an order alone lacks cost optimization, given the disadvantageous location of the automobile corporation’s production plant in central Quang Nam Province.

Meanwhile, joint production based on the strengths of each company will complement each other and foster growth, Nam said.

However, there needs to be a land and tax support mechanism to encourage such cooperation, according to Nam.

Nguyen Van Tri, general director of Lap Phuc Mechanical Company in District 7, Ho Chi Minh City, said that for firms participating in the supporting industry, success sometimes is just to produce small components with high accuracy and low cost. 

The most difficult challenge that mechanical companies encounter is not technical problems but the inability to find a way to join the value chain.

Based on Lap Phuc’s own experience in supplying molds to Tesla and General Motors, Tri said firms that want to join the chain must be nominated by a third party -- either an investor or a reputable agency. 

The enterprises then go through a very thorough negotiation and research process carried out by their partners before being admitted to the chain.

Meanwhile, most companies are afraid to make big investments because the mechanical engineering industry is highly capital-intensive while they are weak in finding ways to join the chain.

They are struggling to find a development direction owing to this obstacle, not necessarily because of low levels of technology.

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