Upgrading Vietnam’s Supporting Industries to Boost Autonomy
The Backbone of Vietnam’s Industrial Landscape
Supporting industries in Vietnam, which provide components, materials, and technical processes to key manufacturing sectors, form the backbone of modern industrial production. Their robustness directly correlates with the nation’s economic autonomy and resilience. Historically, when foreign direct investment first surged into Vietnam about 30 years ago, domestic suppliers were few and far between. Many foreign manufacturers found themselves importing even basic components like screws and rubber gaskets, highlighting a significant gap in the local supply chain.
Evolution of the Sector
Since those early days, Vietnam’s supporting industries have undergone significant transformation. The landscape has shifted dramatically, with a rapid increase in the number of enterprises, expanded production scales, and improved technology. Particularly in major hubs such as Bac Ninh, Ho Chi Minh City, and Dong Nai, mechanical firms have invested heavily in modern machinery. The adoption of advanced systems, including ERP (Enterprise Resource Planning), CNC (Computer Numerical Control) equipment, welding robots, and automated production lines, reflects this evolution.
Achieving International Standards
Vietnamese manufacturers have begun producing technical plastic components, molds, and precision metal parts that meet international standards. This progress is evidenced by initiatives such as the collaboration between the Ministry of Industry and Trade and Samsung Vietnam, which focuses on smart factory training. This program has benefited hundreds of domestic firms, elevating their maturity levels from merely 0.9 to 2.1, illustrating the significant influence of technological transformation on local industries.
Current Landscape of Supporting Industries
Today, Vietnam boasts nearly 7,000 supporting industry enterprises across five primary sectors: mechanics, automobiles, electrical and electronics, textiles and garments, and high technology. Approximately 300 of these companies have successfully integrated into the supply chains of major global players like Samsung, Toyota, Honda, and LG. Some local enterprises are beginning to master higher-tech components, enabling them to produce intricate molds and precision plastic and metal parts.
Challenges in Global Value Chains
Despite these advancements, supporting industries still represent a weak link in global value chains. Many firms continue to focus on simple processing, yielding low added value, and exhibit limited capabilities in design and advanced manufacturing. This unease prolongs the reliance on outsourced technology and stunts brand development and localization. With localization rates in the mechanical and automotive sectors hovering around 30–40%—primarily in straightforward components—and electronics localization at a mere 5–10%, many critical components remain imports. Similarly, textiles and footwear still heavily depend on imported raw materials and technical accessories.
Barriers to Technological Advancement
Experts have pointed to limited technological capacity and an innovation deficit as the biggest hurdles facing the sector. Chronic underinvestment in research and development, machinery, and skilled technical staff continues to undermine productivity and quality. Furthermore, as global supply chains demand increasingly stringent compliance with international standards concerning quality, environmental impact, and social responsibility, the mastery of technology becomes essential for deeper integration into these networks.
A Collaborative Approach to Development
The future of Vietnam’s supporting industries hinges on coordinated efforts between the state, private businesses, research institutes, universities, and industry associations, with the active participation of enterprises at the core. Proposals include the implementation of a dedicated supporting industry law providing incentives for credit, tax breaks, land access, and funding for research and development. Additionally, the establishment of technology parks that integrate production, research, training, and technology transfer is crucial for fostering growth.
Short-term Initiatives for Growth
In the near future, Decree No. 205/2025/ND-CP is set to offer financial support, technical training, and the establishment of innovation centers aimed at nurturing the sector. These initiatives are designed not just to enhance industrial productivity but also to elevate the overall capabilities of supporting industries.
Strategic Importance of Strengthening Industries
Enhancing supporting industries transcends mere economic necessity; it is a strategic undertaking vital for establishing a self-reliant and modern industrial base, closely tied to national defense and security. The Ministry of Industry and Trade is committed to continuing nationwide programs, including the establishment of modern support centers dedicated to testing, quality control, and technology transfer. By fostering partnerships with major corporations, Vietnam aims to help domestic firms fully integrate into global supply chains, thus fortifying its industrial autonomy.
This ongoing journey of upgrading supporting industries signifies an era of potential, where Vietnam is positioning itself not just as a participant but as a significant player in the global industrial arena.