HCM City beefs up supply chain planning
Many were duped in the past into thinking that lower labour costs and a young workforce would virtually guarantee them a place in the global supply chain as international brand manufacturers relocated to Vietnam.
However most relocating brands have retained their foreign supply chains, including many in China, and have been efficiently producing products with high added value and profitably exporting them to foreign markets.
The most recent trade statistics from the General Statistics Office (GSO) showed the trade surplus for foreign invested manufacturers in the eight months leading to September was US$9.4 billion.
This stood in stark contrast to the dismal US$13 billion trade deficit for local manufacturers for the same eight month period.
Noteworthy is the forecast by many economists that the continued success of these foreign manufacturers is not tied to benefits of free trade agreements that Vietnam has recently entered into.
These manufacturers could, if they so choose, continue with their foreign supply chains, forget about complying with the rules of origin or other free trade provisions, forego tariff reductions and remain competitive and profitable in the global marketplace.
However, the Ho Chi Minh City People’s Committee is bent on making breakthroughs for local manufacturers over the long term and is stepping up its planning to break into the support industry.
In connection therewith it has undertaken a survey to look in detail at six specific industries and use the results to lay out an effective strategy through 2025, said Vice Rector Nguyen Trong Hoai of the University of Economics in HCM City.
Currently, though foreign manufacturers have created tens of thousands of good paying jobs for HCM City, local companies have only been competing in labour intensive packaging and labelling industries at the very bottom rungs of the value chain ladder.
However, with a thorough in depth understanding of the key industry needs, and well thought plans, Vice Rector Hoai believes local companies can reinvent themselves, adapt and successfully compete for more lucrative positions up the supply chain ladder.
Local manufacturers will need to develop higher levels of skills in their workforces, pump up investment, plunge more dollars into research and development, and design more innovative products targeting very specific needs.
Our goal is to not leave any stone unturned and lay out a detailed roadmap individualized for each of the six key industries – mechanical engineering, information technology, plastics, food processing, apparel and textile, and footwear – said Vice Rector Hoai.