"Produce What Can be Sold, not Simply Sell What Can be Produced," Says Head of JETRO HCM City Office

On October 7 - 9, 2010, JETRO in conjuncrion with Investment and Trade Promotion Centre (ITPC) of Ho Chi Minh City will organize the 4th exhibition oo

n supporting industries. In particular, the exhibition this year will be held together with exhibition Metalex Vietnam 2010. Vietnam Business Forum reporter has discussed with Mr. Yoshida Sakae, Managing Directorof JETRO’s Ho Chi Minh City Office.

In the world, only the US, Germany and Japan have their developed supporting industries and can support their own industries. The present fully developed supporting industry of Japan is the result of over 100 years of development. Japan developed supporting industry on the strategy of 100 percent import substituting, buying foreign technology and without foreign investment. In early years, small companies produce an imported product (for instance, automobile), with a group of companies, we produced from auto parts to assembly. In the process of development, the companies grow bigger, the manufacturing of auto parts with different technologies separated into member companies, the network of small independent companies formed into main parts of supporting industries. The second part was traditional craft villages. We have mechanics of high technology. The whole process of developing supporting industries was made by private enterprises without special policy of the government.

 

Vietnam is only at the early stage of developing supporting industries. It is not simple to develop supporting industries. First, the government must make investment and all-round efforts to ensure fast development of supporting industries. The investment cannot be made overnight or 5-10 years. There must be human resources and human resources need training system together with development strategy.

 

Vietnam has advantage of cheap labour, however to this moment, investment environment, labour and worksite are no longer advantages of Vietnam or priorities of investors in making investments. Investors are now looking for markets that can best meet their demand in manufacturing their products, including essential products of supporting industries. China, Thailand, and Malaysia meet those demands and their supporting industries are fast developing. It explains why 7,000-8,000 Japanese enterprises have invested in Thailand compared to only 1,000 enterprises investing in Vietnam.

Besides, Vietnamese enterprises must diversify their cooperation and joint ventures with foreign investors especially small and medium enterprises of Japan. They are companies of high technology and rich in experiences to develop supporting industries in Vietnam in producing parts and supporting products while receiving foreign technology. It will help increase the competitiveness of Vietnamese businesses in face of the competition of Chinese enterprises investing in Vietnam in the future. Only by diversification of joint ventures and investment cooperation, can Vietnamese businesses be a part of the global production line.

 

Presently, big Japanese groups and especially Taiwanese companies are investing in joint ventures producing motorbike parts meeting some 70 percent of domestic demand. Similarly, home electrical appliances are localized by 70-80 percent. Those are your initial successes. Therefore, Vietnam should give high priority to mechanics and machinery, with steel and plastic are materials of first priorities. However, my advice is “Produce what can be sold and not simply sell what can be produced”.

 

Exhibition is only a short-term activity of JETRO. We often prepare lists of strong Vietnamese enterprises to introduce to Japanese partners. After reviewing their capacity, we introduce them to Japanese enterprises. In addition to JETRO, Japan has also JAICA sending experts to Vietnam to assist in supporting industries. JAICA experts approach directly enterprises which need assistance to increase production capacity and competitiveness. Supporting industries are foundation of industries and then industries promote economic development. Therefore, it is essential that Vietnam should fast develop supporting industries.