Opportunities for businesses in the mechanical industry
With good disease control and participation in many free trade agreements, 2021, despite difficulties, is still considered a year of high expectations for the mechanical industry.
This assessment is also based on the internal strength of the mechanical industry to overcome 2020 with many difficulties in finding the supply of raw materials for production and export of goods.
Step by step recovery
According to a report from the Vietnam Association of Supporting Industries (VASI), in 2020, due to the impact of the COVID-19 epidemic, nearly 50% of businesses under the association had a sharp decrease in revenue, especially in the first quarter, second quarter of 2020.
However, Ms. Truong Thi Chi Binh, Vice President of VASI, said that with her solutions, many enterprises have been flexible in production and rearranged the management apparatus; since then, still have orders, overcome the most difficult period of the epidemic. Up to now, businesses have basically found sources of goods, reconnected with export partners and gradually recovered.
According to Nguyen Duc Cuong, General Director of Hikari Vietnam Trading Co., Ltd., in 2020, when COVID-19 occurs, almost businesses will face difficulties, both directly and indirectly. Hikari is a company operating in the supporting industry that is indirectly affected in the supply of equipment, machinery or the production of spare parts for foreign enterprises. The disruption of raw material supply in a period has led to a decrease in revenue. A lot of equipment and machinery has been invested but cannot be put into operation and production at full capacity.
“As soon as the epidemic occurred, we changed our business plans and strategies to be able to survive and develop. Previously, technology transfer would usually be done by foreign countries, but this year, we have made full use of our capacity conditions from officials and employees to increase revenue and experience for the company. . We were forced to restructure, redundancies and unreasonable allocations were restructured and core processes changed to be more flexible in the way we work,” said Mr. Cuong.
In particular, Mr. Cuong added, the supply disruption forced the company to combine with domestic enterprises to seek more raw materials and export opportunities. This is a positive point that the epidemic indirectly brings to the domestic business community.
During the pandemic, many industries have suffered huge losses/closed. But also from here, opportunities for small and medium enterprises in the mechanical industry appear. Many units have cooperated and shared difficulties together. The disruption of the supply chain has created job opportunities for small units.
According to Mr. Dao Phan Long, Chairman of the Vietnam Association of Mechanical Enterprises, despite many difficulties, businesses have all joined hands to maintain maximum production and business activities and take care of workers’ lives. . “So far, we have not received any information from the member units related to the bankruptcy of businesses caused by the epidemic, whether it is just a decrease in revenue, stopping production for a certain time due to lack of money. source of raw materials, stop export orders”.
What opportunities in 2021?
According to enterprises, the global supply chain will not be able to fully recover, because the major economies consuming manufactured products may be a long way from stabilizing again. However, after the COVID-19 pandemic, multinational companies can move production or purchase goods from China to 3rd countries and this is a good opportunity for Vietnam.
Nguyen Duc Cuong said that 2021 is still a challenging year, but there are also many positive points, such as positive economic growth, very good disease prevention, helping to promote economic development. This is a strong point to attract foreign investment and create opportunities for domestic production facilities and companies. If Vietnamese supporting industry enterprises seize these opportunities, they can quickly join the global supply chain. After the epidemic, the demand for apparel and household goods… increased, while Vietnam has inherent strengths in processing and manufacturing these items.
“In terms of business, I think 2021 is completely feasible and in the business plan, Hikari sets a growth target of 30-40% compared to 2020”, said Mr. Cuong.
In addition, Mr. Cuong said that 2021 will be the year of “clearing and drilling”. Companies that have direction, connection and long-term plan with good governance will survive and develop. Any business that still does business with snatching and lack of method will be very difficult to survive. This will be the time to purify and make the economy and business environment much cleaner.
According to Mr. Dao Phan Long, in 2021, manufacturing enterprises will be the ones with many opportunities, because almost orders from China cannot be exported because it is difficult for this country to deploy. orders under the impact of the epidemic, or due to loss of reputation in the international market. While most of those orders are shipped to other countries; including Vietnam. However, to catch this opportunity, businesses must standardize products, from raw materials to production stages to competitive prices.
“In order to do this, it is imperative for businesses to link up stronger, those who are still small, weak in capital and qualifications must know how to sit together to share information, technology and orders,” Mr. Long said.
In fact, the shift of production/purchase to a third country outside of China has been sought by companies in the production networks of multinational corporations for many years. The mechanical industry associations themselves, the supporting industries and their member businesses have met and exchanged..
Ms. Truong Thi Chi Binh said that mechanical enterprises and supporting industries are facing great opportunities when Vietnam joins many free trade agreements. When these agreements come into effect, it will help domestic enterprises have more advantages when exporting to other markets, and at the same time attract foreign investment into Vietnam.
However, in the complicated situation of the global epidemic, the Government needs to take measures to support the domestic market through policies to stimulate consumer demand. In addition, in Vietnam and export markets, the Government needs to have special programs to support output by connecting with potential buyers of each industry. This is the point that businesses are most interested in today, not only for the manufacturing industry but also for all manufacturing industries.
At the same time, it is necessary to have a detailed plan to form supporting industry complexes/joint ventures including small businesses, production clusters, or take specific measures to give incentives to industrial companies. medium-sized support now invests in expanding production to meet new requirements…
According to the Ministry of Industry and Trade, in order to support mechanical enterprises and supporting industries in 2021 and the coming years, the Ministry will continue to strengthen and improve the operational efficiency of two technical centers to support regional industrial development. North and South. Currently, these 2 centers have supported mechanical industry enterprises in some localities across the country such as supporting training in production management systems, business management systems; capacity building to meet international standards. The Centers are actively cooperating with multinational corporations present in Vietnam such as Toyota, Mitsubishi, Canon in order to find suitable suppliers to participate in the value chain of these corporations.
In addition, the Ministry will continue to strongly develop downstream industry; in which there are a number of industries such as the energy industry, the precision engineering industry as well as a number of mechanical engineering industries to ensure the development of supporting industries. This will attract multinational corporations to invest in large-scale projects in Vietnam. By promoting the manufacturing and assembling industries of finished products, the market for domestic supporting industries will be maintained and expanded, creating a premise for domestic mechanical enterprises to become suppliers. participating in the supply chain of enterprises producing and assembling final products…