Japanese firms in Viet Nam struggle to find raw materials

Update: February, 14/2007 - 00:00

Japanese firms in Viet Nam struggle to find raw materials


HA NOI — Locally made materials can only satisfy 22 per cent of demand from Japanese companies operating in Viet Nam, according to a recent Viet Nam Development Forum (VDF) report, forcing executives to look abroad for intermediary goods and services.

The VDF, which is partially funded by Japan’s Government, estimates that Malaysia’s and Thailand’s suppliers meet 45 per cent of Japanese companies’ demand.

The report indicates it is very difficult for Japanese producers to find parts and accessories in Viet Nam, and among hundreds of local suppliers companies may only find one that meets their demands. The VDF noted problems actually finding suppliers, with executives having to rely on telephone books or word of mouth references from staff.

One the opposite end, local companies say that it may take two to three years before they receive an order from their Japanese counterparts, which discourages them from seeking out further business. In addition, Japanese firms tend to be too choosy about input materials, according to suppliers.

The main concern, though, for the VDF and companies on both sides is the lack of high-quality materials available in the local market. The forum estimates that input materials account for 70-90 per cent of the companies’ production costs. If the Viet Nam’s input materials suppliers do not find the ways to improve quality standards, the production companies will take a lot of money to import the input materials from other countries, warns the VDF.

The organisation also warns that the labour force needs to be better trained in order to help improve product quality.

Although Japanese companies organise training courses for local labourers, the employees often discontinue the courses, even though it could lead to a higher paying position, says Ngo Duc Anh, a VDF researcher.

The VDF was established under a co-operation between Viet Nam’s National Economics University and Japan’s National Graduate Institute for Policy Studies (GRIPS). — VNS