Production activities at the Lien Ha Thai Industrial Park in Hung Yen province. (Photo: qdnd.vn)
Supplying components, materials and technical processes to key manufacturing sectors, supporting industries form the backbone of modern industrial production. Their strength is closely tied to the economy’s level of autonomy and resilience.
When foreign direct investment first entered Vietnam about 30 years ago, domestic suppliers were scarce. Many foreign manufacturers had to import even basic parts such as screws or rubber gaskets.
Since then, the sector has evolved markedly. The number of enterprises has grown rapidly, production scales have expanded and technology levels have improved. Mechanical firms in Bac Ninh, Ho Chi Minh City and Dong Nai have invested in modern machinery, ERP systems, CNC equipment, welding robots and automated production lines.
Products such as technical plastic components, moulds and precision metal parts now meet international standards and are gradually entering global supply chains.
A notable example is the Ministry of Industry and Trade’s cooperation with Samsung Vietnam on smart factory training. The programme has helped hundreds of domestic firms upgrade processes, lifting smart factory maturity levels from 0.9 to 2.1 and demonstrating the impact of technology transformation.
Vietnam now has nearly 7,000 supporting industry enterprises across five sectors: mechanics, automobiles, electrical and electronics, textiles and garments, and high technology. About 300 have joined the supply chains of major foreign groups such as Samsung, Toyota, Honda and LG. Some local companies have begun mastering higher-tech components, including moulds and precision plastic and metal parts.
Despite this progress, supporting industries remain a weak link in global value chains. Many firms still focus on simple processing with low value added and lack capabilities in design, advanced manufacturing and core technology mastery. This prolongs reliance on outsourced technology and constrains brand development and localisation.
Localisation rates in mechanical and automotive sectors stand at about 30–40 per cent, largely in simple components, while electronics localisation is only 5–10 per cent, with critical parts such as chips and sensors still imported. Textiles and footwear remain heavily dependent on imported raw materials and technical accessories.
Experts say limited technological capacity and innovation are the biggest constraints. Underinvestment in research and development, machinery and skilled technical staff continues to drag on productivity and quality. At the same time, global supply chains increasingly demand strict compliance with international standards on quality, environment and social responsibility, making technological mastery essential for deeper integration.
Developing supporting industries will require closer coordination between the state, businesses, research institutes, universities and industry associations, with enterprises at the centre. Proposals include a dedicated supporting industry law with incentives for credit, tax, land access and R&D, as well as the creation of technology parks integrating production, research, training and technology transfer.
In the short term, Decree No. 205/2025/ND-CP is expected to be rolled out through financial support, technical training and innovation centres.
Strengthening supporting industries is not only a market imperative but also a strategic task in building an independent, self-reliant and modern industrial base, closely linked to national defence and security. The Ministry of Industry and Trade says it will continue nationwide programmes, including modern support centres for testing, quality control and technology transfer, alongside partnerships with major corporations to help domestic firms integrate into global supply chains.
