What can Vietnam expect from Toyota’s localization program?
Experts said that Vietnam can take full advantage of Japanese auto manufacturers’ support and Vietnamese businesses could, as a result, become second-class car part suppliers to Toyota and other foreign-invested enterprises (FIEs).
Toyota Motor Vietnam’s (TMV) managers have said that Toyota cars have higher localization ratios than any other car brands in Vietnam. Its five car models, including Vios, Corolla, Camry, Innova and Fortuner, have locally made content proportion of between 19 and 37%.
Now TMV has 18 satellite companies which provide car parts. In order to increase the locally made content rate, TMV has asked Japanese car part manufacturers to set up a network of suppliers including Denso, Toyota Boshoku and Toyoda Gosei.
Toyota’s localization program has raised controversy. Some analysts pointed out that though the percentage of car parts made in Vietnam has increased, Vietnam cannot benefit from this, because the car part suppliers are not Vietnamese, but FIEs which have factories in Vietnam.
This means that Vietnamese businesses cannot join Toyota’s supply chain, and cannot get jobs from the automobile manufacturer.
Nguyen Ba Hai from the HCM City University of Technique Education applauds the big efforts to increase the locally made content ratio, adding that when Vietnam joins TPP (the Trans Pacific Partnership) the localization program would bring benefits to Japan because it would boost exports.
He thinks if Vietnamese enterprises cannot satisfy the requirements in making car parts, it is necessary to let Japanese enterprises make car parts in Vietnam.
Bui Ngoc Son from the World Economics & Politics Institute said it was not a surprise that Toyota wants to increase the localization ratio with Japanese enterprises, saying that it cannot find Vietnamese suppliers.
“In the last two decades, Vietnam did not think of developing supporting industries for automobile manufacturing, but only focused on assembling cars,” Son explained.
Nguyen Khac Trai, former lecturer of the Hanoi University of Technology, believes that asking Japanese enterprises to come to Vietnam is inevitable. Meanwhile, the possibility of Vietnamese enterprises becoming Toyota’s satellite companies is low.
Trai went on to say that Japan would not necessarily transfer technology to Vietnam. Instead of cherishing this hope, Vietnamese businesses should strive to become second-class suppliers for Toyota or other Japanese automobile manufacturers, and be satisfied with this.
“No one wants to see others jump into the field and share the pieces of the world’s automobile cake,” he explained.
“There are many different levels in supporting industries. Vietnamese enterprises still can join some stages of the production process,” Trai said.
Now TMV has 18 satellite companies which provide car parts. In order to increase the locally made content rate, TMV has asked Japanese car part manufacturers to set up a network of suppliers including Denso, Toyota Boshoku and Toyoda Gosei.
Toyota’s localization program has raised controversy. Some analysts pointed out that though the percentage of car parts made in Vietnam has increased, Vietnam cannot benefit from this, because the car part suppliers are not Vietnamese, but FIEs which have factories in Vietnam.
This means that Vietnamese businesses cannot join Toyota’s supply chain, and cannot get jobs from the automobile manufacturer.
Nguyen Ba Hai from the HCM City University of Technique Education applauds the big efforts to increase the locally made content ratio, adding that when Vietnam joins TPP (the Trans Pacific Partnership) the localization program would bring benefits to Japan because it would boost exports.
He thinks if Vietnamese enterprises cannot satisfy the requirements in making car parts, it is necessary to let Japanese enterprises make car parts in Vietnam.
Bui Ngoc Son from the World Economics & Politics Institute said it was not a surprise that Toyota wants to increase the localization ratio with Japanese enterprises, saying that it cannot find Vietnamese suppliers.
“In the last two decades, Vietnam did not think of developing supporting industries for automobile manufacturing, but only focused on assembling cars,” Son explained.
Nguyen Khac Trai, former lecturer of the Hanoi University of Technology, believes that asking Japanese enterprises to come to Vietnam is inevitable. Meanwhile, the possibility of Vietnamese enterprises becoming Toyota’s satellite companies is low.
Trai went on to say that Japan would not necessarily transfer technology to Vietnam. Instead of cherishing this hope, Vietnamese businesses should strive to become second-class suppliers for Toyota or other Japanese automobile manufacturers, and be satisfied with this.
“No one wants to see others jump into the field and share the pieces of the world’s automobile cake,” he explained.
“There are many different levels in supporting industries. Vietnamese enterprises still can join some stages of the production process,” Trai said.