Developing supporting industries in Vinh Phuc: Current status, achievements and orientations

Vinh Phuc is emerging as the "heart" of Vietnam's supporting industry (SI) with hundreds of enterprises operating actively in the field of manufacturing components and spare parts for large automobile and electronics corporations. However, facing the "survival" problem, the province needs to implement many solutions to break through in the technology race and improve its position in the international economic value chain.

Cosmos Technology Co., Ltd. (Khai Quang Industrial Park, Vinh Yen City) always puts product quality first, improves modern machinery and technology, enhances product quality, and ensures strict standards of partners such as Honda, Yamaha...

The supporting industry (SI) includes the production and supply of components, spare parts, materials and technical services, serving key industries such as automobiles, electronics and mechanical engineering. In the context of industrialization and modernization, SI plays a core role in improving domestic production capacity, reducing import dependence and increasing competitiveness for key industries by optimizing supply chains and reducing costs.

With the advantage of being close to Hanoi , modern infrastructure and large industrial zones such as Khai Quang, Binh Xuyen, the province attracts FDI capital, focusing on the production of automobiles, motorbikes and electronics. Supporting industry holds a central position in the local economic strategy, increasing the added value of the main industry, creating thousands of jobs and promoting economic restructuring towards industrialization.

The development of supporting industry in Vinh Phuc comes from the synchronous policies between the Central and local governments. Based on the support and incentive policies of the Central Government, Vinh Phuc has implemented policies suitable for specific incentives such as reducing corporate income tax, supporting land rental prices in industrial zones and low-interest credit.

Thanks to effective coordination, the province has achieved many achievements in developing supporting industries with an increasing number of enterprises, improved technology, and increasingly deep integration into the global supply chain. According to statistics from the Department of Industry and Trade of Vinh Phuc, by the end of 2024, the province will have about 400 supporting industry manufacturing enterprises, of which more than 70 enterprises participate in the supply chain for large corporations.

Four enterprises manufacturing and assembling complete automobiles and motorbikes, Toyota Vietnam Automobile Company, Honda Vietnam Company, Daewoo Bus Company Limited and Piaggio Vietnam Company Limited, play a leading role in promoting the development of supporting industry enterprises in the field of mechanical engineering, especially automobile and motorbike manufacturing.

The industry structure mainly consists of small and medium-sized enterprises, with significant participation from both domestic and foreign enterprises, notably suppliers to Toyota, Honda, Piaggio, Samsung and LG.

According to a report from the Provincial Statistics Office, in 2024, the province's GRDP is estimated to reach VND173.14 trillion, up 9.95% over the previous year. Vinh Phuc province has also strongly attracted foreign direct investment (FDI).

Regarding labor, the supporting industry in Vinh Phuc has created jobs for more than 150,200 workers, including 142,440 workers in industrial parks and more than 7,800 workers in industrial clusters, accounting for about 25-30% of the province's total workforce.

This figure not only reflects the large scale of the industry but also shows its important role in social stability. Training support policies with support levels of up to 70% of costs have improved workers' skills, meeting the strict requirements of multinational corporations in the production of auto and electronic components.

In the context of global integration and rapid economic transformation, the three key sectors of the supporting industry in Vinh Phuc have affirmed their importance in the international economic value chain.

The automobile and motorbike industry has developed thanks to large corporations such as Toyota, Honda and Piaggio promoting domestic production; of which, Toyota has 79 first-tier suppliers (39 DDIs and 40 FDIs), contributing to technology transfer and modernization of production processes.

The electronics industry in Vinh Phuc attracts significant FDI, with enterprises such as Patron Vina and Haesung Vina playing an important role. Vietnam's electronics export turnover is expected to reach 126.5 billion USD by 2024, and Vinh Phuc will contribute more than 2.2 billion USD from electronic components in the first quarter of 2025.

The mechanical engineering industry has maintained stable growth thanks to the production of industrial machinery and equipment, not only meeting domestic demand but also expanding export markets. The combination of preferential policies and investment in technology and human resource training is the key driving force for the supporting industry in Vinh Phuc to progress steadily, aiming to become the economic pillar of the province by 2025.

However, in addition to achievements, the supporting industry in Vinh Phuc still faces many challenges. Dependence on foreign technology makes it difficult for local enterprises to be proactive in production and innovation.

For example, many important components in the automobile and electronics industries still have to be imported from Japan and South Korea, increasing costs and reducing domestic added value. The shortage of highly skilled labor is hindering the ability of enterprises to expand production, especially in the context of multinational corporations requiring high-quality human resources to meet international standards.

Although infrastructure has been improved with modern industrial parks, the rapid pace of industrial development requires additional investment in transportation, electricity, and water to meet increasing demand.

On April 2, 2025, the US imposed a 46% tariff on goods exported from Vietnam. However, the US has temporarily suspended the imposition of reciprocal tariffs for 90 days, from April 2, 2025 to July 1, 2025, to create an opportunity for bilateral negotiations.

But if the 46% tax rate is implemented after this delay, supporting industry enterprises in Vinh Phuc will face worse scenarios, with increased production costs, disruptions in the supply chain and a decline in FDI inflows, which could cause enterprises to shift to other markets.

Faced with the impact of the US tax increase policy, businesses in Vinh Phuc need to deploy flexible short-term response solutions to maintain production activities and stabilize the market.

One of the urgent measures is to restructure orders and adjust export proportions to reduce dependence on the US market, while proactively exploiting other potential markets such as Europe, Japan, Korea or the Middle East.

At the same time, businesses need to proactively renegotiate commercial contracts and seek cost sharing from partners to minimize financial risks during periods of instability. Cutting production costs, improving management efficiency and promoting the application of digital technology in the supply chain also need to be promoted, creating a foundation for businesses to overcome the current difficult period.

In the long term, to proactively adapt to international trade fluctuations and ensure sustainable development, the province needs to focus on developing important supporting industries such as automobiles, electronics and mechanics. Promote investment in technology and innovation.

Strengthening the linkage between domestic enterprises and FDI enterprises, business networking events and supplier development programs need to be promoted to increase the localization rate and build a sustainable supply chain.

Training high-quality human resources to meet the needs of the supporting industry. Investing in vocational training, focusing on skills such as engineering, quality control and supply chain management, combined with cooperation from leading enterprises will ensure that the workforce meets development requirements.

Expand export markets and actively participate in global supply chains. Supporting local businesses through market research, trade promotion and international standard certification, and encouraging participation in international trade fairs will help build relationships with potential buyers.

Vu Tuan Anh, National Economics University

Dao Tien Cong, Department of Industry and Trade of Vinh Phuc

Luu Thi Lan Anh, Hanoi University of Science and Technology

Do Phuong Chi, IDC Center - Ministry of Industry and Trade

Source: http://baovinhphuc.com.vn/Multimedia/Images/Id/128203/Phat-trien-nganh-cong-nghiep-ho-tro-tai-Vinh-Phuc-Thuc-trang-thanh-tuu-va-dinh-huong