The average age of Vietnamese is under 25 years old, in that social burden is lighter than other developing countries. With the improvements of road conditions and housing construction, the existing 17 million motorcycle consumers will rapidly turn to consuming automobiles.Â Vietnam is one of the fastest developing countries in the world with a highly potential emerging market.
With reference to the prediction in Industrial Policy and Strategy Report made by Vietnamese Ministry of Industry, the demand of Vietnam’s auto market will be 256,000 units per year in 2010. According to forecasts of Vietnamese Ministry of Transport, in 2010 the total number of vehicles participating in circulation will reach 129 million units, including 310,000 cars, 360 000 of all kinds of coaches, 620,000 auto trucks and by 2020 the total demand will reach 2.8 million units.
According to the urban traffic development plan of Vietnamese Government, Vietnam annually needs to purchase 35,000 buses for servicing all kinds of urban public traffic system from 2005 to 2010. In a period of economic development, Vietnam has a greater demand for large tonnage heavy-duty dump truck, engineering vehicles, tractors, container vehicles and farm vehicles which use the cities and transportation infrastructure construction. The large luxury coaches, medium-sized passenger cars and mini – buses suitable for use of small cities and towns gradually become a new market demands. The Vietnamese government is taking measures to limit the motorcycle license gradually, which may have the indirect stimulation in richest families who buy cars and mini-vans.
Located in the eastern part of indo-china peninsula with more than 3,200 km of coastline, Vietnam is in the important international traffic online. It has more than half of the province in coastal of the 53 provinces. So it has the obvious advantage of the coast. Vietnam owns many coastal harbors and the land directly to other countries in Indochina is very convenient. It has opened 23 international routes which through the 19 countries and regions of the capital or city in the world. Due to the strategic location of the Vietnam, it has been provided many favorable conditions, such as developing the foreign economic, absorbing foreign investment, developing economic and trade cooperation as well as advantages on aviation, maritime, tourism.
Standard and the work application particularly for the mandatory standards promulgated by departments of Vietnamese government is relatively piecemeal and the implementation is less effective, therefore the effect of management based on the standard left much to be desired.
From the aspect of technology transfer and training, foreign-funded enterprises tends to stay in the low level of CKD1 and CKD2, and training is only to adapt to the needs of automotive assembly process (Thuy, 2008). Concerning the use of raw materials, in addition to some simple process of individual components and parts, main raw materials for automobile assembly are selected and purchased from a parent or parent’s partners.
On account of Vietnamese poor domestic production, even some raw materials used for the manufacture of parts, such as steel plate or profiles have to be imported from abroad. The main task of car assembly companies is to maintain and repair due to its poor factories, technology, and equipment. The problems concerning technology include three points as follows:
First, the scientific research is too weak, and metallurgy, new materials, electronics, chemical, kinetic, mechanical and other industries supporting the automotive industry developed slowly, in that only the car chassis and automobile tires can be produces natively, while the main components are still dependent on import; The second is a lack of senior technical staff in general, and R & D is almost empty, long-term effort is needed to meet the demand; Third, the lagging after-sale service lead to unimpressive market research and information collection.
According to technical training, research and development and environmental protection, at present, the automobile machinery plants in Vietnam expedite investment on the more production of cars and spare parts, with the result that the labor resource is already serious shortage, especially for engineers and senior technicians and other technical workers. There are three native training mechanisms available in Vietnam:Â
(1) Six universities with the major of auto mechanics training professional engineers;
(2) 300 colleges training thousands of professional technicians and workers, but more limited level;
(3) Training schools educating common workers to be skilled in technical. The joint venture company also absorbed the large number of Vietnamese technical cadres to be appointed after training, but generally speaking the overall technical education is not poor.
Recommendations and summary
In brief, the Vietnamese car market is small; machinery manufacturing industry is weak, and automotive auxiliary industry is nearly zero. On these grounds, there are four recommendations proposed below:
Carry out active exchanges and strengthen force to develop further. Trade promotion activities and Vietnam-related automobile exhibitions are worthwhile to participate with specific targets;
Focus on quality instead of under dumping. Under dumping may lead to vicious competition and price competition will not only reduce corporate profits directly, but also affect the company’s image. And the auto company needs to strengthen communication and coordination with relevant departments so as to make appropriate export strategies according to the actual needs of the Vietnamese market;
Improve the marketing system and the after-sales service. Based on the high-quality and low cost, enough service personnel are needed in Distribution Offices to enable the Vietnamese consumers to consult at ease;
Invest in Vietnam to establish joint ventures, acquire or restructure existing motor vehicles and parts of Vietnamese companies. Since Vietnam introduced a series of preferential localization, predominant products may seek joint venture partners to produce locally.