Markets German machine tools to support industrial boom in Vietnam

The good news is Germany and German products enjoy an excellent reputation in Vietnam.

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Verein Deutscher Werkzeug- maschinenfabriken e. V. (VDW)

Confirming this at the recent VDW Symposium at Mekong Delta was Marko Walde, the executive director of the German-Vietnamese Chamber of Foreign Trade. The chamber is also a co-operation partner of the second VDW (German Machine Tool Builders' Association) Symposium at Mekong Delta. The VDW Symposium, organised twice yearly since 2004, is to develop markets sustainably and repeat events regularly.

According to VDW, Vietnam's economic development is continuing its upward trend and economic researchers are expecting the country's GDP to have increased 7% in 2018. A further 6% growth has been predicted for 2019. New free trade agreements are opening up markets and attracting foreign investors to Vietnam. In 2018, the eight most important customer industries for machine tools invested 18% over the year before. Another 8% increase is expected this year and the growth is broad-based.

The aviation, medical technology, electrical/electronics, metal production and processing industries and the mechanical engineering sector are investing disproportionately high amounts. "This is why now is the right time for the German machine tool industry to return to Vietnam to showcase its strengths," said Klaus-Peter Kuhnmünch, organiser of the VDW Machine Tool Association's foreign symposia.

Eleven manufacturers presented their manufacturing technology innovations in Ho Chi Minh City, namely Alzmetall, Chiron-Werke, Gleason Corporation, Grob-Werke, Heller, Index-Werke, Kapp Niles, Röders, Siemens, Trumpf and J.G. Weisser. "I was most impressed by the presentations and the selection of German companies," said Nhat Pham, senior manager of Strategic Sourcing Marlow Vietnam, Company II-VI.

Potential for German machine tool manufacturers

Vietnam has established itself as an important link in international supply chains, meaning its manufacturers must be globally competitive, both qualitatively and price wise. As such, demand for sophisticated production technology is high. Machine tool consumption, an important indicator of the industry's modernisation efforts, is predicted to grow 8.2% this year, VDW says.

Mechanical engineering in Vietnam is not well developed. Local manufacturers only produce simple devices till now. Thus, progress to establish a modern, efficient industry is heavily dependent on machine tools imports.

Vietnam ranks 10th as importing nation

Internationally, Vietnam already ranks 10th as importing nation, buying products up to a value worth €1 billion. Together with the U.S., Germany is one of the few Western suppliers selling machines to Vietnam, while South Korea, China, Japan and Taiwan are dominant in this area. Since 2014, German machine tool exports to Vietnam have risen by over 150%, recording a 215% increase alone in 2018. And, orders from Vietnam have more than tripled recently.

The German machine tool industry offers technologically sophisticated solutions that stand out from the mass-produced offerings of Asian competitors, Duong Tuan Ngoc, vice general director of Hong KY, Ho Chi Minh City noted. Duong: "We have already purchased machine tools from Switzerland this year. In the future, we will be taking a keen interest in high-precision milling machines from Germany."

Kuhnmünch said: "In view of the Asian dominance and the great potential of the Vietnamese market, German manufacturers must take urgent action if they want to share in the Vietnamese boom." And General Director of Trumpf Vietnam, Patrick Kemnitz, added: "Having a local presence is important for customer proximity. Service and after sales are the core elements for ensuring further growth."

Soltau-based Röders, which is already actively servicing the market, took part in the VDW symposium for the first time. The company has been operating a contract manufacturing plant in Vietnam since 2013.

The VDW Symposium was well attended, attracting some 100 participants. Interest levels were high and discussions were lively. Included too were 42 bilateral talks. Dirk Prust, chairman of Index-Werke noted: "The B2B meetings are a very useful addition to the presentations. The individual meetings provide a convenient opportunity to get into closer contact.” He added that one gets a lot about views, experiences and abilities of potential customers here, which help in assessing needs and providing professional advice.

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