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한국어 Vietnam supporting industry is growing as demand rises for precision mechanical engineering, localisation, and advanced manufacturing.
23Jun2026
Latest News & Report / Vietnam Briefing
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Abstract
Vietnam’s supporting industry is growing as demand rises for precision mechanical engineering, localisation, and advanced manufacturing. Electronics, automotive, semiconductor, and automation sectors are driving the need for high-precision components and engineering services. This creates opportunities for Japanese companies in investment, outsourcing, partnerships, and technical cooperation.
Overview of Vietnam supporting industry
Vietnam’s supporting industry has developed under a clearer national policy framework during the 2016–2025 period. Decision No. 68/QĐ-TTg, issued in 2017 and later amended by Decision No. 71/QĐ-TTg in 2024, specifically targets three main areas: components and spare parts, supporting industries for textiles, garments, leather, and footwear, and supporting industries for high-tech industries. The programme focuses on improving production capacity through technical support, technology transfer, supplier linkages with FDI firms, credit incentives, and workforce training. These measures have helped create a more favourable environment for enterprise growth[1]. However, the sectoral structure remains uneven. Mechanical engineering accounts for the largest share of enterprises at 28.6%, but textiles and garments, together with leather and footwear, still represent 47.6%, showing that many firms remain tied to labour-intensive manufacturing. Meanwhile, electronics and automobiles account for only 23.8% combined[2], indicating limited capacity in more technology-intensive supporting industries.
Source: Ministry of Industry and Trade of Vietnam
The ownership structure shows that the sector is mainly driven by private and foreign-invested enterprises. Non-state enterprises account for 55.0%, while foreign-invested enterprises make up 39.7%, together representing 94.7% of all enterprises2. This reflects the important role of private domestic firms and FDI enterprises in expanding the industry, but also suggests continued dependence on foreign capital, technology, and production networks.
The product structure confirms that Vietnam’s supporting industry is mainly positioned within manufacturing supply chains. Supporting-industry products account for 68.8% of total product types, more than twice the share of final products at 31.2%2, indicating that firms are increasingly producing materials, parts, components, and other intermediate goods.
However, localisation rates remain low in several key industries, at around 45–50% in textiles, garments, leather and footwear, 15–20% in mechanical engineering, and only 5–20% in automobile assembly, while electronics production continues to depend heavily on imported components[3]. These figures reveal a significant gap in Vietnam’s industrial ecosystem, showing that the domestic supplier base is still not strong enough to replace imported inputs or fully meet the requirements of multinational manufacturers. Therefore, developing a stronger domestic supporting-industry market is necessary to reduce import dependence and increase Vietnam’s value capture in manufacturing. In this context, precision mechanical processing will become increasingly important, as it supports the production of high-accuracy components, tooling, moulds, jigs, and other standardised parts required across supply chains.
Rising Demand for Precision Mechanical Engineering and Manufacturing Know-how in Vietnam
Vietnam’s mechanical engineering industry includes around 3,100 enterprises and more than 53,000 production facilities, employing over 1.2 million workers and generating approximately VND 1.7 quadrillion in revenue. In 2023, the sector contributed nearly 24% of Vietnam’s GDP, highlighting its important role in industrial development[4]. However, precision engineering capability remains relatively underdeveloped compared with regional competitors, limiting Vietnam’s ability to supply high-accuracy components, tooling, moulds, jigs, and other specialised mechanical parts for advanced manufacturing industries.
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