German manufacturers impress Vietnamese customers

12 machine tool manufacturers premiere their capabilities in Vietnam

The German machine tool industry has met with keen interest in Vietnam. For the first time, the VDW (German Machine Tool Builders’ Association), in conjunction with the German-Vietnamese Chamber of Industry and Commerce, in late November organised a one-day symposium in Ho Chi Minh City. Twelve prestigious companies like Chiron, DMG Mori, Heller, Hermle, Klingelnberg, Mauser, Open Mind, Peiseler, Siemens, SW Schwäbische Werkzeugmaschinen, Trumpf and Zimmer & Kreim showcased their products, solutions and services for modern-day industrial production operations. Around 100 customers from the relevant user categories in the metalworking sector responded to the invitation, and attended the VDW’s symposium in the cultural and commercial centre of Vietnam.

The Vietnamese sales market offers huge potential
The country has always had a marked affinity with Germany, and has offered attractive sales potentials, not least for the nation’s machine tool industry. “Thanks to its young, consumption-friendly populace, plus an annual economic growth rate of between 6 and 7 per cent, Vietnam is rated as one of Asia’s future-friendliest markets. What’s more, the country does not have a mechanical engineering sector of its own, which is why Vietnam is heavily dependent on imports and direct investments from abroad,” explains Klaus-Peter Kuhnmünch, who is responsible at the organisers VDW for the technology symposia.

The German machine tool manufacturers, too, are keeping a close eye on the rising levels of machine tool consumption in Vietnam, as Dr. Florian Zock, Head of Business Development Asia-Pacific at the Trumpf company in Ditzingen, emphasises: “We are confident that the growth rates in Vietnam during the years ahead will continue to be high. The nation is driving forward a progressive transition from a traditionally government-run to a free-market economy. The mid-tier structures emerging are increasingly superseding long-established state-owned enterprises, thus offering solid foundations for broadly based growth.”

In order to reach the ambitious growth targets, the Vietnamese government is pursuing a policy of developing a national machinery and plant manufacturing capability. Local manufacturers, however, are so far able to produce only simple equipment. This means that for further industrialisation the country is closely dependent on international support. In the category of machine tools, Germany is only the fifth-largest supplier nation after vendors from Japan, China, South Korea and Taiwan. Nonetheless, it has maintained its position as the most important Western supplier. During the period from 2011 to 2015, German machine tool exports to Vietnam rose by almost 70 per cent. Order bookings from Vietnam, which increased by 76 per cent in 2015, are signalling further growth for this year as well. Most recently, German machine tool manufacturers delivered machines worth around 30 million euros to Vietnam.

According to the VDW’s British forecasting partner, Oxford Economics, Vietnam’s industrial production output is set to expand by around 9 per cent this year, following growth of almost 10 per cent in 2015, with 2017 and 2018 each predicted to show a 7 per cent rise as well. Referenced to the output of Vietnam’s eight major user industries for machine tools, growth rates of almost 6 per cent are being forecast for 2016 and 2017, plus another 7 per cent rise in 2018. The electrical engineering and electronics sectors alone are planning to invest 1.2 billion euros in Vietnam itself. The metal-production and metalworking industries together account for another billion, with an overproportional share for the manufacturers of metal products.

German manufacturers aim to attack Asian dominance
In view of the front-runner role played by Asian vendors, and the huge potential of the Vietnamese market, the goal of German manufacturers is to strengthen their presence in Vietnam and upgrade it by means of events like the VDW’s symposium. As to how this goal can actually be achieved, this is succinctly summarised by Bernd Hilgrath, an authorised signatory at the Tuttlingen-based machine tool specialists Chiron: “As is the case in all Asian markets, it is above all the Japanese, Chinese, Taiwanese and South Korean machine tool manufacturers that are particularly strong. In this competitive environment, German vendors can survive and prosper only if they deploy to full effect their proverbially solid virtues, their competent engineering and their high-quality products.”

Prasad Kizhakel, Managing Director at Klingelnberg India, adds: “The German machine tool industry offers single-sourced technological solutions that alongside the high-volume product portfolios of their Asian competitors are highly appreciated in Vietnam as well, not least by reason of their multifaceted, customer-focused services.”

Vietnamese customers for German machine tools concur. Do Phuoc Tong, Board Chairman at the tool and mould manufacturer Duy Khanh Engineering Co. in Ho Chi Minh City and Chairman of the local industrial association for mechanical and electrical engineering companies, puts it succinctly: “German products stand for maximised precision and optimum performance. We in Vietnam want to profit from this know-how as well. All indicators are signalling progress, and in this thrust vendors from Germany can offer us the best possible support.”

Symposia are an ideal platform
In order to enter into a direct dialogue with international customers and establish new business relationships, the VDW has for years now been offering its successful technology symposia. And now in Vietnam as well. A concept that in the view of Walter Dobesch, Sales Director at Mauser-Werke in Oberndorf, is paying off: “The symposia are an ideal platform, not least for the smaller German vendors. The customers come to us and are keenly interested. During the symposia, we had an opportunity to conduct intensive dialogues. In addition, there’s a great opportunity to familiarise yourself with the lucrative market of Vietnam. Otherwise you’d have to do this all by yourself.”

German machine tool industry aided by local supporters
The VDW’s symposium was organised on the spot in conjunction with the German-Vietnamese Chamber of Industry and Commerce. In the view of Marko Walde, the Chamber’s President in Vietnam, the symposium comes at precisely the right time. “The Vietnamese companies are set to undergo a gigantic wave of modernisation, and for this purpose our German manufacturers have the appropriate products and solutions,” he says.

Klaus-Peter Kuhnmünch from the VDW confirms this, and adds: “We as the German machine tool industry are confident that Vietnam will achieve dynamic development in the years ahead. Our companies can benefit directly from this growth.” To ensure that these efforts are crowned with lasting success, the VDW will continue in the future to provide its member companies with consultancy and on-the-spot support.