Toward development of mechanical supporting industry in Ho Chi Minh City: an approach to industry structure and its determinants

Abstract

This study aims to address the current state of mechanical supporting industry in Ho Chi Minh City (HCMC) by approaching several factors affecting the industry for further solutions to its development in the coming years. Using both qualitative and quantitative methods, we find that: (i) the HCMC mechanical industry has yet to satisfy the demands for development of other economic industries as a consequence of its simple products and its failure to manufacture machine tools and equipment in automatic production lines; (ii) the industry is mostly composed of small- and medium-sized enterprises (SMEs), featuring mainly imported inputs, outdated technologies, and poor quality management, thus causing the output products in large part to merely serve domestic consumption and disabling them to engage in the global supply chain; and (iii) some principal reasons comprise limited access to credit, modern technology, market, and information as well as other constraints to production infrastructure and human resources.