Asien-Experte Karlheinz Zuerl gibt Praxistipps zum Thema Qualitätsicherung in China. Pressemitteilung Q2
Ob in China produzierte Teile auf dem Binnenmarkt bestehen können, entscheidet die Qualität der Fertigungsprozesse: Es dürfen null Fehler beim Kunden ankommen.
„Aus meiner Sicht braucht es dazu einen Mix aus effizienten Prozessen, klaren Qualitätszielen und Kenntnisse der Gegebenheiten vor Ort“, meint unser Asien-Experte Karlheinz Zuerl.
Karlheinz Zuerl gehört zu den profiliertesten Beratern und Interim Manager für Produktion, Einkauf und Marktbearbeitung in Asien. Er lebt seit über 14 Jahren dort kennt daher die Gepflogenheiten in diesen Ländern wie kaum ein anderer deutsche Manager.
„Dabei haben sich während meiner Tätigkeit als Qualitätsmanager und General Manager für die Automobilindustrie in Asien diese Punkte als entscheidend erwiesen“:
Arbeiten Sie mit einem Repräsentanten vor Ort zusammen
Qualitätssicherung setzt Präsenz vor Ort voraus: Nur wenn Sie direkt mit Ihren lokalen Mitarbeitern, aber auch mit Ihren chinesischen Lieferanten zu tun haben, können Sie sicher gehen, dass Sie Ihre Qualitätsziele erreichen.
Hier haben Sie zwei Optionen.
Einmal können Sie Mitarbeiter entsenden. Das hat den Vorteil, dass Sie genau wissen, mit wem Sie da zusammenarbeiten werden. Überraschungen wird es in aller Regel nicht geben. Und Ihre Mitarbeiter können im Ausland Erfahrung sammeln – zum Beispiel für künftige Führungsaufgaben.
Zum anderen können Sie mit einem externen Berater zusammenarbeiten. Davon können gerade KMU profitieren, denen das entsprechende Personal im Hause fehlt. Hinzu kommt, dass externe Berater die Akteure vor Ort bereits kennen und so mit den chinesischen Besonderheiten vertraut sind.
Nachteil dieses Modells ist sicherlich, dass es nicht leicht ist, den passenden Berater zu finden. Auf alle Fälle sollte diese Person mindestens die folgenden Kompetenzen haben:
Sie sollte fundierte landeskundliche Kenntnisse haben, die sich auf Sprache und Kultur erstrecken, aber auch soziale Strukturen und politischen Gegebenheiten umfassen.
Ein geeigneter Berater muss über Kontakte zu den lokalen Behörden und Unternehmen verfügen, die nicht zu unterschätzen sind.
Schließlich sollte er oder sie die Arbeitskultur kennen: Auf der Ebene der Geschäftsführung wird Kooperation und Konzilianz erwartet, auf der Ebene der Mitarbeiter dagegen ein eher straffer Führungsstil mit klaren Arbeitsanweisungen.
KONTACT:
GTEC German Technology & Engineering Cooperation
The Business of the 21st Century! Mieten anstatt Einstellen!
Asien-Experte Karlheinz Zuerl gibt Praxistipps zum Thema Qualitätsicherung in China. Pressemitteilung Q1
China ist als Investitionsstandort zunehmend interessant. Eine Herausforderung bleibe aber dabei die Qualitätssicherung, meint unser China-Experte Karlheinz Zuerl. Das Qualitätsmanagement müsse daher an die Gegebenheiten vor Ort angepasst werden.
Karlheinz Zuerl gehört zu den profiliertesten Beratern und Interim Manager für Produktion, Einkauf und Marktbearbeitung in Asien. Er lebt seit über 14 Jahren in China kennt daher die Gepflogenheiten in dem Land wie kaum ein anderer deutsche Manager.
Für den chinesischen Markt zu produzieren, ist auch für deutsche Hersteller aus dem Mittelstand interessant:
Ein Grund ist die zunehmende Kaufkraft. Das BIP pro Kopf lag 2022 in China bei über 14.000 US-Dollar (Deutschland 46149 USD)
Hinzu kommt, dass der Binnenkonsum für die chinesische Wirtschaft immer wichtiger wird. Wachstum entsteht nicht mehr nur aus der Herstellung von Vorprodukten, die für den Export bestimmt sind.
Und schließlich ist die Nachfrage nach hochwertigen Produkten und Dienstleistungen aus Deutschland unverändert hoch.
Warum es sich lohnt, in China zu investieren
Für deutsche Unternehmen, die für den chinesischen Markt produzieren wollen, stellt sich allerdings die Frage nach dem Produktionsstandort. Lohnt es sich, in China zu investieren?
Ich meine ja:
Inzwischen kann man zwar in Nachbarländern mindestens genauso gut produzieren wie in China – ohne die bekannten politischen Risiken. Das belegt z.B. der Immobilienboom in Vietnam. Aber für bestimmte Produktreihen muss man immer noch vor Ort produzieren. Gerade die Automobilindustrie braucht eine entwickelte Zuliefererindustrie. Und angesichts der sehr effektiven Forschungsstätten sowie der vergleichsweise guten Ausbildung chinesischer Arbeitskräfte relativieren sich die Risiken wieder.
Auch die Fertigungskosten sprechen eine deutliche Sprache. Wenn Sie Äpfel mit Äpfeln vergleichen, haben Sie gegenüber die Fertigung in Deutschland noch einen Preisvorteil von mindestens 30 Prozent, vor allem wegen der günstigeren Arbeitskräfte, Maschinen und Energiekosten. Deutsche Hersteller können in China also immer noch deutliche Gewinne erzielen.
KONTACT:
GTEC German Technology & Engineering Cooperation
The Business of the 21st Century! Mieten anstatt Einstellen!
The Chinese course consists of 4 sessions, each 3 hours + 30 min test
The English course consists of 4 sessions, each 3 hours + 30 min test
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See details in our agenda below.
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certificate can be shown to your employer or customer to convince for your qualification in your job.
continuous mentoring if any questions or challenges in your job (e.g., sales support to convince your potential customers to buy your product or service)
Supply Chain at Seaport
Benefit for your company
CPD for Organizations: Providing CPD accredited training and events can benefit your organization through recognition and an increased brand perception. Internal use of Continuing Professional Development encourages and promotes a healthy learning culture for organizations, that can lead to a more fulfilled workforce and retaining valuable staff.
If interested in, please send an email or call us for asking details and for quick enrollment process.
Enroll now and get advantages in your market for profit growth
Certificate / Test :
Each online session will be followed by an online examination (multiple choice questions).
The online test is password protected and the password will be provided at the end of each learning session by the instructor. Each test will take part directly after each session and you will have 30 minutes in total for each test.
All tests of the sessions are needed to finally receive the Carbon Green Card Certificate. You will receive further instruction after successful registration for each session.
Please note：
Registration and payment before the class is mandatory. Please register first and you will receive an Email including payment instructions.
Paid participants will receive a confirmation Email including login link (zoom) and access information for the webinar.
Electronic invoice will be sent to your Email within one week after the event.
Any question on Carbon Green Card Course, please contact Mr. Karlheinz Zuerl at [email protected], or add WeChat or Whatsapp via 0086-13482438080
If interested in, please send an email or call us for asking details and for quick enrollment process.
Over the past few years, the supply chain in Vietnam has contributed to the production and business activities of many enterprises as well as the entire operation of the economy. The flow of goods and services circulating in the market is increasingly rich, improving in quality, and satisfying customers’ needs.
However, the supply chain in Vietnam is still at a low level of development, which has not fully promoted the function of integrating economic organizations and activities in the national economic system. Moreover, the spread of COVID-19 has disrupted the way global supply chains operate, making it difficult for businesses in every country, including Vietnam to model and assess risks. The supply chain practice in the past will no longer be favorable to support the future marketplace.
In this article, we’ll take a look at the top supply chain issues, showing the results, limitations, and causes across the whole system.
The impact of global unrest
The global unrest poses the largest risks to Vietnamese manufacturing. Although Vietnam is a country that imports raw materials to manufacture export goods, the input is heavily dependent on foreign countries, causing difficulties and a dramatic increase in prices.
After Russia invaded Ukraine, Hanoi forewarned of downstream shocks to supplies, which were already suffering from China’s decision to tighten its land border with Vietnam in December. Added to that now is a COVID shutdown in China that includes the world’s busiest port, in Shanghai.
As a result of China adopting tiered COVID measures, enterprises in Vietnam are struggling to manage supply chain breakages, especially the raw material supply and exports because China usually supplies a large number of materials used by many industries in Vietnam for production.
This is not just holding down manufacturing, some businesses are struggling to complete their export orders. If raw materials cannot be imported for production, the company’s order will not be delivered on time, causing the contract to be canceled by the customers.
Exports of agricultural produce to China – one of the main consumers of Vietnamese produce, have also been negatively impacted by stricter customs checks and procedures. Week-long delays and even turns aways occur at entrance gates for export containers. Fruit and vegetable exports to China decreased by 25% year over year in the first quarter of 2022.
The global unrest poses the largest risks to Vietnamese manufacturing. Although Vietnam is a country that imports raw materials to manufacture export goods, the input is heavily dependent on foreign countries, causing difficulties and a dramatic increase in prices.
After Russia invaded Ukraine, Hanoi forewarned of downstream shocks to supplies, which were already suffering from China’s decision to tighten its land border with Vietnam in December. Added to that now is a COVID shutdown in China that includes the world’s busiest port, in Shanghai.
As a result of China adopting tiered COVID measures, enterprises in Vietnam are struggling to manage supply chain breakages, especially the raw material supply and exports because China usually supplies a large number of materials used by many industries in Vietnam for production.
This is not just holding down manufacturing, some businesses are struggling to complete their export orders. If raw materials cannot be imported for production, the company’s order will not be delivered on time, causing the contract to be canceled by the customers.
Exports of agricultural produce to China – one of the main consumers of Vietnamese produce, have also been negatively impacted by stricter customs checks and procedures. Week-long delays and even turns aways occur at entrance gates for export containers. Fruit and vegetable exports to China decreased by 25% year over year in the first quarter of 2022.
Current challenges throughout the 4 stages of the supply chain in Vietnam
According to a survey conducted by KPMG (2021), there are a few of the major challenges highlighted across 4 stages of the supply chain for Vietnam: Plan, Source, Make and Deliver.
Plan – Lack of long-term planning
Strategic and integrated planning is essential for maximizing the effectiveness of supply chains because it ensures the alignment between the supply chain operations and the business direction. However, most companies are spending efforts on short-term planning with a lack of accuracy in the forecasting process and real-time visibility of cost, service level, inventory, etc. on the end-to-end supply chain.
Another key issue is that each department inside supply chains tends to pursue its priorities rather than following a unified course. As a result, we can see that even when the organizational workforce appears to be occupied by planning activities, the businesses are still having repetitive failures with uneven demand and supply, slow-moving inventory, and lost revenue.
Source – Lack of local supply base
In this stage, companies need to select suppliers to deliver the items and services they require to develop their products. However, most companies struggle with the uncertainty of supplier delivery, and the lack of a qualified supply base for alternative sources, which disrupts production and distribution.
One of the significant root causes of those pain points is that companies are exerting all effort to control operational procurement but not investing in proper procurement and category strategies. Procurement is focused too much on price instead of service quality. Category management, supplier relationships, and risk management are among the top areas that can significantly contribute value to generating cost savings and enhancing supply stability but are currently underestimated.
Make – Low manufacturing capability
Manufacturing is the backbone of the business, and production efficiency has a big impact on the company’s performance. However, companies are still having trouble figuring out how to increase their manufacturing capacity. Changeovers occur frequently because supply planning and production scheduling are not well integrated.
Lack of maintenance or inadequate maintenance is leading to frequent asset breakdowns and unexpected shutdowns. Inefficient recruitment process and talent shortage also cause difficulties in improving production quality. These top concerns demand a holistic strategy to reinforce shop floor practices and improve manufacturing performance.
Delivery – Challenges for the delivery stage
The delivery stage is often referred as the logistics phase, where the products are delivered to the customer at the specified location by the supplier.
Poor infrastructure is one of the main problems that the logistics sector is currently facing. Domestic businesses have not fully established a multimodal transport corridor, while the demand for high-quality transshipment is still rising. The operation efficiency of the Vietnamese seaport is very low due to the lack of proper infrastructure.
The two other major constraints for the delivery stage are cost-to-serve management and warehouse management. Companies struggle with compiling and analyzing data to identify specific areas for improvement even though they are aware of the value of cost-to-serve visibility.
Warehouse leasing supply is currently not enough to fulfill demand due to limited floor space. The construction of warehouses and depots in three regions, along with the system of wharves, roads, and warehouses, is still in its early stages and is not complete, so it only meets the needs for import and export rather than domestic demand, particularly demand for E-Logistics.
Therefore, optimization of warehouse operations is also a potential area for improvement that most businesses need to put serious effort into it.
Figure 2: Warehouse
Other existing concerns
Manpower
According to statistics from the Vietnam Logistics Business Association (VLA), foreign companies account for 80% of Vietnam`s logistics market. Local firms which offer separate services and small segments find it difficult to compete with foreign counterparts who have access to much more capital and labor.
In Vietnam, logistics human resources are deficient in both quantity and quality, especially highly qualified personnel at the managerial level and logistics experts who are familiar with national laws to apply and use them effectively in their work.
Technology and digital solutions
Although logistics enterprises have an awareness in applying technology to their business activities, they are still slow to adapt to the digital transition and are out of touch with current technology.
While rising supply chain technology trends like AI, Big Data, Internet of Things (IoT), digital twins, and blockchain are taken into consideration in more mature markets, supply chain leaders in Vietnam appear to place a greater emphasis on getting the fundamentals right.
Expenses for logistics services
The COVID-19 pandemic disrupted the world’s supply chain, and at the same time, freight costs shot up significantly, particularly on routes to Europe and America. Mr. Dang Dinh Long, Director of Mega A Trading Investment Joint Stock Company, reflected that after several instances of port closures in China, the freight rates immediately increased by 15%-20%.
Recently, the conflict between Russia and Ukraine has pushed up the price of oil and many kinds of raw materials and fuel, turning import and export costs a burden beyond the tolerance of many businesses.
High freight rates, which are forecast to remain high in 2023, are one of the biggest challenges for businesses. The fact that Vietnam’s logistics costs are much higher than the global average causes an increase in the cost of goods, reducing its competitive advantages compared to other countries in the region.
Figure 3: Supply Chain in Vietnam
Vietnam’s economic integration with the rest of the world is progressing, and the scale of the market for logistics services is growing. Therefore, it is critical for Vietnamese enterprises to develop strategies to minimize supply chain disruptions in the face of global uncertainty and take advantage of overseas investment.
AuthorKarlheinz Zuerl
CEO of GTEC German Technology & Engineering Cooperation
Diplomatic Council Trusted Member
More solutions you will find on our website and in our eBook shop.
How to increase flowability at manufacturing shop floor? Example press shop
How did you manage to increase flowability at the generator line from 12.2 to 6.1 days per part?
Our Solutions were:
o Flowability control (including WIP trend): Improved flow (or equivalent lead time) is a primary objective of operations. Once the root causes of the constraints were identified, the solution required some changes in the production process. It required a total re-design of the equipment, methods and layout of the work area. Employees needed to be retrained in order to understand the improvements. It also required a process to be monitored on a regular basis so as to track and trend its performance over time.
o Improve throughput time: We eliminated throughput bottlenecks with increased manufacturing safety. Then reduced the part-rejection rate by improved employee training and using factory automation, where possible. We also put prototype build on a separate production line, not to interfere with serial production.
o Reduction of manufacturing WIP: First, we forecasted and calculated WIP Levels where upon we shared capacity, adding machines and improved workforce, JIT (Just-in-Time) production, time savings and the allocation of the right operators. Benefits from WIP reduction were obtained through the use of extra machines or process improvements that reduced defects and produced more at a given time, among other things. The company policy, which encouraged departments to work well together for the benefit of the enterprise as a whole, also had a positive impact on WIP.
Just-in-Time Production (JIT): We were able to manufacture the products that the clients wanted at the desired quantities, just when they needed them. JIT depended on the utilization of control cues in inventory to indicate the need to produce products from raw materials. The outcome was a very large reduction in WIP and other issues such as overproduction and inaccurate inventory.
Time savings and allocating the right operator, including:
– Manufacturing lead-time reduction: How can you reduce manufacturing lead time? We ordered smaller amounts more frequently. Larger orders took longer to fulfill and ship. Then made a clear lead-time contract with customers, which we kept what was promised by automation of our inventory management and let our suppliers knew about sales data. We had a weekly follow-up about TPS status, flowability status and WIP trends.
– Value-stream analysis and mapping: This VSA/VSM illustrated the necessary process steps that existed from order entry to final product delivery and was useful for gaining a wide-reaching view of the company’s activities. It allowed us to remove nonessential activities that created waste while maintaining the manufacturing process.
– Takt management: Takt time is the rate at which we had to complete a product to meet customer demand. Takt time was our sell rate and was categorized as the heartbeat of our work process. It allowed us to optimize our capacity in the most appropriate way to meet demand without keeping too much inventory in reserve.
Summary: For a long time, resource utilization and efficiency had been the prime operational measurements in production. We changed our target to flowability, because of increasing productivity (calculated by Throughput (T) divided by operation expenses OE), increasing inventory turnover (calculated by Throughput (T)/Inventory), increasing cash flow (as throughput value T minus Operation expenses OE minus inventory increases), increasing sales output (finished goods) by Input TVC (total variable costs) + Throughput value (T), shorter ROI by (Throughput value (T) minus OE) /Investment
We aligned our organization to our goal by distinguishing between three operational measurements:
– Throughput: The rate at which the system generates money through sales as the net of variable costs. This corresponds to the value added by the system.
– Inventory: All the money that system has invested in purchasing things which it intends to sell. This was later expanded to include all investment such as plant, property, equipment, etc.
– Operating expense: “All the money the system spends in order to turn inventory into throughput.” These fixed costs, such as rent and salaries, are incurred regardless of whether throughput increases or decreases.
More solutions you will find on our website and in our eBook shop.
Contact us at [email protected] for improving quality or have a preview of our special ‘Project Pack’ for implementing Asaichi, Jidoka, design for manufacturability, poka-yoke and 5-piece counting at assembly in your Asian organization.
It’s a better way to start your Lean journey for your quality improvements and profit growth. We are ready to support you in China, India, Malaysia, Philippines, Taiwan, Thailand, Vietnam.
If any questions and wishes, please contact me for a Zoom meeting in order to dig into details together, to get your benefit out of our knowledge.
AuthorKarlheinz Zuerl
CEO of GTEC German Technology & Engineering Cooperation
Transform knowledge into impact and drive innovation in your organization with our flagship online one-to-one business program. We provide you with the tools and techniques to become a more effective changemaker and leader. For example General Manager. It is up to you, according your personal career planning. We support and realize.
Mixed prospects for business development in the regions. In times of uncertainties, is it unpredictable? Please read details for Asian countries like China, Vietnam, India and others.
Nothing is so stable like the change and up and down in economy
For sure, interest rates rise to curb inflation rates, this causes turbulences in a challenging economic environment in Asia in 2023. Economies with high levels of household debt, such as South Korea, will slow sharply. However, consumer spending in India and Indonesia will continue to be affected by cost-of-living strains, but not by any forced household deleveraging.
China’s domestic challenges, e.g., to deal with covid, will probably cause a less confrontational approach in international affairs and lower geopolitical risks, at least within first half of 2023.
ASIA
Asia will face difficult economic conditions in 2023. Several years of strong export growth for the region will reverse, as the EU is entering recession and the US economy slows sharply. geopolitical risk in Asia will persist as North Korea is expected to continue nuclear testing and Taiwan is preparing for elections.
The impact of higher interest rates will be the major economic theme for Asia in 2023. With the exception of China and Japan, Asia’s major central banks increased their policy rates in 2022 to combat inflation and support local currencies. The effects of these higher rates on governments, households and businesses will mainly be felt next year, owing to lagged monetary policy transmission.
At the macro level, however, the main concern will be the balance sheets of households and businesses in more advanced Asian markets that have become more leveraged over the past decade or are not profitable enough to meet higher debt-servicing costs.
The additional costs will add to the squeeze caused by the higher consumer and producer prices generated by the war in Ukraine. Most banking sectors are in a strong position to withstand a rise in bad debts, meaning that the risk of systemic financial crisis is low. However, higher repayment costs will at least reduce the amount of finance available for consumer spending and business investment, acting to slow growth; at worst, they will cause widespread bankruptcy, leading to higher unemployment and prolonged downturns.
Our assumption is that household debt will prove the bigger concern, given that a sizable portion of corporate liabilities in many Asian markets have some sort of government backing.
Surprising innovations in Automotive industry
Everybody talk about electric vehicles, and already know, it is not the solution in zero carbon for our planet. In this context, Porsche took action and has replaced gasoline with air and water. The automaker has filled up a 911 for the first time with a new synthetic fuel created out of thin air and water. The fuel was developed by a company called “Highly Innovative Fuels”.
The company makes the fuel at a wind-powered plant in Punta Arenas, Chile, near the tip of South America, where the wind blows an average of 270 days per year. The fuel combines carbon captured from the atmosphere with hydrogen sourced from the water to create methane, which is converted into a fuel that works the same as gasoline.
Why I wrote it here, about Asia outlook? It shows, whatever you are planning in Asia in short run, you need an exit strategy in at least mid-run.
CHINA
Even as forecasting China’s economic seems futile, considering the unprecedented 2022, many Western companies noted that they were continuously ripped off while navigating through last years. Nonetheless, recent legislation signifies that “Common Prosperity” and digital transformation shall continue to dominate forthcoming regulations in 2023 and beyond.
For companies, it is crucial to be informed of new policies and changes, as they can significantly impact business operations and strategies.
What is “Common prosperity”?
Common Prosperity first appeared in 1953 in People’s Daily newspaper. The term reflects the fundamental collective society in China. It is still predominantly in the Prospect Vision of the year 2035 in the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China (October 2020). The principle refers to prosperity for all people. In practice, Common Prosperity underlines socioeconomic reforms to alleviate poverty in the poorer regions and reduce socioeconomic polarization between the urban and rural areas.
Common Prosperity in legislation
Sustainable economic growth and high-quality development are the key of achieving Common Prosperity. For example, the revised “Anti-Monopoly Law”, effective from 1 August 2022, elevates legal liabilities for larger companies from monopolizing the market and eliminating smaller competitors. Furthermore, the revisions prioritize anti-trust policies to ensure sustained market development and fairer market practices.
More recently, the revised “Unfair Competition Law”, draft issued on 22 November, strengthens legal protection for small and medium companies (‘SMEs’) in China.
In 2023, curbing monopolies and optimizing a fairer market for SMEs shall continue.
Digital transformation of SME
SMEs are a driving force in China. Accounting for 50% of taxes, 60% of GDP and 70% of technology innovation, SMEs significantly contribute to economic growth. However, Industrial digital transformation for SMEs can be financially and practically challenging to implement.
Nevertheless, the digital transformation of SMEs is key to long-term development, reducing reliance on the external environment, and accelerating the overall digital economy. So, the SMEs are sitting between the devil and the deep blue sea. What to do?
The Ministry of Industry and Information Technology issued the “Guide to the Digital Transformation of Small and Medium-sized Enterprises”, effective from 3 November 2022. This guide calls local governments to support digital development in SMEs. The guide reflects Common Prosperity principles in fostering high-quality and sustained development for smaller companies, focus on lowering investment barriers for SMEs to upgrade software and integrate into a digital ecosystem.
Specific provisions promote the following:
providing small, fast, lightweight, and precise products and solutions
researching, developing, and promoting low-code products and services;
developing subscription-based software services
helping SMEs to create, deploy, use, and adjust digital applications themselves, and
improving SMEs’ secondary development capability and demand response capability.
Overall, digitalization plays a vital role in China’s socioeconomic development. In 2023, local supportive policies would be issued by local governments to expedite internet applications for SMEs, upgrade company infrastructure, and make business operations more efficient and cost-effective. In addition, forthcoming cyber and data security regulations and rules are anticipated across sectors. Cyber security needs to be increased in conjunction with increasing effort in digitalization.
What it means for foreign investment in China
For foreign companies to survive and develop their business further, understanding China´s Common Prosperity and its practical implications are essential. Aligning business strategies with Chinese politics and policies determines a company’s success and profits significantly.
The days of leveraging cheap labour in China or a western brand story are long gone. Sustainable investments that fulfill China´s Common Prosperity are here to stay. It is clear that foreign investment in China has moved into a new era.
Distracted by domestic affairs, China tries a different geopolitical approach. China’s economy is forecast to grow in 2023, as covid-19 management becomes more pragmatic. Still, the risk of a chaotic outcome—involving a stretched health system and a significant death toll—will be high. President Xi´s demonstration of China’s rising strength, the trade tariffs, sanctions and heightened geopolitical risk that have come with his muscular foreign policy have dragged on China’s economy and made international firms cautious about expanding their footprint in the country.
While China is not able to conduct a foreign policy U-turn, especially with Mr Xi still in charge, we believe that China will seek more favorable international conditions in 2023. There were signs of this approach at the G-20 summit in November 2022.
Areas to watch for meaningful change in Chinese policy will include trade purchasing commitments and concessions. Restraint ahead of Taiwan’s elections in January 2024 would be a further indication of change. China’s domestic preoccupations will mean a further sidelining of the Belt and Road Initiative.
INDIA
Companies who need to reduce reliance on China, but faces political uncertainty in South-east Asia due to upcoming elections in Thailand and Indonesia, will be encouraged to move their manufacturing units to India. Improvements in India’s business environment and progress in bilateral trade deals make it an increasingly viable investment destination.
South-east Asia has been the focus of investors’ attention in Asia as they seek manufacturing alternatives to China. However, there are political risks as well. Now, India has its moment. Higher political risk in South-east Asia will present India with an opportunity to capture more attention from global manufacturers. The free-trade area of the Association of South-East Asian Nations, as well as the bloc’s centrality in various mega-regional free-trade agreements, has helped to smooth supply-chain linkages.
Transport and digital infrastructure in the region are reasonable and improving.
The dominance in India of the ruling Bharatiya Janata Party carries its own political risks, but from an investors’ perspective it also offers policy continuity and means there is little chance of a change in administration. India has an obvious advantage in terms of a large and youthful labour market, while there has been incremental progress in addressing weaknesses in transport infrastructure, taxes and trade regulation. The country has risen to 52nd in EIU’s global business environment rankings, now ranks above China.
Investment has accelerated in the electronics sector. The country’s electronics exports rose by around 50%. Taiwan’s Foxconn has planning significant expansion in India, as it seeks to diversify its manufacturing capacity beyond China. In 2023 India’s presidency of the G-20, as well as the probable conclusion of bilateral trade agreement negotiations with Australia and the UK, will further help to highlight investment opportunities in the country.
THAILAND
Thailand is due to hold an unpredictable general election by May, with splits within the ruling military-aligned political bloc giving opposition forces loyal to an exiled former prime minister, Thaksin Shinawatra, an opportunity to return.
MALAYSIA
The political instability that has come to characterize Malaysia is set to persist, following the indecisive outcome of its November 2022 election.
INDONESIA
Indonesia will enter a more volatile period as campaigning begins ahead of the 2024 elections and the influence of the capable departing president, Joko Widodo, weakens.
If any questions and wishes, please contact me for a Zoom meeting in order to dig into details together, to get your benefit out of our knowledge.
AuthorKarlheinz Zuerl
CEO of GTEC German Technology & Engineering Cooperation
Issue No. 2: Status of Automation in the Industry of Vietnam
Chances for automation to support industrial growth in Vietnam
Automation is the application of advanced technology to monitor and control the industrial production process. According to this definition, the automatic process requires different control systems to minimize human input in production activities.
The demand for the automation industry in Vietnam is increasing rapidly, as businesses realize the importance of automation in enhancing competitive advantage.
Thanks to the development of the Internet and the 4.0 industrial revolution, automation is considered a key and indispensable factor to help businesses develop and improve their competitive position in the market. Labor expert Dr. Pham Thi Thu Lan stated, “From the first to the third industrial revolution, automation enabled manual labor to be replaced by machines. Nevertheless, machines only competed with humans in terms of physical capability, while at the same time generating the need for brainwork – which requires cognitive capability. Automation is capable of greatly improving the efficiency of manufacturing operations and at the same time reducing costs.”
According to statistics, more than 90% of foreign-invested enterprises in Vietnam apply automation technology to improve production and business capacity. Especially after the COVID-19 pandemic, the investment in automated machinery, technology, and robots is an inevitable solution to reduce labor and costs while ensuring good management of the production system.
Automation does and will continue to play a crucial role in the constant development of electric power systems, transportation systems, manufacturing operations, and industry as a whole.
Manufacturing enterprises always improve their technology and machinery systems to create products with the best quality, at the most competitive prices. The control systems commonly used to operate the production process include servos, Programmable Logic Controller (PLCs), electronic circuits, G code, and many more. The control function can range from simple to complex algorithms, and from simple machines to large industrial systems.
Automation is now gaining access to many of the world’s most advanced sources of information, knowledge, and technology. Automated businesses have the opportunity to take shortcuts to the latest technologies that help reduce costs and testing time. In addition, Vietnam’s Free trade agreements (FTAs) and other support from the Government are likely to help the country attract more foreign investors.
Currently, in many technical universities in Vietnam, training programs are designed and oriented toward the automation industry. The Government has also implemented many scientific and technological research and development programs.
Robotic research and development have been carried out in most universities and research institutes across the country. Among them, Hanoi is known for Hanoi University of Science and Technology, Institute of Information Technology, Institute of Mechanics (Vietnam Academy of Science and Technology), and Military Technical Academy. On the other hand, automation is a high-tech that has a significant multi-sector impact, however, it has not yet become a separate industry in Vietnam. According to statistics, the automation field in Vietnam has witnessed an average level. Most of the automatic production line equipment and robots are imported. In-depth training and research on robotics and automation have not been focused on, most of which reuse old technology in the world. Businesses investing in automation rely heavily on foreign partners’ technology, facing difficulties in equipment maintenance and repair.
To integrate with the global trend of automation, Vietnam needs a community of businesses determined to invest in automation. Associate Professor, Ph.D. Dinh Van Manh said that Vietnam needs to have a policy connecting businesses with universities, and research institutes to put applied research on robotics, and by that directly solve problems posed by businesses.
Advantages of Industrial automation
Lower operating costs
The major advantage of an industrial automation system is the reduction in manufacturing costs. It must be admitted that the initial investment cost for automation might be rather high, but throughout the production process, the risk of machine failure and service interruptions is reduced to a minimum, resulting in significant cost savings for businesses. A carefully planned investment in automation can make good financial sense.
Industrial automation also helps limit costs in employment regulations such as healthcare, paid leave, and statutory holidays. It frees humans of manual, tedious tasks, allowing them to focus on higher-value work.
Higher productivity
Although many companies hire hundreds of workers to participate in production with 3 shifts for maximum hours, the plant still needs to be closed for maintenance and holidays. Industrial automation fulfills the company’s goal by enabling a manufacturing plant to operate 24 hours a day, 7 days a week, and 365 days a year. This leads to a significant improvement in the company’s productivity. Instead of a floor full of workers, companies can now have a few supervisors and key personnel, focusing on more important tasks such as innovation while still completing projects on time.
Greater quality
Automation is useful in eliminating human errors and thus improving the quality of the products offered. Unlike humans, robots are not associated with work attitude or distraction. If programmed correctly, the automated system will execute exactly as intended until the program is changed or turned off. This results in mass production after several hours of continuous work.
Improved safety
Another huge benefit of automation is improved safety in the workplace. Industrial automation can make production lines safe for employees by deploying robots to handle heavy-duty tasks in hazardous conditions: tight spaces, harmful noise levels, dust pollution, toxic chemicals in the environment… Welding robots can work with maximum productivity in dangerous and toxic conditions. The same goes for a robot automated guided vehicle (AGV) which can pull pallets weighing up to 500kg a few hundred meters to the desired location in just a few minutes.
Automation applied in Industries in Vietnam
Application in Manufacturing Industry
Mitsubishi Electric is the world’s leading industrial automation supplier. Mitsubishi Electric Vietnam has launched the concept of [email protected] and introduced to the market many models of advanced industrial automation equipment.
Utilizing the IoT technology (Internet of Things), the Mitsubishi Electric [email protected] concept extracts hidden benefits from existing resources through integrated automation to improve efficiencies, reduce cost, and increase overall productivity.
Mitsubishi Electric’s robotic system with artificial intelligence (AI) includes force sensors and imaging sensors.
Robots equipped with force sensors enable complex manufacturing processes, while continuously collecting results to measure and improve production lines.
Image sensors are complicated optical sensors that enable robots to see their surroundings and identify objects. With camera algorithms and multiple cameras, it is possible to install robots on a large production line up to 16 times with high accuracy.
When connected to cloud data, the robots enable the production of customized products according to individual needs. The Internet system integrated with [email protected] and the computer center is responsible for analysis and feedback, while manufacturers can remotely manage the factory from smartphones, tablets, or laptops.
Robots also ensure the safety of workers and production facilities. In addition, the new robotic arm with many improvements in sensing and control technology is also applied in stages of simple-to-complex difficulty such as assembly, product inspection, and product tracking on the conveyor.
Application in Agricultural production:
In 2013, Vietnam Dairy Products Joint Stock Company (Vinamilk) put into operation a “mega factory” of milk production in Binh Duong with an automatic production system along with robots, creating a great breakthrough for the company in the subsequent development phase. In this factory, self-propelled robots can control the entire process from raw materials to packaging to finished products without human intervention. Other factories across the country also have a high level of automation on par with many regions in the world. Vinamilk is currently putting robots into dairy farming as well.
In 2017, Ba Huan Corporation, one of the leading suppliers of pasteurized eggs and poultry meat products in Vietnam, invested in a fully automated power system from Moba Egg grading machines (Netherlands) with a processing capacity of 65,000 eggs/hour.
DABACO Group has also put the automatic egg processing line of the Netherlands into use since 2016, now supplying the market with over 200 million eggs each year.
If any questions and wishes, please contact me for a Zoom meeting in order to dig into details together, to get your benefit out of our skills.
AuthorKarlheinz Zuerl
CEO of GTEC German Technology & Engineering Cooperation
Issue No. 1: Vietnam’s real estate market is being purified, returning to the real value
The recent credit tightening in real estate is an opportunity to purify the market. It is time forproperty developers to review their investment strategy toward customers’ demands and focus on real value.
See challenges as opportunities
The real estate businesses in the coming time will still face many challenges ahead. Many banks had run out of credit room for real estate loans, together with rising input costs and obstacles in completing project legal procedures. This period is assessed to be even much worse than the financial crisis of 2007-2008.
History has proven that, after each crisis period, businesses that have well-prepared internal resources will thrive immediately afterwards. Adapting to market changes, many real estate businesses have quickly developed strategies such as restructuring their investment portfolios towards centralizing resources, ensuring on-time progress of ongoing projects, repositioning products to meet real-life needs, and developing mid-segment apartments.
Starting from the second quarter of 2022, the Government has made strong moves to tighten the room for real estate credit and corporate bonds. Many businesses are required to change the methods of capital mobilization to pay off loans as well as maintain corporate cash flow. During this period, customers should limit their participation in the market with speculative investment.
The market is witnessing the most attractive sales policies in the history of the past 10 years with the following advantages: great incentives for fast payment methods, “huge” discounts, as well as interest rate support. Real estate businesses also strengthen cooperation with international investment funds, diversify capital mobilization channels through stock pledge activities of business leaders, and borrow cash from unofficial channels…
A new point is that over the past time, along with the government’s determination, a series of real estate businesses have also planned to invest in social housing development, creating a colorful picture for the real estate segment.
Currently, many large enterprises have actively invested in technology applications to serve marketing, sales, after-sales activities, end-user connection, and management-related services.
Experts point out that, businesses should focus on perfecting the products that are about to be handed over, towards developing product lines that are suitable for market demand. Learning from past crises, individual investor sentiment has turned to those property projects with real value and high safety. Some well-financed investors prioritize projects that are reputable and oriented to long-term investment.
The fact that customers change their investment mindset is a factor making the real estate market healthier and more positive in the coming time. Because of the specific nature of the real estate, reinforcing customer trust through the quality of the product is the most important factor to drive property projects.
The market has many opportunities in the long term, especially ready-built houses are expected to have no price drop. Despite the low liquidity, the price only stops and increases. When the investors have well cash without a bank loan, this is an opportunity to maintain their investment with many choices. On the contrary, those who have a large proportion of debt need to sell their products and restructure their financial sources to be healthy.
Experts forecasted the interest rate might not be reduced in 2023. This period is predicted to last until the end of the second quarter of 2023. The properties with feasibility and exploitable value would still keep the price and continue to increase. Instead of joining the market to catch the bottom in the short term, investors should focus on a long-term attitude toward three main qualities: legal guarantee, property handover on schedule, and high exploitability.
It is obvious that the practical need for property is always huge while the supply of suitable homes is scarce. The more real home buyers understand the market movement, the easier it is to seize opportunities. This also makes this segment a bright spot in the gloomy market outlook for 2022-2023.
Property market predictions in 2023
According to the CEO Pulse survey in September with 50 business leaders in Vietnam, 70% expect business conditions to improve next year. Business leaders also commented that, compared with other countries in the region, Vietnamese personnel has similar characteristics with reasonable staff cost and a high level of hard work as the most prominent advantages.
Based on the current growth rate, the general economic picture is expected to continue recovering from the recession. The manufacturing industries will come into stable operation. When the implementation of the new decrees and regulations has been on track, the real estate market will gain balance with price controls. The removal of legal obstacles for businesses helps to improve the supply situation. Stabilizing lending interest rates and expanding credit room are important factors for transactions to gradually become active again.
Most analysts propose that brokerage businesses should focus on standardizing training activities and building a team of professional experts for consolidating resources for the future. To improve their reputation, brokerage businesses should choose investors that are capable of implementing projects. At the same time, build a long-term strategy, and be ready to deal with bad scenarios when the market still has many unpredictable movements. The quiet period is also a good time for businesses to perfect the industry ecosystem, applying technology in sales and business management.
The business director of Batdongsan.com.vn, Mr. Le Dinh Hao said that in the fourth quarter of 2022, the liquidity in the market is still slow, but the indicators will be more positive by the end of the quarter. The reason is that businesses tend to use their profit to invest in property in the last quarter of the year. Moreover, public investment and FDI capital are often promoted at this time. Remittances to Vietnam are expected to hit 14-16 billion USD this year, which is a cash flow aid to help the market have better liquidity at the end of the year.
Mr. Hao said that although the market in the first months of 2023 is still difficult, it will gradually become more stable when policies related to credit interest rates and exchange rates are issued. In fact, the market is currently supported by a policy that reduces the interest rate by a minimum of 2% per year for businesses (a credit package of VND 25,000 billion) and home buyers (a credit package of VND 15,000 billion), but it has not yet implemented well, because supported businesses must ensure conditions such as no bad debt, secured assets, stable cash flow… However, in 2023 when the interest rate policy is stabilized, businesses will have more opportunities to access financial resources, helping the market more stable.
The property market in Vietnam is still safe compared to other investment channels, especially for individual investments such as land plots and apartments. The investors who have financial capacity without leverage and surfing will win. At this stage, the market is facing challenges, investors appear to wait and see if the macroeconomic policy will be adjusted appropriately for projects to be implemented.
According to Mr. Dang Hoai Nam, Director of Tien Phuoc Real Estate Joint Stock Company, the market was slowing down but wasn’t frozen. “The slowdown is a wake-up call for investors and an opportunity to purify the market,” he said.
Meanwhile, Mr. Neil MacGregor – Managing Director of Savills Vietnam commented: “This is a period when the market has to go through difficulties, slowing down significantly. However, this deceleration process creates conditions for businesses to review and evaluate the current development status, and make improvements to strengthen and build a sustainable market.”
If any questions and wishes, please contact me for a Zoom meeting in order to dig into details.
This training was developed for managers and engineers who seek for potentials of automation while maintaining flexibility.
Objectives and Content
The increasing demand for customization, shortened product lift-cycles and increasing labor cost raise new challenges for production systems. Flexible systems are needed, that can adapt to these changing requirements and achieve similar cost efficiency as traditional lean production systems. Scalable Automation allows a quick adaption of the automation level of an assembly system. Enablers for scalable automation are introduced in this course. Special attention is paid to proper task allocation between human operators and Collaborative Robots (Cobots).
Why this training is very important for your career and for your company?
Learn how to seek for potentials of automation while maintaining flexibility
learn how to do proper task allocation between human operators and Collaborative Robots (Cobots).
Outline
Introduction of changeability and scalable automation
Manual assembly line practice and discussion
Challenges and change drivers enabled by Industry 4.0
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