Optimistic Prospect for Vietnam Automobile Market

To learn about operations of NSK Vietnam Co., Ltd in Vietnam, the Vietnam Business Forum has an interview with Mr Hiroyuki Tanabe, General Director of NSK Vietnam Co., Ltd. Duy Anh reports.

Could you please introduce NSK and its products and services?
NSK, set up more than 100 years ago, is headquartered in Tokyo, Japan. The Vietnam branch, established 10 years ago, is located in Hanoi and we have also opened a representative office in Ho Chi Minh City.

NSK has two main business areas engaged in motorcycle and industrial manufacturing, such as making steering wheels for Nissan. More than 50 per cent of the company’s revenue comes from devices using ball bearings for mining, oil and gas, turbine, missile, train, motorcycle and elevator industries.

In industries, NSK has two main business lines: after-sales services (supply of replaced equipment) and OEM (original equipment manufacturer) industry, e.g. manufacturing electric cables for IBM computers.

After-sale services account for about 35 per cent of gross revenues and 65 per cent of OEM revenue. For example, Toshiba makes motors and it needs bearings. We will directly supply bearings for it and this is the OEM industry and after-sales services mean we sell products to distributors. Our company distributes products imported from Thailand, Indonesia, Japan and other countries. For example, motor bearings are mainly imported from Indonesia because NSK has production factories in Indonesia. As for after-sales services, we import products from Japan and bigger ball bearings.

How does the NSK market in Vietnam compare to other Southeast Asian countries? Does NSK have any difficulty in doing business in Vietnam for the time being?
I do not think we meet any difficulty in Vietnam when it is compared with other countries because we are still growing robustly. Therefore, our regional leaders in Singapore and Japan still want to expand business operations in Vietnam.

In addition, the NSK scale in Vietnam is not very big in comparison with other Southeast Asian countries. Malaysia and Thailand are currently the company’s main markets as the automobile markets of Thailand and Indonesia are quite big. But, we are also optimistic about the very promising future of the automobile market in Vietnam. NSK develops year after year, e.g. revenue rising 15 per cent from a year earlier. If we can grasp these changes, we will undoubtedly have more opportunities to further expand sales.

How do you think about NSK’s opportunities when Vietnam participates in the ASEAN Economic Community (AEC)?
We think that price impacts will become more intense in the car manufacturing industry. In this case I think they will need to spend more because AFTA and TPP will make domestic cars in Vietnam more expensive than imported cars. Therefore, automakers in Vietnam such as Honda and Toyota will have to add costs and they will sooner or later accept domestic components and automotive component manufacturers will have to invest in Vietnam to increase the localisation rate and bearings demands will rise. NSK supplies a variety of auto parts to manufacturers and this is a tremendous opportunity for us and many other industrial sectors as well.

So, how has your company prepared to compete with other rivals and step up your marketing strategy?
Besides bearings, we also have a wide variety of different products and we are still considering how to boost sales. After Vietnam increases the localisation rate, we may import other products to sell in Vietnam.

In addition to market research and development, NSK has attended a number of specialised exhibitions, including Metalex, to seek to boost sales and meet potential bearings customers. The company’s bearings are widely used in motorcycle and industries. The biggest ball bearings are measured 5 metres used in space sciences.