Overview

There are several methods of heat treatment - surface treatment being used in Vietnam. Regarding heat treatment, 4 basic types of heat treatment including annealing, normalizing, quenching, and tempering can all be ordered in Vietnam, with quenching being the most preferred. Steel quenching is classified into two major categories including through hardening (neutral hardening) and case hardening (surface quenching) in which surface quenching is a technique that few heat treatment units in Vietnam Nam can meet the demand, especially orders with specific requirements for the depth of the permeation layer. High-quality surface impregnation with small tolerance requirements (less than 1mm) can only be done by Japanese businesses, but such orders are rare. Furthermore, a tomographic analyzer is required to check the depth of the permeation layer, but very few companies own this equipment.

In terms of surface treatment, Vietnamese businesses can employ a variety of methods such as coating, plating, polishing, and grinding. Plating includes zinc plating, nickel plating, and chrome plating; however, few Vietnamese enterprises can plate small industrial components. Both liquid and powder coatings are quite common for coating. Recently, the number of powder coating businesses has increased significantly. In general, there are companies in the market that specialize in one method and those that process mechanical components and have heat treatment, surface treatment, or both lines inside them.

Regarding the activities of businesses, we will present them in detail below.

Business Activities

In Vietnam, businesses engaged in heat treatment and surface treatment can be divided into two groups. The first group consists of mechanical processing companies that perform heat treatment and surface treatment. The main purpose is to meet the needs of the enterprise itself. Additionally, some businesses also take on external orders to optimize resource utilization and increase income for the enterprise.

These are typically large enterprises, including state-owned enterprises, FDI enterprises, and a few large Vietnamese mechanical processing companies. Most state-owned enterprises are long-standing entities that have undergone numerous reforms or structural changes. Equipment has been invested in early on, but there has been little innovation, so most of it consists of outdated technology. However, in recent years, along with privatization activities, state-owned companies have also undergone significant changes in both equipment and quality management activities. With existing infrastructure and abundant financial resources, these companies still maintain a fairly strong position in the industry. On the other hand, FDI enterprises, especially Japanese enterprises, typically invest systematically in synchronized equipment, with large upfront investment costs. Some Vietnamese enterprises also invest heavily in equipment, but they often struggle with financial issues.

When it comes to the benefits of performing heat treatment and surface treatment processes in-house, it is clear that this helps businesses have better control over quality management and reduces outsourcing costs. However, the investment costs for equipment and machinery can be significant. Additionally, to operate the production line efficiently, businesses also need to incur expenses for training their workforce. FDI enterprises may have experts from the parent company to provide guidance with more structured training programs, while domestic enterprises may incur additional costs to bring in experts for training or rely on a train-the-trainer approach.

Secondly, there are businesses specializing in heat treatment and surface treatment. Previously, only a few foreign enterprises from countries like Japan, Taiwan, and China essentially dominated this field. At the time, Vietnamese enterprises, which were mostly small and had limited financial resources, relied heavily on Chinese machinery and equipment, which frequently had outdated technology and techniques, making it difficult to compete with FDI enterprises that had more advanced technology and equipment.

However, in the past five years, the number of Vietnamese enterprises operating in these fields has gradually increased. Most of them have founders who previously worked in FDI enterprises. With the founders' work experience, it can be assumed that they can ensure know-how for the company. However, the biggest obstacle still lies in equipment. Investing in Japanese equipment is costly, so most of these enterprises choose to use machinery and equipment from China or old machinery from Japan, or even opt to produce themselves by purchasing core components from China and manufacturing the mechanical parts. Some companies responded to the Emidas magazine that "Vietnamese enterprises have the knowledge and know-how to handle orders, but lack modern equipment to ensure the efficiency and quality of the products."

Manufacturing procedures

By visiting various heat treatment and surface treatment enterprises in Vietnam, the Emidas magazine has observed that Japanese FDI enterprises have a significant advantage in terms of production management, which has become almost a guarantee for the superior quality of Japanese enterprises.

The process of heat treatment or surface treatment often involves multiple stages, and each product may require different treatment methods depending on its shape or material. At Japanese FDI enterprises, each stage is usually meticulously and scientifically designed, carefully adjusted to ensure that the product achieves the highest possible quality.

For example, during our visit to a powder coating line of a Japanese enterprise, we witnessed complete stages of surface cleaning, drying, and coating, all carried out with specific instructions regarding technical requirements and timing to optimize the production line and ensure thorough quality management. In contrast, at smaller Vietnamese enterprises, each stage may lack the same level of detail and precision, and some initial treatment stages may even be omitted to save costs and time.

Another example is with Japanese heat treatment enterprises, where combining furnaces or cutting down stages seems to be unacceptable. This seemingly reflects the deep-seated production philosophy of the Japanese, where each stage is considered an integral part of the process of achieving perfection. However, in Vietnamese enterprises, they may still combine furnaces to process small orders together or cut down stages to meet delivery time requirements. These different approaches have their own advantages and disadvantages. The Japanese approach ensures quality but comes with higher costs and longer processing times. Conversely, the Vietnamese approach seems more flexible, suitable for orders that do not require very high quality but need urgent delivery.

Thus, it can be said that, although operating in the same field, the target customers of Japanese and Vietnamese enterprises are quite different. Similarly, when companies want to place orders for heat treatment and surface treatment in Vietnam, they should also consider more flexible ordering options: products that do not require very high quality can be ordered from Vietnamese enterprises to save costs and delivery time, while high-quality products should be ordered from Japanese FDI enterprises.

Another point that Emidas magazine wants to emphasize to buyers is that some Vietnamese enterprises still do not have regular equipment maintenance procedures; they often only repair when breakdowns occur. This can lead to unstable equipment operation, potential breakdowns, reduced production efficiency, and prolonged delivery time.

Challenges

Below are some challenges of the heat treatment - surface treatment industry in Vietnam. These are not only specific issues within this industry but can be considered as common challenges of the manufacturing sector in Vietnam.

Firstly, the location of factories lacks connectivity; machining plants and heat treatment - surface treatment plants are not located close to each other. This is partly due to the planning and policies of the government and local authorities, as industrial zone development mainly aims to attract foreign investment or large Vietnamese corporations, while local small and medium-sized manufacturing enterprises struggle to secure long-term land leases there. Support policies such as industrial land leasing, financial support, and tax incentives for manufacturing enterprises in the early stages are also limited, with most enterprises having to rely on their own resources. Therefore, the majority of enterprises in their early years of operation often have to rent/buy land from private entities or within small industrial clusters to set up workshops. The uneven distribution of supporting industrial plants in Vietnam leads to increased transportation costs and processing time for orders.

Secondly, the equipment and most types of raw materials (chemicals, solvents, additives, etc.) used in the processing process all need to be imported from abroad. Relying on imported raw materials is a challenging issue for many enterprises across various industries in Vietnam. Purchasing materials from overseas can incur costs such as import taxes, international transportation fees, and sometimes fluctuations in the prices of materials on the international market, leading to increased production costs.

Thirdly, there is an environmental issue. The heat treatment and surface treatment processes can significantly impact the environment. In the heat treatment process, the use of high temperatures and chemicals can release smoke, vapors, and harmful gases into the environment. Similarly, the surface treatment process also involves the use of chemicals, solvents, and additives, which can lead to the discharge of hazardous substances into the environment if not properly handled. Environmental protection is both a responsibility and a burden for businesses. During their operations, businesses must bear the costs for environmental protection measures and waste treatment. Moreover, due to recent government regulations on environmental protection and the shift towards green initiatives, obtaining permits for new investment projects related to these industries, especially in major cities like Hanoi and Ho Chi Minh City, has become very difficult. Environmental monitoring of processing activities has also been tightened significantly after several major pollution incidents in other sectors, affecting the operations of enterprises in this industry to some extent.

Prospects

Heat treatment and surface treatment are the next stages of machining operations, so it can be said that the development potential of the industry depends entirely on the expansion prospects of machining enterprises. On the other hand, not every product requires advanced heat treatment and surface treatment.

In the context where the Vietnamese motorcycle market has reached saturation, the scale of the automobile industry is still small, and the machinery and equipment manufacturing sector (such as construction machinery, agricultural machinery, etc.) is almost stagnant, the domestic market scale for the heat treatment industry in recent years has remained largely unchanged. On the other hand, the surface treatment industry may have development opportunities as customers shift their orders to Vietnam; however, they may encounter issues related to environmental protection.

In the long term, as the market demand for high-quality heat treatment and surface treatment products increases and customer preferences change (shifting from price prioritization to quality emphasis), perhaps the industry's landscape in Vietnam will truly thrive. Additionally, rearranging the order of Japanese and Vietnamese enterprises in the global supply chain, such as Vietnam handling factory infrastructure, undertaking rough processing, mass production, while Japan is responsible for precision machining, high-quality post-processing after machining... may be one of the solutions contributing to the sustainable development of the local supporting industry.