Introduction
As the global restructuring of supply chains accelerates, Vietnam’s importance as a “China Plus One” manufacturing hub is no longer a subject of debate. Particularly in the aluminum die-casting industry, which is essential for automotive parts and industrial machinery, Vietnam is evolving from a mere assembly hub into a supply base for key components, including molds.
For many Japanese executives and procurement managers, local procurement of molds in Vietnam can be a trump card for realizing significant cost reductions and shorter lead times. However, “hidden risks” such as variations in technical levels and immature infrastructure exist, and easy entry can lead to causes of quality troubles.
In this article, based on Daiwa Aluminum Vietnam’s on-site perspective and the latest economic statistics, we will delve into the current state of the aluminum mold supply chain in Vietnam. We provide concrete judgment materials to correctly understand the risks behind the cost benefits and lead your procurement strategy to success.
Growing Vietnam Manufacturing and Aluminum Mold Market
Solid Economic Growth and Influx of FDI
Vietnam is currently establishing its position as a manufacturing center in Southeast Asia. According to data from the General Statistics Office of Vietnam (GSO), the GDP growth target for 2024 is set at 6.0%–6.5%, with similarly high growth expected for 2025.
Driving this growth is Foreign Direct Investment (FDI). Realized FDI capital in the first quarter of 2024 reached approximately 4.63 billion USD (up 7.1% year-on-year). Investment is particularly concentrated in the manufacturing and processing sectors, making the deepening of local supply chains an urgent task for Japanese manufacturing industries as well.
Expansion of Aluminum Industry and Challenges in “Supporting Industries”
Demand for aluminum die-casting products is surging for automobiles, motorcycles, and construction machinery. Market research predicts that the Vietnam aluminum market will expand at a Compound Annual Growth Rate (CAGR) of approximately 6–7% from 2024 to 2030.
However, challenges remain in the local procurement rate (localization). According to a JETRO survey, the local procurement rate for Japanese companies in Vietnam was approximately 41.9% (2023), a low level compared to China’s 68.3% and Thailand’s 59.6%. This suggests that the cultivation of “supporting industries” such as molds and precision processing has not kept pace with the expanding demand of finished vehicle manufacturers.
Benefits of Local Procurement: Cost and Speed
Still Attractive Cost Structure
The greatest benefit is cost competitiveness. Although wages rose by approximately 6% due to the minimum wage revision in July 2024, Vietnam’s labor costs remain comparatively low when compared to China or Thailand.
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Labor Costs: The monthly basic salary for the worker class varies by region, starting from 4.96 million VND (over 200 USD) in Region 1 (Hanoi, Ho Chi Minh City, etc.). Even including actual wages, it maintains a level about half that of coastal China.
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Processing Costs: It is common for charge rates for machining and electrical discharge machining (EDM) in mold production to be kept about 30–50% lower than in Japan.
Young Workforce and Speed of Skill Acquisition
Vietnam has a population reaching approximately 100 million, and it is a very young country with an average age in the early 30s. The dexterous and diligent national character is suitable for work requiring precision, such as mold finishing and precision processing. With appropriate education and management, it is possible to produce products approaching Japanese quality at low cost.
Key Data: Economic Indicators of Vietnam Manufacturing (2024-2025)
| Indicator | Data Overview |
| GDP Growth Target | 6.0%–6.5% (2024 Government Target) |
| Minimum Wage Increase Rate | 6.0% (Implemented July 2024, to 4.96 million VND in Region 1) |
| Japanese Companies’ Localization Rate | 41.9% (Approx. -26 points vs. China) |
| Manufacturing FDI | Solid trend including new and expanded capital (Q1 2024 Realized Amount: 4.63 billion USD) |
| Electricity Price | Raised by average 4.8% in October 2024 (to 2,103.1159 VND/kWh) |
Risks of Local Procurement and Countermeasures
“Invisible Costs” and Quality Risks
Focusing only on cost benefits can lead to unexpected pitfalls.
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Material Quality: Sources for high-quality mold steel (such as SKD61) are limited within Vietnam. There are reported cases where using cheap Chinese steel led to early occurrence of heat cracks, resulting in a mold lifespan less than half that of Japanese molds.
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Reliability of Heat Treatment: Few local companies possess the equipment for heat treatment (quenching/tempering), which determines mold durability, and quality variation is significant. There is a risk of early wear due to failure to achieve appropriate hardness.
Infrastructure and Energy Challenges
The electricity situation is something the manufacturing industry cannot overlook. In the summer of 2023, serious power shortages occurred mainly in the north, leading to a series of rolling blackouts. In October 2024, EVN (Vietnam Electricity) raised electricity prices by an average of 4.8%, making rising energy costs unavoidable.
Additionally, the shortage of skilled technicians and middle management is a chronic issue. High turnover rates due to job hopping make it difficult to accumulate technology, leading to costs in maintaining quality control systems.
Importance of Selecting the Optimal Partner
To avoid these risks, it is important to select a supplier that fuses a “Japanese-quality management system” with “local cost benefits.”
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Confirmation of Material Certificates (Mill Sheets): Are they using materials from reliable steel manufacturers?
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Scope of In-house Production: Can they handle design, processing, heat treatment, and tryouts consistently in-house, or do they have a reliable network of partner factories?
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Presence of Japanese Engineers: Are there managers on-site who can understand subtle nuances and quality standards?
Daiwa Aluminum Vietnam’s Approach
We, Daiwa Aluminum Vietnam, respond to this difficult problem of balancing “cost” and “quality” with a hybrid production system that leverages thorough Japanese-standard quality management and the geographical advantages of Vietnam. By ensuring consistent traceability from mold design to casting and processing, we provide a supply chain that our customers can trust.
Summary
Aluminum mold procurement in Vietnam is a powerful option for increasing cost competitiveness, but pursuing only “cheapness” leads to risks such as quality troubles and delivery delays.
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Merits: Abundant young labor force, relatively low labor costs, growing market, and preferential tax systems.
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Risks: Anxiety over quality of materials/heat treatment, instability of power infrastructure, shortage of skilled workers.
The key to success is finding a “reliable partner” who can control risks while maximizing Vietnam’s potential. Heading into 2025, Vietnam’s manufacturing industry is facing a qualitative turning point. Now is the time to review your supply chain and make a move toward the next stage of growth.