Aluminum casting & mold design services

Introduction

 

For Japan’s manufacturing industry, strengthening supply chains and optimizing costs are perpetual management challenges. As the “China Plus One” movement accelerates due to geopolitical risks and soaring labor costs, Vietnam is drawing intense global interest as a top candidate. However, when it comes to procuring “castings”—the bedrock of manufacturing—many procurement and purchasing managers face a dilemma: “The cost is appealing, but quality and delivery are unstable.”

This article focuses on Vietnam’s casting industry, thoroughly analyzing its latest market trends and future potential based on macro data. Furthermore, it reveals the common “pitfalls” of Vietnamese procurement that many Japanese companies fall into and provides concrete methods to avoid them.

By reading this article to the end, your company will rediscover the potential of Vietnam not just as a cost-cutting destination, but as a strategic procurement hub for “high-quality, high-value-added” components. You will also gain a deep understanding of the unique value offered by Daiwa Aluminum Vietnam (Japanese Company A): “Japan Quality in Vietnam.”

Vietnam’s Thriving Manufacturing Sector: The Market’s Appeal Seen Through Latest Data

 

The strength of Vietnam’s economy is reflected in numbers that leave no room for doubt. The era of being merely “cheap labor” is over; Vietnam is now establishing its position as Asia’s new manufacturing hub.

Over 7% Economic Growth and FDI Inflow

 

Defying concerns of a global recession, the Vietnamese economy continues its astonishing growth. According to Vietnam’s General Statistics Office (GSO), the real GDP growth rate reached 7.09% in 2024, significantly exceeding the government’s target (6.0-6.5%) (Source: JETRO).

Driving this growth is Foreign Direct Investment (FDI). In the first half of 2025, approved FDI reached its highest level in 15 years, with investment heavily concentrated in the manufacturing and processing industries. In the first quarter of 2025, a remarkable 61% of total FDI was directed toward manufacturing and processing (Source: VietBiz). This is clear evidence that manufacturers worldwide are explicitly positioning Vietnam as a primary “China Plus One” production base.

Market Size: Rapid Growth in Machining and Metal Production

 

To accurately understand Vietnam’s casting market, it is most effective to look at the trends in its parent sectors: “machining” and “metal production.” These fields are the very foundation of supply and demand for the casting industry.

As of 2021, Vietnam’s machining industry (including casting, forging, stamping, and cutting) comprised 11,998 companies with total revenue reaching 197.947 trillion VND (over approx. 900 billion JPY at the time). The compound annual growth rate (CAGR) from 2017 to 2021 remained high at 15%, indicating rapid market expansion (Source: B&Company).

This momentum has continued into 2024 and beyond. In Vietnam’s Index of Industrial Production (IIP) for the January-October 2024 period, “metal production” grew 10.4% year-on-year, and “metal product manufacturing” grew 11.9%, both surpassing the manufacturing sector’s average (Source: Vietnam Briefing).

Key Data: Growth of Vietnam’s Metal and Machining Industry

The “Two Major Drivers” of Casting Demand

 

Underpinning this robust market and driving further growth are “two major drivers” for both domestic and export demand: the “transformation of the automotive industry” and the “national strategy for renewable energy.” In the next section, we will explore in detail how these two huge sources of demand are impacting the casting industry, especially for aluminum castings.

Drivers of Vietnam’s Casting Demand: Automotive and Renewable Energy

 

Vietnam’s casting market is being powerfully pulled by specific growth sectors. “Automotive” and “renewable energy,” in particular, have become crucial pillars that will define demand for the next decade.

【Automotive】EV and HV Transition Driving Aluminum Casting Demand

 

Vietnam’s automotive market is in a period of explosive growth. Domestic car production (estimated) reached 388,500 units in 2024, a phenomenal 27% increase from the previous year (Source: Asian automotive industry statistics). New car sales also exceeded 490,000 units (Source: JETRO).

Particularly noteworthy is the wave of electrification, driven by the global decarbonization trend. Sales of hybrid vehicles (HV) surpassed 10,000 units in 2024, an increase of over 200% year-on-year. Japanese manufacturers, who demand high-quality parts, are leading this HV market, with Toyota holding a 48.8% share (Source: B&Company).

The transition to EVs and HVs makes vehicle lightweighting a paramount objective. Consequently, demand is rapidly shifting from traditional iron-based castings to lightweight, high-strength aluminum castings (for engine blocks, battery cases, motor housings, etc.). This trend presents a massive business opportunity for manufacturers with high-quality aluminum casting technology.

【Renewable Energy】National Strategy “PDP8” Creating Huge Infrastructure Demand

 

The “8th National Power Development Plan (PDP8),” approved by the Vietnamese government in May 2023, is the other massive driver of casting demand.

What is PDP8 (Power Development Plan 8)?

Vietnam’s national power development plan for 2021-2030 (with a vision to 2050). It is a national strategy aimed at reducing reliance on coal-fired power and rapidly accelerating the adoption of renewable energy (especially wind and solar).

This plan is extremely ambitious. It sets a target for renewable energy to account for 30.9% to 39.2% of total power generation by 2030 (or 47% with international support) (Source: JETRO). Furthermore, it aims to increase the renewable share to about 70% by 2050, phasing out coal power entirely (Source: JOGMEC).

To achieve this goal, a rush of large-scale onshore and offshore wind farm construction is planned, primarily in southern Vietnam. Wind turbines (nacelles, hubs, base frames, etc.) require large cast iron components weighing several tons to tens of tons.

Additionally, a massive expansion of the 500kV (500,000 volts) ultra-high-voltage transmission grid system is planned to transport the generated electricity throughout the country (Source: ONE-VALUE), creating long-term demand for casting parts related to power transmission infrastructure.

The Reality of Vietnamese Casting Procurement: Why It’s Stuck at “Cheap but Poor Quality”

 

Despite such an attractive market environment, there are serious reasons why many Japanese companies hesitate to procure castings in Vietnam. These are the structural “quality” and “cost” challenges faced by local manufacturers (referred to here as Company B and Company C).

The “Quality Wall” Faced by Local Manufacturers (Companies B, C)

 

The biggest risk in procuring castings in Vietnam is quality variation. At local companies B and C, in particular, it is common to find that a foundation for quality control has not been established.

For example, in managing the composition of molten metal, which dictates casting quality, many factories do not even possess a CE meter (Carbon Equivalent meter), considered essential in Japan (Source: vietnam-casting.com). Operations that rely on experience and intuition cannot maintain material uniformity between lots or even within a single product, leading to fatal defects such as insufficient strength or “casting defects” (internal cavities).

Furthermore, Vietnam’s “supporting industries” (which supply parts and raw materials) are still developing, making it difficult to stably procure high-quality raw materials and consumables domestically. As a result, they are forced to rely on imports, which contributes to rising costs and delivery instability (Source: Okayama Prefectural General Industrial Technology Center).

The Dilemma of Soaring Labor Costs

 

The premise of “cheap labor,” once Vietnam’s main attraction, is also crumbling. In 2024, the average monthly income for Vietnamese workers reached 7.7 million VND (approx. 304 USD), an 8.6% increase from the previous year (Source: Sending Navi). The government-mandated minimum wage was also raised by an average of 6% in July 2024 (Source: JETRO).

Rising labor costs are a healthy sign of economic growth, but the problem is whether “productivity gains are keeping pace.” At local companies B and C, delays in automation and inadequate quality control systems mean they have no choice but to pass these rising labor costs onto the product price, causing them to lose even their sole appeal of being “cheap.”

Lack of Machining Capabilities: The Disconnect Between Casting and Machining

 

A casting is not complete once it is “cast” (shaped). In most cases, it only becomes a functional product after subsequent “machining” (cutting, drilling) and “surface treatment.”

However, many local Vietnamese manufacturers (Companies B, C) “specialize in casting” and only a limited number possess high-precision machining equipment (Source: vietnam-casting.com). This forces procurement managers to place and manage separate orders: casting to Company B, machining to another Company D. This “disconnect” is the primary source of ambiguous quality responsibility, delivery delays, and unnecessary management costs.

The Optimal Solution: “Japan Quality in Vietnam” – The Uniqueness of Daiwa Aluminum Vietnam

 

The solution that fundamentally resolves the numerous challenges of Vietnamese procurement mentioned above—and the only one that balances cost benefits with quality and delivery—is the “Japan Quality in Vietnam” solution offered by Daiwa Aluminum Vietnam (Japanese Company A).

Here is how we, “Japanese Company A,” overcome the challenges faced by local Companies B and C.

Overwhelming Quality Stability (Achieving <0.2% Defect Rate) and Japanese Standard Management

 

We at Japanese Company A (Daiwa Aluminum Vietnam) thoroughly implement “Japanese-standard manufacturing” on Vietnamese soil. The biggest difference from local Companies B and C is that our rigorous management systems, typified by ISO9001:2015 (Quality Management System), are not just certifications on paper; they are deeply embedded in every corner of our shop floor.

From incoming inspection of raw materials to molten metal management, the casting process, and final inspection, all processes completely transplant the know-how of our Japan headquarters. Through thorough quality education and standardization for local employees, we have eliminated human-dependent manufacturing processes that rely on “personal experience and intuition.”

As a result, castings procured via high-quality Japanese-affiliated casting factories (Company A) achieve an average defect rate of less than 0.2% upon arrival in Japan (Source: vietnam-casting.com)—a level of quality stability impossible for local Companies B and C to reach. This directly translates to a dramatic reduction in our customers’ incoming inspection and rework costs.

From Casting to Precision Machining and Surface Treatment: The Value of a One-Stop Solution

 

We have also cleared the hurdle of “lack of machining capabilities” that plagues local Companies B and C. Daiwa Aluminum Vietnam (Company A) is equipped not only with state-of-the-art aluminum casting equipment (gravity casting, low-pressure casting) but also with high-precision CNC machining centers and various inspection instruments within our own factory.

This allows us to provide a “one-stop solution” for all processes, from casting to precision machining and even surface treatment (painting, anodizing, etc.).

A one-stop solution maximizes the benefits for procurement managers:

1. Clear Quality Responsibility: With all processes managed by one company, the window for quality assurance is unified.

2. Shorter Lead Times: Wasteful lead times for transport and coordination from the casting factory (Company B) to the machining factory (Company D) are eliminated.

3. Reduced Management Costs: You are freed from the hassle and cost of managing multiple suppliers.

A “True China Plus One” Hub That Hedges Geopolitical Risk

 

We at Japanese Company A (Daiwa Aluminum Vietnam) maintain a close coordination system with our Japanese side (Daiwa Aluminum HQ). We can respond quickly and flexibly in Japanese to customers’ sudden specification changes or delivery adjustment requests.

Vietnam is one of the world’s most attractive production bases, boasting economic growth, an abundant workforce, and the geopolitical advantage of “China Plus One.” However, to fully unlock that potential, the quality and management system issues faced by local Companies B and C must be overcome.

Daiwa Aluminum Vietnam (Company A) is a unique partner that fuses Vietnam’s “cost competitiveness” with Japan’s “high-quality manufacturing.”

Conclusion

 

This article used data to show the vibrant state of Vietnam’s casting industry, supported by a strong macroeconomy: 7.09% GDP growth, concentration of FDI in manufacturing (61%), and rapid growth in the machining sector (15% CAGR). Two major drivers, in particular—”automotive electrification” (domestic production up 27%) and “renewable energy (PDP8)”—are creating sustained demand, especially for aluminum castings.

However, local manufacturers (Companies B, C) still face serious challenges: inadequate quality control systems, slow responses to rising labor costs (8.6% increase per year), and a disconnect between casting and machining.

The optimal solution to solve these problems and truly enjoy the benefits of Vietnamese procurement is Daiwa Aluminum Vietnam (Japanese Company A). Through rigorous Japanese-standard quality control (defect rate <0.2%) and a “one-stop solution” that covers everything from casting to precision machining, we deliver high quality, cost, and stable supply at a high level. We invite you to make us your strategic partner for strengthening your supply chain and optimizing costs.