Introduction
In recent years, the environment surrounding Japan’s manufacturing industry has undergone a dramatic transformation. Amidst skyrocketing raw material prices, severe labor shortages, and the urgent need to restructure supply chains, exemplified by the “China Plus One” strategy, Vietnam has emerged as the most closely watched procurement destination.
Particularly in the field of aluminum castings (products made from aluminum alloys), Vietnam has evolved from being a mere source of “cheap labor” into a “strategic partner” that offers both advanced technical capabilities and stable quality. With domestic demand for aluminum alloys predicted to reach 1,502,300 tons in fiscal 2025 (a 1.3% increase over the previous year), sourcing from Vietnam is the key to balancing cost competitiveness with risk diversification.
Based on the latest statistical data, this article provides a thorough explanation of why Vietnam is the choice for today, its specific benefits, and practical points for successful procurement. By reading this, executives and procurement managers will gain a reliable guide for designing next-generation procurement strategies.
Why “Vietnam” Now? The Background of the Accelerating Shift
The primary factor driving Japanese companies to accelerate their shift to Vietnam lies in its overwhelming “growth stability” and “favorable investment environment” within Southeast Asia.
Vietnam’s Superiority Compared to China and Thailand
China, once the primary hub for aluminum casting, is losing its former cost advantages due to rising labor costs and increasing geopolitical risks. Similarly, Thailand, which led as a manufacturing base in Southeast Asia, is facing visible labor shortages due to an aging population.
In contrast, Vietnam possesses an abundant working-age population, with labor costs suppressed to approximately one-half to one-third of those in China. Furthermore, by utilizing the Economic Partnership Agreement (EPA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the benefits in terms of tariffs are significant, making its advantage in total cost stand out.
Growing Demand for Automotive and Industrial Equipment
Looking toward 2026, the shift to electric vehicles (EVs) in the Japanese automotive industry is accelerating, causing a surge in demand for aluminum parts aimed at vehicle weight reduction. The demand forecast for primary aluminum alloy ingots for casting and die-casting in fiscal 2025 is projected at 267,200 tons (a 2.1% increase over fiscal 2024). Vietnam’s importance as a supply base to support this demand is rapidly increasing.
Three Decisive Benefits of Sourcing from Vietnam
Aluminum procurement in Vietnam offers value far beyond simple price competitiveness. Here, we organize the specific benefits for Japanese companies from three perspectives.
1. Overwhelming Cost Performance and Tariff Advantages
While minimum wages in Vietnam vary by region, they range from approximately 25,000 to 30,000 JPY per month (4,680,000 to 4,960,000 VND). Even when securing skilled workers, a cost reduction of 30% to 50% compared to Japanese domestic production can be expected. Additionally, by utilizing the Vietnam-Japan Economic Partnership Agreement (VJEPA), import duties on many aluminum products are either eliminated or reduced.
2. Risk Diversification through “China Plus One”
Supply chains dependent on a single country carry the risk of being severed in an instant by disasters or political instability. Vietnam is a pro-Japanese nation, and its government is proactive in attracting foreign investment. Foreign Direct Investment (FDI) approval amounts in 2024 have remained steady year-on-year, and infrastructure development is progressing rapidly.
3. Penetration of Japanese-style Quality Control (JIS Standards)
Currently, many aluminum casting manufacturers operating in Vietnam (such as Daiwa Aluminum Vietnam) receive direct technical guidance from Japan. These facilities have not only obtained ISO9001 certification but have also established quality control systems compliant with JIS standards. The image of “overseas products = cheap and poor quality” is a thing of the past.
Key Data: Statistical Indicators for Vietnam’s Manufacturing Industry and the Aluminum Market
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2025 Operating Profit Forecast: 50.4% of Japanese companies operating in Vietnam responded that profits will “improve” (8 points higher than the ASEAN average).
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FY2025 Domestic Secondary Aluminum Alloy Ingot Demand: 1,502,300 tons (1.3% increase YoY).
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FY2025 Primary Alloy Demand for Casting/Die-casting: 267,200 tons (2.1% increase YoY).
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2024 Vietnam Export Value (to the U.S.): 97.017 billion USD (highlighting its presence as a major export hub).
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Japan’s Foundry Equipment Market Forecast (End of 2026): 315.62 million USD (growth driven by lightweighting demand).
Source: [JETRO: 2024 Survey on Business Conditions of Japanese Companies Operating Overseas], [Japan Aluminum Alloy Association: FY2025 Demand Forecast]
Three Strategic Points for Successful Vietnam Procurement
While sourcing from Vietnam offers many benefits, success requires mastering specific “key points.”
1. Set “Technical Guidance Capability” as the Partner Selection Criterion
It is not enough to simply have equipment; it is crucial that the partner understands the “strictness regarding minute defects” required by Japanese customers. Selecting a partner that has Japanese managers on-site or a long track record of exports to Japan—rather than just local capital—is the shortest route to avoiding initial troubles.
2. Optimization of Logistics Lead Times and Inventory Strategy
Ocean freight from Vietnam to Japan typically takes 10 to 14 days. When combined with local customs clearance and domestic distribution, a lead time of approximately three weeks to one month should be expected. To respond to sudden fluctuations in demand, it is important to maintain a certain amount of safety stock within Japan or include buffer stock arrangements in the contract with the local supplier.
3. Overcoming Communication Barriers with “DX”
To facilitate fine adjustments to drawings and feedback during the prototyping stage, real-time collaboration using 3D CAD data sharing and online meeting systems is essential. Furthermore, by establishing a system for periodic remote inspections of the local production site, transparency in quality can be ensured without the need for constant travel.
Summary
Aluminum procurement in Vietnam is no longer a temporary trend; it is becoming a “standard strategy” for the survival of Japan’s manufacturing industry. From 2025 onward, as vehicle weight reduction and industrial equipment efficiency progress, the importance of aluminum castings will increase even further.
Vietnam has established its position as a reliable partner for Japanese companies, backed by a low-cost workforce, a stable political and economic environment, and continuously improving technical capabilities. As shown by the data indicating that over 50% of resident companies expect improved business performance, building production and procurement systems in Vietnam has the power to directly enhance a company’s profitability.
To all procurement and purchasing managers: if you feel even a slight unease regarding your current supply chain, why not first consider prototyping or small-scale procurement in Vietnam? That single step will fundamentally change your company’s cost structure and serve as a robust foundation for remaining competitive ten years from now.
Daiwa Aluminum Vietnam will fully support your overseas procurement with our years of experience and Japan-quality management systems. Please feel free to contact us anytime for specific quotes or technical consultations.