Aluminum casting & mold design services

Introduction

As the restructuring of global supply chains accelerates, reviewing overseas procurement strategies has become an urgent task for Japanese manufacturing executives and procurement managers. Particularly in aluminum castings, where both cost competitiveness and quality are demanded, Vietnam has rapidly increased its presence in recent years. This article provides a detailed explanation of the current status and future prospects of Vietnam’s aluminum casting industry, its competitiveness in terms of quality, cost, and delivery, and highlights Vietnam’s importance in overseas procurement strategies.

Amid increasing global economic uncertainty, strengthening and diversifying supply chains are indispensable strategies for companies. Efforts to avoid over-reliance on China and seek new production bases and procurement destinations are intensifying, with Vietnam receiving particular attention among ASEAN countries. This is due to its stable political situation, abundant labor force, and the government’s proactive foreign investment promotion policies. Aluminum castings are essential materials in a wide range of industries, including automotive parts, motorcycle parts, electronic device components, and construction materials, and their stable supply and quality assurance are critical to a company’s competitiveness.

This article will first touch upon Vietnam’s overall economic growth and the driving force of its manufacturing sector, then provide an overview of the specific size and growth forecast of the aluminum casting market, and its major demand sectors. Next, we will delve into the quality competitiveness of Vietnamese aluminum castings, including the status of international certifications, the progress of technology transfer, and the challenges that still exist. Furthermore, we will analyze Vietnam’s cost advantages from the perspectives of labor costs, raw material procurement, and transportation costs, and also mention the current state of delivery management and efforts for improvement. Finally, we will introduce the specific value that Daiwa Aluminum Vietnam can offer to Japanese manufacturers and its strengths.

Market Trends and Growth Potential of Vietnam’s Aluminum Casting Industry

The Vietnamese economy has achieved remarkable growth in recent years, with the manufacturing sector serving as its driving force. The GDP growth rate recorded +5.05% in 2023, and is projected to accelerate to +7.09% in 2024 and +7.52% in the first half of 2025, Source: Capital Asset Management Co., Ltd., JETRO, ACCESS ONLiNE,. Manufacturing accounts for approximately 25% of GDP and is a major recipient of Foreign Direct Investment, FDI,. Total FDI inflows from 2020 to 2024 reached 165 billion USD, with approximately 60% invested in manufacturing-related sectors, Source: B-Company,.

Against the backdrop of such economic growth, Vietnam’s aluminum casting market is also continuously expanding. In particular, the aluminum die casting market is projected to grow at a Compound Annual Growth Rate, CAGR, of 13.18% from 2021 to 2026, and its market size is expected to continue expanding, Source: Daiwa Light Alloy Industry Vietnam Co.,Ltd,.

Major demand sectors include the automotive and motorcycle industries. Vietnam is one of the leading producers of motorcycles, and its automotive market is also rapidly expanding. Automobile sales reached approximately 300,000 units in 2023 and are expected to increase further, ensuring robust demand for aluminum castings such as engine parts, transmission cases, and chassis components. Next, the electronics and electrical products industry is also a significant demand sector. Vietnam has become a global production hub for smartphones, personal computers, and home appliances, with revenue from electronics manufacturing exceeding 115 billion USD in 2023, accounting for more than a quarter of GDP, Source: B-Company,. Many aluminum castings are used in these products as heat dissipation components and housing parts. Furthermore, in the construction and infrastructure sectors, lightweight and durable aluminum castings are adopted as building materials and structural components, and demand is increasing with urbanization.

The Vietnamese government is actively promoting the development of the manufacturing sector and attracting FDI. Specific examples include corporate tax incentives, development of industrial parks, and infrastructure investment. Particularly in major industrial regions like Dong Nai province, the operating rate of industrial parks exceeds 82%, enhancing their attractiveness as production bases, Source: TSM Technology Vietnam,. Moreover, Vietnam has signed numerous Free Trade Agreements, FTAs, and Economic Partnership Agreements, EPAs, offering significant advantages in terms of tariff preferences for imports and exports. Total exports in 2024 are projected to be 405.5 billion USD, up 14.3% year-on-year, and exports of aluminum castings to major destinations such as the US, EU, Japan, and Korea are also on an upward trend. Notably, aluminum ingot exports to China increased by over 150% to approximately 500,000 tons in 2022, indicating changes in raw material supply, Source: Daiwa Light Alloy Industry Vietnam Co.,Ltd,.

Quality Competitiveness and Challenges of Vietnamese Aluminum Castings

The quality of aluminum castings in Vietnam has significantly improved in recent years due to technology transfer and equipment modernization. Many local factories are obtaining ISO 9001 certification, an international quality management system, and an increasing number of factories are acquiring IATF 16949 certification for the automotive industry, Source: Daiwa Light Alloy Industry Vietnam Co.,Ltd,. These certifications demonstrate compliance with international standards for quality management systems and are important indicators in supplier selection. When Japanese companies enter Vietnam, they establish quality management systems equivalent to those in Japan by introducing their own quality standards and thoroughly training local staff.

In terms of technology transfer, investments from developed countries such as Japan, Korea, and Taiwan play a significant role. The introduction of the latest die-casting machines, melting furnaces, and inspection equipment has led to automation and efficiency improvements in production processes. This has resulted in improved dimensional accuracy and surface quality of products, contributing to a reduction in defect rates. For example, companies like Daiwa Aluminum Vietnam bring years of experience and Japanese technological expertise to Vietnam, establishing an integrated production system from mold design to casting, machining, and inspection, thereby maintaining high quality standards, Source: Daiwa Light Alloy Industry Vietnam Co.,Ltd,.

However, challenges still exist. The most prominent is the securing of skilled workers and managerial staff. The shortage of human resources in the manufacturing industry reaches 39.8% for Japanese companies, with a particularly high rate of 67.1% for managers and administrative staff, Source: Mitsubishi UFJ Research & Consulting,. This indicates that human resource development has not kept pace with rapid industrial development. To address this challenge, many companies are focusing on upskilling local staff through On-the-Job Training, OJT, and internal/external training programs. Additionally, Japanese engineers are dispatched to provide technical guidance, aiming to maintain and improve quality levels.

Common quality defects include blowholes, cracks, and inclusions. These defects can occur due to inadequate melting temperature control, faulty mold design, insufficient optimization of casting conditions, or fluctuations in raw material quality. Japanese companies establish strict quality inspection systems to prevent these defects. Specifically, they utilize X-ray inspection, 3D measuring machines, tensile testing machines, and hardness testers to comprehensively check products from internal defects to dimensional accuracy. Furthermore, upon the occurrence of defects, they implement a PDCA, Plan-Do-Check-Act, cycle to investigate causes and implement recurrence prevention measures, thereby stabilizing quality, Source: Daiwa Light Alloy Industry Vietnam Co.,Ltd,.

Daiwa Aluminum Vietnam has established a rigorous quality control system based on Japanese quality standards, with experienced Japanese engineers stationed permanently to provide technical guidance and ensure thorough quality control for local staff. This enables us to provide high-quality aluminum castings that customers can use with confidence.

Cost Advantage and Current Status of Delivery Management

Procuring aluminum castings in Vietnam offers significant cost benefits for Japanese manufacturers. The primary factor is lower labor costs. The average monthly wage in Vietnam’s manufacturing industry was 4,249,150 VND, approximately 21,000 JPY, in 2020, and is projected to be around 8,500,000 VND, approximately 50,000 JPY, in 2025, Source: Manufacturing Wages,. This is less than half of that in Thailand or Malaysia, and less than half of the hourly wage in China, approximately 3 USD, allowing for significant labor cost reductions, Source: Daiwa Light Alloy Industry Vietnam Co.,Ltd,. This difference in labor costs significantly impacts product costs, especially in labor-intensive processes. Cases of achieving approximately 30% cost reduction compared to domestic production have been reported, contributing to improved corporate profitability, Source: Daiwa Light Alloy Industry Vietnam Co.,Ltd,.

Regarding raw material procurement costs, while Vietnam’s domestic aluminum ingot production capacity is still limited, stable procurement is possible through imports from neighboring countries and collaboration with some local refining companies. Furthermore, Vietnam has signed numerous FTAs and EPAs, which can lead to preferential import tariffs, also contributing to cost advantages. For example, the Japan-Vietnam Economic Partnership Agreement, EPA, and the ASEAN Free Trade Area, AFTA, have eliminated or significantly reduced tariffs on specific items.

Transportation costs and geographical advantages are also strengths of Vietnam. Vietnam is located on major maritime shipping routes, offering excellent access to East Asia, Southeast Asia, and even European and American markets. Major ports such as Ho Chi Minh and Hai Phong function as international logistics hubs, enabling efficient sea transport. Moreover, the sea transport time from major Japanese ports to Vietnam is comparable to, or in some cases shorter than, that to coastal areas of China, contributing to shorter transport lead times.

Regarding delivery management, improvements are being made across Vietnam’s manufacturing industry. The introduction of production management systems, utilization of IT technology, and visualization of the entire supply chain have improved the accuracy of production planning and reduced the risk of delivery delays. Many Japanese companies are introducing Japanese-style production management methods and striving to establish a supply system close to Just-In-Time, JIT, production through training local staff. However, challenges such as underdeveloped infrastructure and complex customs procedures still exist. For these challenges, collaboration with reliable local partners and logistics specialists can be effective solutions.

Daiwa Aluminum Vietnam leverages its years of experience and local network to establish stable raw material procurement and an efficient production management system. This enables us to achieve both cost competitiveness and stable supply, meeting the diverse needs of our customers. Furthermore, by establishing an integrated production system from mold design to casting, machining, and inspection, we ensure shorter production lead times and strict adherence to delivery schedules.

Value Provided by Daiwa Aluminum Vietnam

Daiwa Aluminum Vietnam offers optimal solutions to various challenges faced by Japanese manufacturers in procuring aluminum castings in Vietnam.

1. High-quality aluminum castings backed by years of experience and technical expertise: Daiwa Aluminum Vietnam has introduced advanced Japanese casting technology and know-how, cultivated over many years, to its production base in Vietnam. Experienced Japanese engineers are permanently stationed to ensure thorough quality control, providing high-quality aluminum castings that comply with Japanese quality standards. We have extensive experience in fields requiring high reliability, such as automotive parts and electronic device components.

2. Shorter delivery times and quality assurance through an integrated production system: Our company has established an integrated production system from mold design to casting, machining, surface treatment, inspection, and shipping. This ensures smooth coordination between each process, achieving shorter production lead times and adherence to delivery schedules. Furthermore, by managing all processes in-house, thorough quality control is possible, and product traceability is secured. Customers can simplify their procurement process by avoiding the hassle of negotiating with multiple suppliers.

3. Strict quality control and inspection system based on Japanese quality standards: To ensure that customers can use our products with confidence, Daiwa Aluminum Vietnam has implemented an inspection system based on strict Japanese quality standards. We are equipped with the latest facilities such as 3D measuring machines, X-ray inspection equipment, tensile testing machines, and hardness testers to thoroughly check product dimensional accuracy, internal defects, and mechanical properties. We are also actively working to acquire international certifications such as ISO 9001 and IATF 16949, reliably guaranteeing the quality level required by our customers.

4. Balancing cost competitiveness and stable supply: While maximizing Vietnam’s cost advantages, Daiwa Aluminum Vietnam provides cost-competitive products without sacrificing quality. Through efficient production processes and the utilization of local procurement networks, we contribute to our customers’ cost reduction. Furthermore, with a multi-site production system and risk management plans, we strive to maintain a stable supply even in the event of unforeseen circumstances.

5. Proposal capabilities and flexible response to solve customer challenges: We focus on deeply understanding our customers’ specific needs and challenges and proposing optimal solutions. We collaborate from the product design stage, supporting the development of optimal aluminum castings from various aspects such as weight reduction, cost reduction, and functional improvement. We can also respond flexibly to customer requests, from prototyping to mass production.

Daiwa Aluminum Vietnam is committed to continuously providing high-quality and cost-competitive aluminum castings as a reliable partner in the global supply chain strategies of Japanese manufacturers.

Conclusion

Vietnam’s aluminum casting industry is a market expected to continue high growth, backed by robust economic growth, proactive government support, and an abundant labor force. Demand from the automotive and motorcycle industries, as well as the electronics and electrical products industries, is expanding, establishing Vietnam’s position as an attractive overseas procurement destination for Japanese manufacturers.

In terms of quality, the acquisition of international certifications, technology transfer, and equipment modernization are progressing, enabling the supply of products compliant with Japanese quality standards. While challenges such as the development of skilled human resources and the optimization of the entire supply chain still exist, these can be overcome through collaboration with reliable local partners. In terms of cost, the advantage of labor costs, tariff benefits from FTAs, and geographical advantages are major attractions, holding the potential to achieve significant cost reductions compared to domestic production.

Daiwa Aluminum Vietnam combines years of experience with Japanese technological expertise to establish an integrated production system from mold design to casting, machining, and inspection. This enables us to stably supply high-quality aluminum castings that meet customer requirements at a cost-competitive price. Our strict quality control system and flexible response capabilities provide tangible value in our customers’ global supply chain strategies.

We hope that Japanese manufacturing executives and procurement managers will take this opportunity to focus on the potential of Vietnam’s aluminum casting industry and consider collaborating with Daiwa Aluminum Vietnam. We are committed to providing optimal solutions to contribute to the success of your business.