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Lee Jae-Seung, president of Pyeong Hwa Automotive, told VIR’s Kim Oanh about his expectations for the firm’s first plant in Vietnam as well as his thoughts about the supporting industry for the domestic auto sector.
Establishing a plant in Vietnam is part of the plan to expand the operations of Pyeong Hwa Automotive (PHA) to the global market. What is your Vietnam-based plant and how does it compare to PHA’s operating facilities in the world?
Our Vietnam-based plant will cover an area of 7 hectares, with investment capital of $16.7 million. Upon commencing operation in September 2019, it will supply 7.5 million products to the market per year, generating nearly 300 jobs for local labourers. We intend to develop Vietnam’s plant as our largest production base worldwide. PHA has already started planning a second project and has invited other investors in its supply chain to join and invest in Vietnam. Regarding product sales, PHA will begin by focusing on exporting products to overseas markets.
Why have you decided to set up in Vietnam, especially in Deep C II Industrial Zone (IZ) in Haiphong’s Dinh Vu-Cat Hai Economic Zone?
Before deciding to invest in Vietnam, we spent one year conducting market surveys in numerous countries, including seven countries in the Southeast Asia region like Indonesia, Malaysia, Thailand, and Vietnam, among others. As a result, we found that Vietnam is the most suitable destination for PHA’s operation expansion plan. Regarding Haiphong, the location of the plant, we selected Deep C II IZ due to its optimised business environment, reliable utilities system, and supporting services.
Our primary target is to build the automotive parts distribution system for the Southeast Asian market’s automotive industry. Vietnam and Deep C have the necessary infrastructure and incentives to facilitate this goal.
Many have claimed that Vietnam’s supporting industries, particularly those supplying the car makers, are still underdeveloped compared to regional neighbours such as China and Thailand. Does PHA plan to co-operate with local vendors at its first plant?
The automobile parts manufacturing industry is considered one of the most difficult industries in the world, because human life depends on automotive safety. Thus, we have to issue strict standards to select sub-vendors. Because of this, PHA will at first co-operate with South Korean automotive parts vendors who have been working with us for a long time. PHA will bring along several companies in its supply chain to launch their businesses in Vietnam, but we also welcome local providers, as long as they meet our very strict quality requirements. Further integration of domestic input will enhance our value and the competitiveness of products made in Vietnam.