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VIETNAM ACADEMY OF SOCIAL SCIENCE GRADUATE ACADEMY OF SOCIAL SCIENCES TRAN THI QUYNH TRANG Thailand's participation in the global automotive production networks and policy implications for Vietnam Major: International Economics Major code: 9.31.01.06 SUMMARY DOCTORAL DISSERTATION IN ECONOMICS HA NOI - 2022 The thesis is completed at: GRADUATE ACADEMY OF SOCIAL SCIENCES SCIENTIFIC ADVISOR: Assoc Prof Dr Nguyen Thi Hong Nhung Assoc Prof Dr Nguyen Duy Loi Reviewer 1: Assoc Prof Dr Le Xuan Ba Reviewer 2: Assoc Prof Dr Ha Van Hoi Reviewer 3: Assoc Prof Dr Pham Quy Long The thesis will be defended before the Academy-level Thesis Judging Committee meeting at ….hour…minute, date…month A thesis can be found at the library: Vietnam National Library Library of the Academy of Social Sciences OPENING The urgency of the subject Decision No 1168/QD-TTg on “Approving the development strategy of Vietnam's automotive industry to 2025, with a vision to 2035” states that “… focusing on linking and cooperating with manufacturing corporations major automotive in the world to develop the automotive industry ; improve competitiveness to become a supplier of components and spare parts in the world automotive industry production chain; creating a driving force to promote the economic restructuring of the whole country towards modernity” The document of the 13th National Congress of Delegates emphasized that "Vietnam needs to give priority to the development of several spearhead industries, new technologies, high-tech industries, and supporting industries such as electronics and telecommunications, communication, automotive industry…” The current global economy is restructuring in the direction of increasing integration links in the form of value chains and production networks Today, there is not a country that does not participate in the global production networks that can develop the automotive industry Therefore, it can be said that participation in the global production networks is an opportunity and a means to develop the automotive industry How Thailand has become more and more active in the global automotive production networks, thereby developing its automotive industry, and what Vietnam can learn from Thailand's practical experience is the issue chosen by the PhD student for research Research objectives and tasks The objective of the thesis research: is to study the participation of Thailand in the global automotive production networks to draw lessons to help Vietnam participate effectively in the global automotive production networks to develop its automotive industry To achieve that goal, the thesis sets out the following research tasks: - Systematize the theoretical basis for participation in the global automotive production networks to build an analytical framework - Applying an analytical framework to analyze the reality of participating in the global automotive production networks of Thailand - Summarizing Thailand's experience and drawing implications for Vietnam about participation in the global production networks to develop the automotive industry Object and scope of research 3.1 Research subjects Theoretical and practical issues of participating in the global automotive production networks 3.2 Research scope: - Scope of content: The thesis only focuses on typical successes and failures in Thailand's participation in the global automotive production networks and the current situation of Vietnam's automotive industry - Spatial scope: The thesis focuses on researching the participation in the global automotive production networks of Thailand and Vietnam because Vietnam and Thailand are two countries in Southeast Asia with the same starting point and strengths The policy tools that Thailand applied in the early stages were similar to those of some countries in the region But the application of a market adaptation policy that allows direct investment has helped to win the trust of foreign car manufacturers, especially Japan, thereby creating a solid foundation for the formation of foreign cars a regional and global automotive manufacturing hub - Scope of time: The thesis only focuses on studying the subjects participating in the global automotive production networks in Thailand since the 1960s, especially from 1990 to now and Vietnam from 2004 up to now, when the two countries started to develop the automotive industry - Research subject: Government, ministries and sectors, automotive manufacturing enterprises, especially those directly involved in the global automotive production networks, the Government's mechanisms and policies Research approach and methods The thesis uses an interdisciplinary approach to international economics, a historical and systematic approach From the perspective of a person looking for useful practical experience in Vietnam, the thesis studies Thailand with the specific contexts and characteristics of the country when participating in global automotive production networks The global production networks are a relatively new field of study in international economics, but the theories of the global production networks and their participation in the global production networks have been actively studied in recent times That is the tool for the thesis to analyze the case of Thailand’s automotive industry Also from the perspective of those who seek practical experience to suggest to Vietnam, it will be more useful to learn about policies, especially when Vietnam is pursuing a state model of development Institutional approach: The thesis approaches the mechanisms, policies, strategies, and master plans of the automotive industry of the Government and related ministries and agencies 4.2 Research Methods - Secondary data collection method - Methods of analyzing and synthesizing documents - Descriptive and comparative statistical methods - Method of getting an expert opinion Contribution and significance of the thesis 5.1 About the research approach Although there have been many studies on the global production networks, there are also many studies on the development of the automotive industry, but the research on the development of the automotive industry by participating in the global production networks is one of the ways to approach the global production networks new approach Many processing and manufacturing industries want to develop and cannot help but participate in global production networks such as electronics-ICT, textile-garment, leather- footwear, industries where manufacturing Creation includes many stages and can place each stage in a different location for cost, market, technology, production secret, Approach of the thesis and analysis framework The analysis that the thesis builds after applying to the case of Thailand’s automotive industry will be of value as a reference for the study of other manufacturing and processing industries and in different geographical areas 5.2 About practice Their studies and proposals propose solutions to develop Vietnam’s automotive industry, but there are not many studies on foreign experiences in the development of the automotive industry, especially research on the development of the automotive industry Thailand's automotive industry in the context of globalization under the guidance of transnational companies with production networks is still very lacking This thesis is one of the first studies to suggest how to develop Vietnam's automotive industry by participating in the global automotive production networks Thesis structure In addition to the introduction and conclusion, the thesis consists of four chapters with the following contents: Chapter 1: Research overview of Thailand's participation in the global automotive production networks and policy implications for Vietnam Chapter 2: Some theories about the participation in the global automotive production networks Chapter 3: The practice of participation in the global production networks to develop Thailand's automotive industry Chapter 4: Some solutions to help Vietnam participate in the global automotive production networks in the future * CHAPTER 1: RESEARCH OVERVIEW OF THAILAND'S PARTICIPATION IN THE GLOBAL AUTOMOTIVE PRODUCTION NETWORKS AND POLICY IMPLICATIONS FOR VIETNAM Firstly, domestic studies lack in-depth research topics on the participation of specific industries in the global production networks, especially studies on how to participate in the global production networks global production Most of the works in the country talk a lot about value chains, and how to participate in the value chain, for example, the value chain of the electronics and textile industries Most of the works that discuss the topic of automobiles only stop at researching and assessing the current situation of the automotive industry in the context of industrialization and modernization of the country but have not yet made many recommendations related to reality to promote network participation in global automotive production Secondly, for foreign documents, there are many studies on the automotive manufacturing industry in Thailand, many of which also show the success factors in the development of the automotive manufacturing industry In Thailand, it is thanks to the successful attraction of FDI projects from transnational companies, from Thailand's supporting industry development policies and industrial clusters However, in the case of Thailand, there are very few studies on how Thailand participates in the global automotive production networks From the research gap mentioned above, this thesis chooses the research direction to answer the research question "How has Thailand been and is participating more and more actively in the global production networks, thereby developing an automotive industry, and what can Vietnam learn from Thailand's best practices?" CHAPTER 2: SOME THEORIES ABOUT THE PARTICIPATION IN THE GLOBAL AUTOMOTIVE PRODUCTION NETWORKS 2.1 Global production networks concept The thesis has examined the concepts of the global production networks such as those of the authors: Ernst and Kim (2001), Henderson et al (2002), and Dilts (2006), of the theory of spatial economics, and realized that there are many different concepts of the global production networks due to different approaches In the framework of this thesis, the author uses the concept of global production networks which is a highly developed model of a modern production organization, which consists of a leading company with management, technological and chain capabilities suppliers distributed in many countries The leading company has a dominant role in the network with different governance mechanisms such as setting standards for participating in the supply chain A supplier company can reside in multiple production networks simultaneously 2.2 Types and ways of participation in the global production networks If you want to take advantage of the global production networks to develop a certain industry in the country, you must first participate in the global production networks Even participation in the global production networks is a kind of industry upgrade Global production dispersal plays an important role Therefore, to participate in the global production networks, it is necessary to focus on attracting the product segments of transnational companies Developing countries should pay attention to facilitating the segment of foreign transnational companies to reduce costs A production network consisting of various types of members classified by technological capabilities and skills suggests different avenues to upgrade the business as it participates in the global production networks However, how to develop industry and industrialize the economy, there are the following points to keep in mind: Firstly, enterprises must build their capacity based on domestic demand, taking the developed domestic market as a premise Secondly, businesses need easy access to low-priced intermediate inputs Thirdly, enterprises need to obtain international certificates of production Manufacturer-led manufacturing networks require members to upgrade their production processes and obtain international certifications to meet the network's quality standards and business performance standards Fourthly, businesses need to know to target specialized segments of the value chain of the global production networks This type of value chain specialization will of course require a certain degree of dependence on imported inputs/services Fifthly, businesses need to have support in the domestic market, easy access to intermediate inputs, and improve their technological capacity The development of industry clusters plays an important role If the manufacturing facility is the node of the network, the industry convergence area is the collection of many nodes of a network as well as of many networks concurrently 2.3 The global automotive production networks and their role The global automotive production networks are based on the integration of a variety of technologies, the automotive industry characteristics are based on extensive specialization with various industries and close coordination with each other The global production networks are geographically fragmented but remain centralized, as multinationals expanding their production networks into developing countries mean these multinationals are in the process of segmenting their production stages globally to take advantage of local advantages such as cheap labor and reduce transportation and other production costs Entities participating in the global automotive production networks are closely linked with each other, in the global automotive production networks, including both intra-company linkages and linkages between companies in the network The global automotive production networks consist of many layers, headed by multinational companies The global automotive production networks are affected by a variety of regulatory systems The global automotive production networks have a complex multi- layered, multi-level structure, but basically, the global automotive production networks consist of three main actors: (1) automotive manufacturers; (2) component manufacturers; (3) and auto parts manufacturers 2.4 Contents of participation in the global automotive production networks 2.4.1 The basis for participation in the global automotive production network Firstly, restructuring the production organization of the automotive industry Secondly, the shift of the world auto market to developing and emerging countries Thirdly, regional integration in the automotive industry facilitates participation in the global production networks 2.4.2 Several factors affect the ability to participate in the global automotive production networks Because the automotive industry is an integration of manufacturing industries from spare parts, accessories, and semi-finished products to supply the assembly industry with finished products, which are automobiles, to participate in the network When it comes to global automotive production and gradually upgrading to higher levels, businesses need to pay attention to the following four factors: - Product quality, - Factory price, - Market share and product localization level, - Growth rate and added value 2.4.3 The supplier selection process of car manufacturers Screening profiles First survey Request a quote Request for sample production Second survey Order mass production 2.4.4 Requirements and conditions for countries and businesses to participate in the global automotive production networks To successfully participate in the global production networks, developing countries need to upgrade their auto industries in the following steps: The first step is to establish enterprises to import CBU cars (importing CBU); In the second step, importers begin to transform into assemblers in the form of SKD (semi-knocked down) or CKD (completely knocked down), ie components are imported entirely in clusters or completely; The third step is to switch to IKD (incompletely knocked down) assembly, that is, from a part of imported components The localization rate is expected to increase day by day; In the third stage, the industry shifts to parts production, focusing on lowvalue-added original equipment In the fourth phase, the localization of spare parts production continued but shifted to the production of high-value-added original equipment The final phase focuses on product design and development, to make Thailand the center of the region's automotive industry To participate in the global automobile production network, Thailand also sets out dynamic strategies, which are continuously adjusted to adapt to each stage of the country's development In particular, Thailand has identified one of the important strategies to attract foreign direct investment to develop the automobile industry 3.2.2 FDI attraction The highlight of the strategy to attract FDI into Thailand’s automotive industry is the diversity and flexibility of policies and levels of incentives to attract FDI in Thailand’s automotive industry, especially is to attract investment of multinational companies to invest in industrial parks Thanks to the focused outward economic strategy, FDI inflows from Japan into the automotive industry from 1970 to now have changed markedly 3.2.3 Trade facilitation Thailand has made a series of trade facilitation moves within the framework of the ASEAN Industrial Cooperation Program (AICO) and the ASEAN Free Trade Area (AFTA) After becoming an official member of the World Trade Organization in 2000, Thailand completely abolished regulations on the origin of products and imported auto components, allowing multinational companies to establish 100% foreign-owned enterprises in Thailand In 2002, Thailand signed a bilateral free trade agreement between Thailand and Australia (TAFTA); In 2005, the Thailand-New Zealand free trade agreement (NAFTA) came into effect, and in 2007 the trade agreement with Japan (JTEPA) also came into effect 3.2.4 Developing synchronous infrastructure associated with the new industrial park In the 1980s, the Thai government established industrial zones in the northern region and the eastern provinces Highways and infrastructure were subsequently developed, especially in industrial zones In the East and Central regions, there are large production areas and the provision of necessary support services This model has partly reflected the interests of the global automotive production networks Supporting industry clusters are located in the same or very close proximity to Thai automotive assemblies, thus not only helping assemblers reduce the cost of transporting parts from the factory to the assembly plant, but also making it easier for the government to manage these businesses 3.2.5 Developing supporting industries and developing automotive manufacturing enterprises Thailand is one of the countries with developed supporting industries in ASEAN and consists of four phases: phase (1960-1970) encouraging and protecting the domestic market; phase (1971-1986) associated with industrial rationalization policy through local origin requirements; phase (1987-1999) export promotion policy and partial liberalization; Phase (from 2000 to present) the Thai government applies a diversified policy to promote the development of supporting industries Some successful examples of Thailand's participation in the global automotive network show that, in the early stages of development, the channel for knowledge transfer and technical support from car manufacturers is most important However, the competition and global sourcing strategies of global automakers force them to upgrade their production systems to match the requirements of multinational companies In the development stages, government policies are aimed at developing auto parts and components manufacturing During the second and third phases, the government implemented a policy of rationalization to create linkages between automakers and local companies to avoid importing outdated technology to produce components auto parts and accessories in Thailand In the development stages, government policies are aimed at developing auto parts and components manufacturing During the second and third phases, the government implemented a policy of rationalization to create linkages between automakers and local companies to avoid importing outdated technology to produce components auto parts and accessories in Thailand In 2020, Thailand’s automotive industry structure can be classified into three tiers, including 18 participated-venture vehicle assembly enterprises, about 720 tier-one enterprises, and over 1,100 second-and third-tier enterprises 3.2.6 Improve production capacity Over the past two decades, Thailand has emerged as a vehicle manufacturing destination for regional and global markets The rapid expansion of the automotive industry has spawned a parts supply network that has resulted in the impressive growth of Thai-made auto parts and components 3000,000 2500,000 2000,000 1500,000 1000,000 500,000 ,0 Sản xuất Tiêu thụ nước Xuất Figure 3.1: Thai automotive production, exports, and domestic consumption from 1991 to May 2021 Source: Author's compilation from Federation of Thai Industries (FTI) 3.2.7 Export promotion Previously, Thailand’s automotive industry merely served the domestic market, thanks to the liberalization policy and the strategy of shifting from serving the domestic market to exporting, so 1988 was a milestone when Thailand Exported cars for the first time with engines made on their own country According to the latest statistics from the International Organization of Automotive Manufacturers (OICA), Thai car sales in 2020 reached 1,427,074 ranked 12th in the world, of which 735 thousand vehicles were exported In terms of vehicle export structure, small trucks continue to dominate among export vehicles OEM production accounts for 30-40% of the total value of auto parts in Thailand In fact, in Thailand, car manufacturers are using locally produced parts higher than the required localization rate On average, the localization rate is 80% with conventional cars, especially for pickup trucks, the localization rate reaches 90% The rest must be imported, most of which are imported from the parent company or the manufacturer's supplier The market for spare parts (REM) is about 60-70%, spare parts are distributed through dealer service centers, wholesale and retail suppliers, and auto repair shops Imports of replacement parts are not wide at present, mostly from Japan (35%), China (17.4%), and the US (7.6%) 3.2.8 Promote technology transfer and human resource development Technology transfer from Japanese companies to Thai companies began in the late 1970s In the beginning, participating in ventures with Thai auto parts suppliers was the way to transfer technology Japanese automakers have invested a lot in human resource development Besides transferring technology to Thailand, Japan also chooses Thailand as a training base for human resources for ASEAN's automotive industry The Thai Government has cooperated with the Japanese Government to conduct human resource development programs in the form of public-private partnerships to train human resources for the auto parts manufacturing industry It is thanks to this skilled labor force that foreign auto parts manufacturers have enthusiastically invested in Thailand, and thanks to that, Thai domestic enterprises have the conditions to develop and upgrade 3.2.9 Development of automotive industry clusters Thailand has two automotive clusters, the first is in Bangkok, near Laem Chabang deep-water port, and the second is in the East, near Map Ta Phut port Most import and export components are transported by sea, close to the port is an important advantage These two areas have the largest number of industrial zones Major Japanese automakers invest in these two industry clusters Table 3.1: Convergence of first-class auto parts and components manufacturing companies in Thailand Number Location Component name of companies Bangkok Capital Region (Bangkok and neighboring provinces) Body: 11%; Chassis: 21%; Electrical and Bangkok 147 electronic: 25%; Drivetrain: 22%; Other: 21% Body: 22%; Chassis: 23%; Electrical and Samut Prakan 123 electronic: 19%; Drivetrain: 17%; other: 19% Body: 9%; Chassis: 18%; Electrical and Pathum Thani 45 electronic: 33%; Drivetrain: 20%; Other: 20% Central Body: 29%; Chassis: 24%; Electrical and Ayutthaya 45 electronic: 27%; Drivetrain: 13%; Other: 7% Body: 19%; Chassis: 14%; Electrical and PrachinBuri 21 electronic: 19%; Drivetrain: 33%; Other: 5% Body: 0%; Chassis: 50%; Electrical and Nakhon Nayok electronic: 50%; Drivetrain: 0%; other: 0% East Body: 23%; Chassis: 14%; Electrical and Chachoengsao 43 electronic: 23%; Drivetrain: 26%; Other: 14% Bodywork: 21%; Chassis: 16%; Electrical and Chonburi 142 electronic: 19%; Drivetrain: 30%; Other: 14% Body: 22%; Chassis: 29%; Electrical and Rayong 155 electronic: 10%; Drivetrain: 27%; Other: 12% North East Nakhon Body: 16%; Chassis: 50%; Electrical and Ratchasima electronic: 17%; Drivetrain: 0%; Other: 17% 3.3 Evaluation of participating in the Thai global automotive production networks 3.3.1 Some successes and causes Some successes in Thailand’s participation in the global automotive production networks Thailand's automotive industry has gradually developed and become an important part of the global automotive production networks : To become a tier-one component manufacturer operating a production network supplying assemblers in domestic and foreign markets; To become a secondary and tertiary component manufacturer operating a production network to supply assemblers in the domestic market; Participate in ventures with multinational companies and provide specialized products for the global market; As a supplier to both domestic and international follow-up markets Reasons for the success of Thailand’s automotive industry: Restructuring in the global automotive industry; Favorable policy environment; Size of the domestic market; Universities and research institutes; Private industry associations; Technology Promotion Association; The relationship between car manufacturers and the government 3.3.2 Limitations of Thailand’s automotive industry The automotive industry has been experiencing a constant expansion and one of the key factors for the industry development is the skilled Thai labor in comparison to neighboring countries However, with a prolonged period of automotive industry growth, Thailand will face a more serious problem of labor shortage because the Thai population structure is shifting towards aging Besides, despite investing in product research and development activities, this activity is still not strong Thailand still has not mastered the technology, and still depends on FDI companies Thailand is not ready for an independent automotive industry development strategy because Thailand's R&D activities, although the most focused in the region, are still in their infancy 3.4 Sub-Conclusion Chapter Since the 1990s, the world automotive industry has faced increasingly fierce competition due to the information technology revolution, trade liberalization, and removal of strict regulations on trade and investment Multinational companies have gradually moved to operate under production networks without investing in foreign projects alone That trend gives developing countries the opportunity to participate in the global automotive production networks The success of Thailand’s automotive industry demonstrates that technological prowess is not the key factor Thailand's success in automotive manufacturing has been underpinned by a favorable combination of three factors: (a) structural changes in the global automotive industry that have opened up periphery countries to participate into production lines to produce for global and regional markets; (b) practices, in line with the Thai government's market, that allow the automotive industry to evolve in line with the trends of the global economy; and (c) the scale of the Thai Manufacturer has met the requirements of the domestic auto assembly market (especially minivans) to achieve economies of scale at an early stage of production export expansion In addition, the Thai Government focuses on developing the industry and supporting infrastructure as well as applying synchronous and consistent policies including foreign investment policy, market stimulation policy, regulation regulations on localization rate, policy to encourage technology transfer, develop concentrated industrial clusters and satellite component suppliers, form and nurture large-scale domestic manufacturing enterprises, being able to compete well over the past decade has been the underlying reason for the country's success in its efforts to participate the industry's manufacturing network However, the dynamic growth rate in the automotive industry of ASEAN countries such as Indonesia and Malaysia in recent years has more or less affected Thailand’s automotive industry, because Thailand is gradually losing its competitiveness compared to other countries neighboring countries In addition, Thailand is not ready for an independent automotive industry development strategy because Thailand's R&D activities are the most focused in the region but are still in their infancy Moreover, Thailand still receives technology through participating venture companies, so in the coming time, although developing the automotive industry in the direction of producing electric vehicles, Thailand will still follow the model of participating in the automotive industry global automotive production network * CHAPTER SOME SOLUTIONS TO HELP VIETNAM PARTICIPATE IN THE GLOBAL AUTOMOTIVE PRODUCTION NETWORKS IN THE FUTURE 4.1 - 4.2 The status of Vietnam's participation in the global automotive production networks and its limitations Vietnamese enterprises have initially participated in the global automotive production network, but have only participated in the production of a few types of simple parts with low technology content Basic materials such as fabricated steel, rubber, plastics, and plastics depend on imported raw materials Only a few businesses invest in body and tire stamping lines The system of suppliers of materials and large-scale production of components for automotive assemblers has not yet been established The size of the automotive market is still small; The level of localization of spare parts and components is still low and has not yet achieved the set target; The quality of human resources in the automotive industry in Vietnam is not high; Poor-quality infrastructure system; Regarding standards in the automotive industry, although Vietnam ranks 31st out of 89 countries that have been granted ISO certificates, most of the companies that have achieved ISO certificates are FDI enterprises The selling price of cars is at a high level, the price of Vietnamese cars is currently 1.2 to 1.8 times higher than the price of cars in countries in the region and the world depending on the type Regarding research and development, the participant venture enterprises not carry out any research and development activities for the automotive industry in Vietnam 4.3 Compare the development path of the automotive industry and participate in the global automotive production networks between Vietnam and Thailand 4.3.1 Comparison of strategic options for participation in the global automotive production networks between Thailand and Vietnam Thailand's automotive industry development strategy, overall, the goals are clear, from analyzing the world situation to analyzing the domestic situation, then analyzing strengths and weaknesses of the industry and provide detailed vision, goals, strategies, and action plans The common highlight of the three master plans for Thailand’s automotive industry is the development of a clear analytical framework, promoting the participation of interest groups in the process of developing the master plan Thailand has become the automotive manufacturing hub of the region, positioning the pickup as a "champion product" Vietnam's strategy to participate in the global automotive production networks is reflected in two master plans for the development of Vietnam's automotive industry Unlike Thailand, the automotive industry development strategy goes from the point of view of industry development; industry development goals; oriented development; investment capital, and policy solutions In general, the goals and strategies of Vietnam's automotive industry are not close to the actual situation of enterprises, therefore, most of the set targets cannot be achieved 4.3.2 Comparison of supporting industry development and suppliers for the automotive industry According to incomplete statistics of companies in the automotive industry, at present, Vietnam has 20 automotive assembly companies, but only 84 first-level supporting companies and 1second-and third-tier companies Meanwhile, Thailand also has just over 18 automotive assembling and manufacturing enterprises, but there are 720 first-level supporting enterprises and 1,700 second-and third-tier enterprises With a limited number, it is much more modest in terms of first-, second-and third-tier supporting companies than Thailand, so Vietnam's supporting industry has not yet developed 4.3.3 Comparison of research and development investment for the automotive industry In Vietnam, participating ventures not carry out any research and development activities for the automotive industry In Thailand, in response to the tax incentives and research and development activities of the Thai Government, several foreign car companies have established research and development bases These firms cooperate with the Thai automotive research institute to research and develop for the automotive industry 4.3.4 Comparison of human resource development for the automotive industry In Vietnam, the level of human resources and human resources in the automotive industry in Vietnam is not of high quality In addition, human resource training facilities in the automotive industry still have many shortcomings Automotive engineer training at universities is not linked to reality, old curricula and many teachers not update new technological changes in the automotive industry Thailand, aware of Thailand's limitation on human resources when developing the automotive industry, the Thai Government has cooperated with the Japanese Government to conduct human resource development programs in the form of cooperation to train human resources for the auto parts manufacturing industry 4.4 Prospects of participation in Vietnam's global automotive production networks 4.4.1 Background a) World context It can be affirmed that the world trend of consumers about cars has changed in the direction of increasingly preferring electric cars, vehicles with many "technologies" (i.e cars capable of helping car users connect and connect with others) control based on information technology) has opened up new development trends in the automotive industry, creating opportunities for established automakers as well as startups to launch new car lines Following such a trend, developing countries also have the opportunity to develop their nascent automotive industry towards participating in the global automotive production networks The successful pursuit and upgrading of the Asian "tiger" industry and China led to the theoretical revision of the flying tern model Recently, economists have begun talking about “compact industrialization”, whereby latecomers can successfully upgrade a certain industry by developing in a way that focuses on one particular industry segments where it has the upper hand and takes advantage of global production networks s and international supply chains While American auto startups go in different directions, from electric cars, selfdriving cars, high-performance cars, sports cars, and luxury cars, to cars with small production volumes and using source code open in design, China's auto startups are almost exclusively going in the direction of producing electric vehicles or petrol- electric hybrid vehicles b) Domestic context Vietnam has been entering the stage of socio-economic development strategy 2021-2025 with a vision for 2035, in which priority is given to the development of the automotive industry At the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26), Prime Minister Pham Minh Chinh officially announced Vietnam's commitment to achieving net-zero emissions by 2050 Therefore, over the years, car manufacturers have constantly innovated technology and introduced fuel-efficient, emission-reducing, and environmentallyfriendly vehicles On January 5, 2022, Vietnamese electric car company - VinFast announced a new development strategy and a complete range of electric vehicle products, covering all segments Accordingly, VinFast will take a new step forward by stopping the production of gasoline cars from the end of 2022, focusing entirely on research, development, and production of pure electric vehicles This is a turning point, making VinFast one of the first petrol car companies in the world to switch to pure electric completely, affirming its pioneering mark and strongly promoting the global electric vehicle revolution 4.4.2 Opportunities to develop Vietnam's automotive industry shortly Although the size of Vietnam's automotive market is still small at present, in the coming time, thanks to the very rapid development and upgrading of transport infrastructure, golden population structure, income growth rate, etc Per capita, boldness in participating in bilateral and regional free trade agreements, Vietnam will be able to become an attractive destination for investors in the automotive and auto parts sectors Therefore, Vietnam will strongly participate in the global production networks to develop the automotive industry shortly 4.5 Some policy implications for Vietnam From Thailand's experience, to enhance the value created in the country and deeply participate in the global production networks, in the coming period, Vietnam needs to focus on the following groups of solutions: Planning and implementing well the strategy to participate in the global production networks Creating a car market Maintain and promote domestic assembly production Effectively attract FDI About supporting industry development and suppliers About investment in research and development for the automotive industry Developing human resources for the automotive industry Promote the formation of automotive industry clusters 4.6 Sub-conclusion of chapter In general, until 2021, after more than three decades of building, developing, and participating in the global automotive production networks, it can be said that the Vietnamese automotive industry has failed because of the low localization rate, low output, small production scale, higher car selling price than other countries in the region Therefore, although certain successes have been achieved, it still failed to achieve the set target as expected and development potential of Vietnam The reason for the failure of the Vietnamese automotive industry is not because of the lack of support from the government, or the lack of cooperation from auto assemblers, but a combination of many factors One of the factors is that the development history of the automotive industry is shorter than that of other countries in the region While Thailand assembles and exports cars and components to other countries, Vietnam has just begun to struggle to build and develop the automotive industry industry development In addition, the small market size leads to large depreciation costs, therefore high ex-factory costs make it difficult for the automotive industry to participate in the global automotive production networks CONCLUDE This thesis answers the research question " How Thailand has been participating more and more actively in the global production networks, thereby developing its automotive industry and Vietnam can learn from it." from the practical experience of Thailand" International theory and experience show that a country that wants to exploit the benefits of participation in the global production networks to develop (upgrade) industry needs to implement measures to reduce production costs and affiliate costs to invite the core multinationals of global production networks s to locate their production segments in their home countries At the same time, the country needs to improve the overall capacity of the country as well as the capacity of enterprises related to the industry that wants to upgrade so that global production networks s develop links with domestic enterprises Specific measures have been outlined in Chapter The practice of developing Thailand's automotive industry clearly illustrates the approach to upgrading the automotive industry by participating in the global automotive production networks Thailand today is not only an automotive manufacturing hub of the region but also of the world as it exports cars and auto parts globally From the original place where only cars were assembled, up to now, about 80 to 90% of auto parts assembled in Thailand are also produced in Thailand, including details with added value and high technology content Not only producing genuine components (OEM), Thailand is also emerging as a center for the production of third-party components and spare parts (aftermarket) Thailand's automotive manufacturing industry today creates jobs for 520,000 Thai workers Prominent policies for Thailand to participate in global automotive production networks s and upgrade the automotive industry that Vietnam should refer to include: having a clear and active long-term upgrading strategy attracting FDI, especially FDI from foreign automotive enterprises and auto supporting industries, facilitating trade, promoting the export of automobiles and auto components, paying attention to the development of infrastructure including industrial parks, have policies to develop automotive supporting industries, develop clusters of the automotive industry to exploit the benefits of industry convergence to improve competitiveness and innovation and logistics, fostering and improving the production capacity of automobile-motorcycle enterprises, promoting technology transfer from multinational companies, developing human resources in the automotive industry, standardizing, etc Studying how Thailand develops the automotive industry by participating in n global automotive production networks s is a new approach to which this thesis contributes This approach gives a more complete picture of how Thailand has successfully developed its automotive industry And therefore, based on the practical experience in Thailand, this thesis can provide implications for an asynchronous policy system for the development of Vietnam's automotive industry LIST OF WORKS OF THE AUTHOR Tran Thi Quynh Trang (2017), Global automotive production networks: Comparing the case of Thailand and Vietnam, Review of World Economic and Political Issues, No 12(260), pp 53-61 Tran Thi Quynh Trang (2018), Vietnam’s participation in the global automotive production network, Review of World Economic and Political Issues, No 7(267), pp.60-73 ... foreign-owned enterprises in Thailand In 2002, Thailand signed a bilateral free trade agreement between Thailand and Australia (TAFTA); In 2005, the Thailand-New Zealand free trade agreement (NAFTA) came... transnational companies, from Thailand's supporting industry development policies and industrial clusters However, in the case of Thailand, there are very few studies on how Thailand participates in the... PRODUCTION NETWORKS TO DEVELOP THE THAILAND’S AUTOMOTIVE INDUSTRY 3.1 Thailand's automotive industry development process and results The automotive industry in Thailand has gone through the following