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Viet Nam
Industrial Park Situation
Text by Saito Hiroshi
The 12th: The equipment and facilities available for rental
For businesses, evaluating initial costs during expansion into Vietnam remains pivotal. Recently, there has been a rise in companies specializing in renting factories and equipment within the country. Renting offers advantages such as lower initial costs, reduced maintenance time and effort, and facilitates market expansion into Vietnam. This article will delve into the types of equipment available for rent and provide an overview of the equipment rental landscape in Vietnam.
1. Types of equipment/equipment available for rent
2. Reach trucks: These large pieces of equipment come with significant maintenance costs and require careful management. Renting them is often more convenient for businesses than purchasing. Apart from various types of forklifts, elevated work platforms can also be rented for tasks that require working at heights.
3. Generators: In Vietnam, the demand for generators has surged in recent years due to the country’s domestic electricity shortages. Annual scheduled power cuts in May and June in northern Vietnam have resulted in estimated losses exceeding 32.2 trillion VND (approximately 1,950 billion yen), equivalent to around 0.3% of Vietnam’s GDP. To meet the electricity needs in the northern region, there are instances where generators are rented from the southern region and overseas.
Apart from the mentioned equipment, it’s also feasible to rent pickup trucks for transportation, cooling units for air conditioning, and various other machinery. Numerous rental companies provide a wide array of equipment types, ranging from those offering diverse selections to specialized providers focusing on specific types of equipment. Therefore, conducting verification before renting is essential. However, compared to Japan, the diversity of equipment types available is notably lower.
2. About rental costs
Given the diversity of equipment and facilities available, renting often proves cost-effective compared to purchasing full equipment. When buying, you avoid rental fees but face high initial costs along with ongoing expenses for maintenance and repairs, resulting in substantially higher overall expenses. Conversely, renting entails annual rental fees but lower initial costs than purchasing equipment. Moreover, certain rental companies offer maintenance services, potentially reducing costs further. Particularly for equipment used infrequently, renting frequently emerges as a financially prudent option.
Small and medium-sized enterprises (SMEs) often begin by renting equipment to gain experience, and once their business operations stabilize, they consider purchasing equipment. Additionally, they may rent equipment for a few days to inspect and maintain their purchased equipment. Evaluating whether the total cost will be lower through purchasing or renting is crucial from both a medium-term and long-term perspective.
3. The situation of equipment rental in recent years
As mentioned earlier, with a wide range of equipment and facilities available for rent, small and medium-sized enterprises find it easier to manage initial costs, leading to an increase in their entry into the Vietnamese market. However, cultural differences can sometimes lead to issues related to equipment rental. Here are two common troubleshooting points.
1. Differences in perception regarding regular maintenance
2. Lack of communication from responsible personnel
In a scenario involving an equipment rental company, they notified an employee about a maintenance schedule. However, this employee failed to relay that information to colleagues, resulting in the maintenance being delayed and causing adverse effects for the company. In Vietnam, there’s a prevalent issue of insufficient information sharing among employees. Therefore, it’s crucial to educate employees about the importance of communication and efficient information exchange practices.
3. Lack of machinery maintenance planning
There are numerous instances where rental equipment has not undergone thorough maintenance. After delivery, there have been multiple complaints of issues such as machines overheating during operation. Furthermore, despite the equipment’s outward appearance appearing new, the engines or motors often turn out to be of subpar quality from China. This underscores the need to focus on both the external and internal aspects of equipment inspection and maintenance.
Few companies possess the capability to conduct maintenance on their own equipment; the majority focus solely on initial costs when making purchases, overlooking maintenance, component replacement, and repair expenses. Hence, it is prudent to initially weigh the options between renting and buying to opt for a cost-effective solution for the future. Additionally, awareness regarding equipment inspection and maintenance remains relatively low in Vietnam. Therefore, there is a critical need to align perspectives on equipment and facility management.
齊藤公(Hiroshi Saito)
Business Advisor
G.A. Consultants Vietnam Co., Ltd
After graduating from university, he joined a PHP research institute and served as the head of the New York office. He then worked on the “Nagoya Port Redevelopment Project” at a subsidiary of the Chubu Nippon Broadcasting (CBC) company. He later shifted his base to Asia, where he was involved in the launch of “FM96.3” in Singapore, and the creation of “Hello Vietnam” and “Invest Asia” magazines in Vietnam. He then joined BW Industrial Development JSC, Vietnam’s largest rental factory development company, where he was responsible for attracting Japanese manufacturing companies. Currently, he is active as a consultant for the entry of Japanese companies at “G.A. Consultants”, one of the longest-standing Japanese HR consulting firms in Vietnam.
