[Report] A Model of 'Korea-Vietnam' Cooperation... Visiting Vietnam's 4th Largest Conglomerate 'Taco' Car Factory

Establishment of 'Tacogia' Factory in 2003... Kia Motors Exports to Various Southeast Asian Regions
Collaboration with Renowned Overseas Automakers like Peugeot, Mazda, and Mercedes-Benz
Equipped with Port Facilities Handling 4 Million Tons Annually

The site of the 'Tacogia' factory within the Chu Lai industrial complex in Quang Nam Province, central Vietnam. (Photo by Taco)

[Asia Economy Reporter Choi Dong-hyun] On the 9th (local time), we arrived at the Taco Auto Chu Lai Industrial Complex after traveling about an hour south along the coastal road by car in Hoi An, Vietnam. This site is an automobile production base developed on a scale of 1.2 million square meters with an investment of 550 million dollars (approximately 710 billion KRW) by Truong Hai Auto Corporation (THACO), the largest automobile company in Vietnam. Upon entering the complex, a large cactus-shaped sculpture about the height of a 10-story apartment building immediately caught the eye. Doan Dat Ning, Vice Chairman of Taco Chu Lai, whom we met here, introduced, "Originally, this area was one of the most inhospitable places to live in Quang Nam Province, Vietnam," adding, "The cactus was erected as a symbol because the factory was built and developed in such a desert-like place."

This visit to the Taco factory was organized as a side event of the 'Baekdu Forum' held in Da Nang, Vietnam, by the Korea Federation of SMEs to commemorate the 30th anniversary of diplomatic relations between Korea and Vietnam this year. The forum's theme was 'Global Supply Chain Crisis and Korea-Vietnam Cooperation Tasks,' aiming to learn know-how by visiting companies that have successfully established cooperation with Korean companies in Vietnam. About 40 members of the Korea Federation of SMEs' board and regional chairpersons attended the site. Kim Deok-ryong, head of the ASEAN office of the Korea Federation of SMEs, who has been supporting the overseas expansion of Korean SMEs in Vietnam since 2019, said, "Compared to any manufacturing plant I have visited in Vietnam, the production line here is well-organized, and the atmosphere and conditions between factories are the best," adding, "The cooperative relationship is excellent as they actively respond to many of our requests."

Taco, ranked 4th among private enterprises in Vietnam, has maintained a cooperative relationship with Kia since 2001 by producing Kia's light trucks in Bien Hoa City, Dong Nai Province, southern Vietnam. In 2003, they built the 'Taco Kia' factory in the Chu Lai Industrial Complex, assembling Kia vehicles through an Original Equipment Manufacturer (OEM) method and exporting them to various parts of Southeast Asia. It serves as a forward base for Kia's Southeast Asian market penetration. The Taco Kia factory covers an area of 130,000 square meters, employs 910 workers, and has the capacity to produce 50,000 vehicles annually. It manufactures most of Kia's main models, including the Morning, Soluto, K3, K5, Carnival, and Sportage. In the first half of this year alone, 34,458 Kia vehicles were sold from Taco Kia.

A scene of car production at a factory within the Chu Lai industrial complex in Quang Nam Province, central Vietnam. (Photo by Tako)

At Taco Kia, Kia's manufacturing and equipment know-how combined with Vietnam's abundant labor force to produce cars continuously. Heo Seok-jin, an advisor who accumulated 40 years of experience at Hyundai Motor Company from the Pony 2 to the Equus and came here in 2016, explained, "Unlike Korea, where there are almost no first-tier vendors, most parts except for some like engines are produced in-house," adding, "Although a smart factory at the level of advanced countries has not yet been established, this is possible thanks to the competitive labor force compared to other countries." The average monthly wage of Vietnamese workers is about 300 dollars, half that of China (600 dollars).

Within the complex, besides the Kia factory, there are factories established in joint ventures with famous foreign automobile manufacturers such as Peugeot, Mazda, and Mercedes-Benz. These were established through joint ventures between Taco and each company, with over 1 trillion KRW invested in each factory. There is also a factory for producing Taco's own brand vehicles, mainly trucks and buses. The site is so vast that it took about an hour to tour the factories by cart rather than on foot. There were differences in manufacturing equipment among the factories, but most workers were young people in their 20s and 30s. The average age in Vietnam is 32.5 years.

'Chu Lai Port' located near the Chu Lai Industrial Complex in Quang Nam Province, Central Vietnam. (Photo by Tako)

Doan Dat Ning, Vice Chairman of Taco Chu Lai, and Kwon Hyuk-hong, Senior Vice Chairman of the Korea Federation of SMEs (center), are shaking hands and taking a commemorative photo on the 9th (local time) at the office building within the Chu Lai industrial complex in Quang Nam Province, central Vietnam.

After boarding a car in the industrial complex and moving about five minutes to the coast, we arrived at a large port where large container boxes were stacked layer upon layer. This is the 'Chu Lai Port,' operated by Taco, with an annual capacity of 4 million tons. Taco exports cars and various equipment and parts to China, Laos, Cambodia, and other regions through this port. The wharf is 471 meters long and can accommodate three 30,000-ton ships simultaneously. The Vietnamese government plans to develop this port into one of the 15 first-class national ports by 2030. A Taco official explained, "Vietnamese Prime Minister Pham Minh Chinh visited here last March and evaluated that Chu Lai Port could become an important transshipment port for the Central Highlands and Laos," adding, "We are currently investing and developing to accommodate 50,000-ton ships."

Taco plans to seek cooperative relationships through close communication with Korean SMEs in the future. Doan Dat Ning, Vice Chairman of Taco Chu Lai, said, "I am pleased to be able to introduce Taco to Korea through this factory visit," adding, "I hope it will be an opportunity to cooperate with small and medium-sized entrepreneurs in the future."

Da Nang (Vietnam) = Reporter Choi Dong-hyun (nell@asiae.co.kr)