DDK Group expands its Vietnam operation with new factories

As with all other Asian bicycle parts manufacturers, saddle maker DDK Group has also reported overwhelming demand for their products. DDK’s existing Vietnam factory in Thủ Dầu Một has a production capacity of 10 million saddles annually, while the company reports that their regular customers have forecast 15 million units for next year.

DDK’s other factories in Nantong in China and Changhwa in Taiwan are similarly overwhelmed by demand. However, the company had already anticipated an increase in demand in 2019. “We expect to double our output to 20 million saddles in five years from now,” Joy Sung, DDK’s global marketing director, said in 2019. It all came much earlier than expected.

Reopening former factories and building new one

DDK, therefore, decided to increase its production capacity through two new factories, both in Vietnam. DDK first re-purchased their original factory in Bình Dương Province, Vietnam, just north of the capital Ho Chi Minh City. “While the total production capacity of this factory is only 3 million units annually, it has the advantage of having many local people who previously worked there and are craftsmen with skills to hand-cover saddles,” the company writes in a statement. “It will allow us to begin delivering saddles from this former factory in August 2021. This will relieve some of the pressure on our main Vietnam factory.”

Related: How to setup a foreign invested company in Vietnam 

DDK is meanwhile building a new factory modelled on DDK’s main factory, called DDK VN2, in the Minh Hung Industrial Park. This factory, which is 82,549 square meters with a capacity of 15 million saddles, will have an initial capacity of 6 million saddles. Production will begin in August 2022.

“In addition to new demand, the situation is further complicated by the need for skilled workers. Hand-covering saddles requires craftsmanship that’s not easily scalable,” the company reports. “Although we have already hired an additional 400 local workers for our main Vietnam factory, it will take several months before these workers are up to speed.”

DDK expects that these investments will resolve the lead-time constraints by the end of 2022, according to a report by Jan-Willem van Schaik on bike-eu.com.

Foreign investors have poured 15.27 billion USD of investment in Vietnam so far this year, equivalent to 97.4 percent of the amount recorded in the same period last year,  Vietnam’s Ministry of Planning and Investment reported.

Among the 18 sectors attracting FDI, manufacturing-processing lured the highest amount at 6.98 billion USD, accounting for 45.7 percent of the total investment, followed by power production and distribution with 5.34 billion USD, making up nearly 35 percent of the total investment.

Singapore leads the 80 countries and territories investing in Vietnam with investment of 5.64 billion USD, followed by Japan with 2.44 billion USD, and the Republic of Korea with 2.05 billion USD.