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Economic Sector

Last updated: Friday, October 19, 2018

 

Technology Spurs Business Development

Posted: Monday, December 25, 2017


A recent survey shows that 85 per cent of businesses are interested in the Fourth Industrial Revolution but more than 70 per cent do not know what to do to readily respond to the current context. They admit that not only their competences but also their current awareness and expertise will hardly follow it, let alone catch up the technology development trend.

A big chance
The technological foundation of the Fourth Industrial Revolution brings in numerous opportunities for SMEs to join in global value chains by means of collaborating with multinational corporations. Start-up entrepreneurs will be able to quickly apply IT infrastructure with groundbreaking, innovative ideas and penetrate into niche markets with many technological products and services.

Dr Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), said, at present, not many businesses and people study and understand values and impacts of digital technology or the Fourth Industrial Revolution although these achievements are clearly seen in daily activities.

When e-commerce further grows, people can go shopping from without having to go out. A company may not need a store or hire employees. Many production activities are included into automation process and are operated by robots. This trend is also boosted by the development of electronic payment services and freight forwarding services. It is impossible to say which technological achievements make impossible possible and break every limit of imagination and creativity of man.

In the Fourth Industrial Revolution, Vietnam has the advantage of telecommunications infrastructure, information technology development, and high smartphone and internet growth in the world. Ministries, branches and localities also focus on developing and implementing information technology application plans. A majority of public services have been now made online, accounting for 88 per cent, of which more than 10 per cent are classified Level 3 and Level 4. Information technology infrastructure, human resources and applications facilitate businesses to invest in scientific and technological development and run new technology development and innovation funds. To date, Vietnam has been basically covered 4G service with more than 4,000 broadcast stations and more than 95 per cent of its population are accessible to the network. It has about 52 million internet users, accounting for 54 per cent of the population, ranked fifth in Asia-Pacific and about 55 per cent of the population using smartphones. This is a very good platform for cooperation to start up a business and grow a business.

Information technology is becoming a fast-growing, sustainable and high-revenue industry, a big export earner and a significant contributor to Vietnam's GDP.
According to statistics in 2016, Vietnam had about 24,500 companies engaged in this field. Information technology revenue grossed US$66.7 billion in 2016, up 11.5 per cent over 2015, of which the hardware industry generated US$58.9 billion, the software industry had US$3 billion and the rest was contributed by digital content and information technology services. Information technology export value was over US$60 billion.

Prime Minister Nguyen Xuan Phuc affirmed that, in the context of accelerated industrialisation, modernisation and international integration, the Government of Vietnam pays special attention to developing mechanisms and policies for information technology development, renovating and applying advanced technologies, and embracing opportunities from the Fourth Industrial Revolution. The Government issued Directive 16 with many important solutions for IT infrastructure development; gave priority to developing digital technology industry, smart agriculture, smart tourism, and smart urbanisation; promoted innovative start-up ecosystems; improved education and training reform, and human resources training to master new production technology trends.

Especially, the Vietnamese business community always strives to renovate, apply technology and gradually join global value chains. The number of innovative companies nearly doubled, from 1,800 in 2016 to over 3,000 in 2017. Together with about 40 international venture capital funds operating in Vietnam, big business groups, big banks and investors actively take part in mobilising and using financial resources for start-ups and innovations. Some Vietnamese companies have been very successful in information technology, software and digital technology, for example, FPT and DTT. In 2017, Viettel Corporation was ranked second in ASEAN and Top 50 telecom brand in the world with a brand value of US$2.68 billion.

Proper shift in need
Vietnam's information technology still relied on some popular advantages such as abundant low-cost labour force. With the rapid-changing digital revolution or the Fourth Industrial Revolution, the information technology industry must properly change to develop.

According to many experts, current challenges to Vietnamese companies are most factories use low-level production lines, average information technology application, unformed ecosystem connectivity, and particularly the hesitance in investing in information technology on fears of investment underperformance in SMEs.

SMEs, which account for 97 per cent of the Vietnamese business community, essentially digitise and improve their capabilities. An SME has fewer than 100 employees.

Mr Phi Anh Tuan, Vice Chairman of Ho Chi Minh City Computer Association (HCA), said, we need to take six steps to digitise successfully: Figuring out strategy in the Fourth Industrial Revolution, developing first pilot projects, defining necessary competences, digitising data, transforming into a digitised company, and getting connected to the sector ecosystem.

After analysing challenges and opportunities for the business, he introduced the draft roadmap for Vietnamese SMEs: Applying information technology as the starting point of the Fourth Industrial Revolution; applying automation and internet of things (IoT), joining hands to build business networking system, and heading for automation and robot use in the production lines

However, to help SMEs to embrace every opportunity, the Government of Vietnam must create a favourable environment for business development by enhancing transparency of policies, abolishing bureaucracy and minimising procedural costs. Policy transparency not only helps local firms to focus their financial resources and time on production but also helps attract foreign investors who create business opportunities and connect Vietnamese SMEs into global value chains.

In addition, the Fourth Industrial Revolution requires Vietnam to gradually reform education to provide sufficient workable knowledge and skills for students before entering the labour force.

For their part, SMEs need to have farther visions and strategies and define global market targets instead of focusing on the domestic market only.

If they know how to grasp opportunities of the Fourth Industrial Revolution, SMEs and start-ups of Vietnam can completely overcome technological and financial hardships and seek out customers to penetrate into global value chains.

Quynh Chi








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