Vietnamese enterprises in the face of 4th industrial revolution

Tuesday, 2017-05-16 15:50:50
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NDO - The government has indicated that it will take a leading role so that Vietnam will not miss opportunities brought about by the 4th industrial revolution. But can Vietnamese enterprises, which are the most affected, take advantage of this technological trend?

A not-so-distant vision

Instead of using scientific jargon barely comprehensible to ordinary people, Le Chi Dung, director of CMC Corp’s Innovation Centre provides an easy-to-understand example of the 4th industrial revolution: A sensor installed inside a vending machine can tell immediately when a type of goods is out of stock, the amount of additional goods needed and the current status of the machine. A deliveryman from the company operating that machine will have accurate data to deliver the required goods and fix broken machines quickly. Meanwhile the company’s managers can monitor and analyse data in real time and made strategic decisions to enhance productivity based on data collected from sensors and other devices. It is an application of the 4th industrial revolution which is not something unfamiliar with Vietnamese enterprises. There are certainly other trends such as the combination of robots and artificial intelligence, 3D printing but the most important thing to comprehend is that there are plenty of new business opportunities along with the potential closure of many current businesses.

Farmers probably will not have to work on the field all the time but will become managers of their fields. Plant cultivation will require less water and goods manufacturing will be faster and cheaper. In 2018, self-driving cars are expected to hit the road. It is even predicted that around 2020, the auto industry will begin to collapse. No one will need to own a car because with an app, you only need to enter the destination and the self-driving car will take you there while work during the commute, as Dung outlines some of his visions on the impact of Industry 4.0. Research suggests that the property market will also change because if one can work on the way to the workplace, they will prefer living in a place far from the city centre where the air is cleaner and the landscape more beautiful.

Enterprises' moves

In addition to Uber and Grab, which are considered typical examples of the world’s sharing economy which have already made their presence in Vietnam from early on, domestic enterprises are also quickly entering technology’s boundless games. In the past two years, a series of Vietnamese ride-hailing apps have appeared. In early 2016, GO-IXE was born and became one of Vietnam’s 18 leading start-ups of that year. In late 2016, 123Xe, another Vietnamese ride-hailing app from VNG, was officially launched, marking VNG’s endeavour into the ride-hailing market. Due to its late launch, 123Xe focused on a niche market, accepting only customers who travel from 15 kilometres up to 500 kilometres. In early 2017, Vivu, whose predecessor is FaceCar, saw strong growth in major cities and provinces such as Hanoi, Ho Chi Minh City, Can Tho and Nghe An. Putting changes at the national level aside, enterprises, especially those in the field of information technology, are possessing advantages in the new game. These enterprises can even take the role as leaders, offering technological guidance for other enterprises to capitalise on new opportunities.

Economist Le Dang Doanh said enterprises should take a multi-faceted approach to this revolution. Not all enterprises can jump into this revolution immediately but it will create a motivation to drive both the government and enterprises to change their mindset, method of production and business, and market thinking if they do not want to fall behind. It means agriculture now must become a clean and high-quality industry with products that can be exported to Japan, Europe and the Middle East instead of depending on intermediary traders and the Chinese market.

E-commerce, internet-based retail and home delivery will grow strongly and gradually replace traditional shops. Education and training must undergo radical changes in a way that encourages innovation and acceptance of new ideas. New technology will replace many current jobs while also creating new jobs, therefore workers must learn to adapt themselves to new jobs and skills. Doanh said that as the government is taking a leading role, it will help ensure enterprises do not fall behind.

According to a recent survey at the Vietnam CEO Forum, up to 67% of respondents are concerned that Vietnam will be unable to catch up with the 4th industrial revolution. The primary reason is Vietnam’s current advantages such as cheap labour, favourable location in the world’s most dynamic trade flow will gradually become inept in the technological revolution of IoT applications. Moreover, the closure of many Vietnamese technology start-ups also signals fiercer competition ahead. Meanwhile the goals of improving labour productivity, and cleaner, greener, smarter and more efficient production have seen little improvement.

The government is asking ministries and agencies to formulate appropriate mechanisms and policies to promote enterprise development plans more in line with requirements of the 4th industrial revolution. The path to the 4th industrial revolution can be viewed as both an opportunity and a challenge.