Vietnam has joined the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) and RCEP (Regional Comprehensive Economic Partnership), and has signed FTAs (free-trade agreements) with the EU and the UK. These deals have positioned Vietnam as a preferred location for manufacturers seeking to disperse their capacity deployments amid the US-China trade disputes.
In a recent interview by Digitimes, Keven Zheng, director of the Representative Office of the Taiwan Trade Center (under TAITRA) in Ho Chi Minh City, talked about the emerging 5G business and investment opportunities in Vietnam and the efforts his office have been making to forge ties between Vietnam and Taiwan.
Q: Has the pandemic undermined demand for HPC devices, network equipment and notebooks in Vietnam and slowed down its digital transformation?
A: Not at all. Demand for tablets, notebooks and IT-related accessories in Vietnam has been growing significantly due to the increasing popularity of remote work and study activities in the wake of the pandemic. Along with the rapid development of 5G technology, digital transformation is an established policy of the Vietnamese government. Commercial 5G operations will kick off in 2021. The three state-owned telecom companies - Viettel (in partnership with Ericsson), Vinaphone (with Nokia) and Mobiphone (with Samsung) – will share their base stations to accelerate 5G rollouts.
Meanwhile, Vinsmart, a handset arm of Vietnam's most prominent private group, Vingroup, has cooperated with Qualcomm and LG Electronics to develop and manufacture handsets, respectively. It has begun shipping 5G phones.
To attract more foreign investments to ramp up the nation's production capacity, Vietnamese president Nguyen Phu Trong, who is also the general secretary of the Communist Party of Vietnam, promulgated in September 2019 the country's Industry 4.0 policy along with a declaration to develop 5G networks.
The government's goal is to let all villages have access to broadband networks by 2025 and reach 100% coverage of 5G networks by 2030, with the digital economy accounting for 20% of its GDP. It also aims to become one of the top players in smart manufacturing and innovative services in Asia.
Since 5G infrastructure is a critical foundation for IoT, smart healthcare, smart transportation, smart city, and smart agriculture applications, Taiwanese makers can tap into these segments by participating in Vietnam's government procurement projects.
The Taiwan Trade Center's task has always been to help Taiwanese companies find business opportunities in Vietnam. But we had to switch more than a dozen promotional activities in 2020 to online events due to the pandemic's impacts.
Q: Did Vietnam initiate stricter adjustments to its environmental protection standards so as to reach an FTA deal with the EU?
A: Actually, the Vietnamese government approved in 2017 a set of initiations to make the environmental industry a focus of its economic growth.
According to the initiations, Vietnam will develop related technologies for waste treatment, recycling, environmental pollution analysis, monitoring and prevention.
The government also calls for the development of related technologies to enable sustainable use of resources and preservation of the environment - efforts that are in line with global trends and Vietnam's domestic conditions.
I believe that Vietnam's environmental protection standards will become more and more stringent. It has been reported that some industrial zones have strictly barred businesses that emit hazardous substances. Polluting industries can only set up factories in a few designated industrial zones. Regarding electroplating, new industrial parks all have stricter standards for wastewater treatment.
The Vietnamese government is also actively developing electric vehicles (EV) and renewable energy. There are many business opportunities in this sector, as many large-scale companies from Taiwan are engaged in water treatment and environmental protection projects. For these, TAITRA has also held many promotional events to push sales of environmental protection equipment and solutions from Taiwan-based companies.
Q: What are the opportunities for Taiwanese firms in Vietnam as the country has a population of over 97 million, which is a large market for consumer electronics products?
A: Vietnam's economy is developing rapidly with strong demand from its younger generation for consumer electronics products, particularly brand-name ones. Many Taiwaneses brands, such as Asustek, Acer and Micro-Star International (MSI) for notebooks; Gigabyte Technology for graphics cards; Transcend and Apacer for flash drives and memory cards - they are well received in the Vietnamese market. It is not easy to gain consumer recognition in this market without a brand.
Samsung and Chinese brands, including Oppo, Xiaomi, and Huawei, all spend a lot in advertisements per year to promote their products in Vietnam. Apple is of course popular among the young people in Vietnam.
Taiwanese firms have more opportunities in the upstream of the consumer electronics supply chain. They can seek to establish partnerships with two major consumer electronics distributors, Digiworld and FPT. The former has signed distribution contracts with more than 30 brands, selling their products through a chain of more than 1,600 sales outlets. Taiwan-based Synnex Technology International has contributed investments into an FPT subsidiary, Synnex FPT, which currently distributes products from 30-40 brands.
Thegioidididong is the biggest channel operator for mobile devices. There are supermarkets, including Bach Hoa Xanh and Dien May Xanh, that sell household appliances, with the latter alone having more than 1,000 sales outlets.
Q: In addition to FPT, are there other important ICT, telecom, or digital gaming companies that Taiwanese firms can cooperate with in the future?
A: In addition to FPT and Vingroup, I think Taiwan-based companies can cooperate with Viettel, a state-owned enterprise responsible for 5G construction in Vietnam. It has been shipping 5G products to Myanmar, Cambodia and other countries. System integrators, including CMC Telecom, Sao Bac Dau, HPT, MISA, ELCOM and HIPT, are also potential partners.
Additionally, TAITRA has signed an MoU with the Ho Chi Minh City Computer Association to facilitate cooperation among companies of the two sides. The association chairman Lam Nguyen Hai Long has said that Vietnam needs to import communication products from Taiwan and other advanced countries to help Vietnam develop smart city solutions. Vietnamese companies are relatively weak in manufacturing, but they are looking to develop new products suitable for the local market by optimizing in-house developed software or technologies with imported equipment from more advanced countries.
Q: Vietnam's digital gaming market has been growing rapidly, resulting in robust sales of gaming smartphones and other PC products for many Taiwanese firms, including Asustek, Acer and MSI. Are there opportunities for these firms to cooperate with local gaming companies such as VNG to further boost their sales in Vietnam?
A: Thanks to the fast expansion of network infrastructure along with its economic growth, Vietnam's gaming industry has been expanding rapidly. The gaming industry's increasing popularity has also pushed consumers to look for higher-quality and high-performance gear to improve their gaming experience.
The government has also paid more attention to developing the gaming industry, encouraging local firms to develop video games, and simplifying related procedures and requirements applying for gaming licenses.
In 2019, there were about 200,000 e-sports players in Vietnam. Given the total population of Vietnam, the ratio of gaming players is relatively high.
According to Nielsen Global Media, some Taiwanese brands such as Acer, Asustek, HTC Vive and MSI have successfully built up their brand image in Vietnam. Consumers in Vietnam believe that Taiwan's products generally come with excellent quality at reasonable prices.
However, the consumers also expect Taiwanese firms to enhance their efforts to promote their brand image in Vietnam by providing more information and establishing more communication channels. As far as distributors of gaming devices in Vietnam are concerned, Acer and Asustek are Taiwan's primary brands that can deliver products with high price-performance ratios, although their offerings are still considered midrange ones.
VNG (formerly Vina Game), established in 2004, is a major Internet and technology company in Vietnam, providing online entertainment, social media and cloud services. The company's main products include Zalo (the most used community app in Vietnam), Zing Mp3, Zing News, and Zing TV.