Japan deepens involvement in Vietnam technology scene

In the wake of an ageing population and the narrowing domestic market, Japanese businesses are expanding to the new fields of digital technology, healthcare, the Internet of Things, and services across the ASEAN, including in Vietnam. 

Takeo Nakajima, the newly-elected chief representative of the Japan External Trade Organization’s Hanoi Office, analyses the new trend in these tech-based sectors among Japanese corporations.

japan deepens involvement in vietnam technology scene

Today, Japan is suffering a fall in population and human resources. The country needs more partners to expand its business, strength, and innovation elsewhere. In that sense, Vietnam is one of the most powerful partners in the region.

japan deepens involvement in vietnam technology scene
Takeo Nakajima, the newly-elected chief representative of the Japan External Trade Organization’s Hanoi Office

The population of Vietnam is growing steadily, and the number of people who speak Japanese is growing. Therefore, it is a logical and strategically sound decision to do business in Vietnam.

Historically, Japanese companies started Asian business in China, Thailand, and South Korea. Now the labour, land, and transportation costs of doing business in those countries is higher than before. The Vietnamese government, as well as the society, now welcome more investment from Japan into the country.

Tech-based industries

The Japan External Trade Organization (JETRO) has piloted some innovative projects in new industries of digital technology, healthcare, the Internet of Things, and services across the ASEAN, including in Vietnam for the last fiscal year.

There are untapped business opportunities to solve social issues in Vietnam. Japan has experienced similar issues through industrialisation in the 1950s to 1970s, but we now have the knowledge and the tools to tackle them. Among those initial projects, healthcare has the greatest potential to grow when this sector is prioritised by the Vietnamese government.

The healthcare system in Vietnam should be modernised. The country faces ageing society issues in the next 20 years, and the government and people should prepare for this. Japan tackles exactly this difficult issue and so we can contribute to that. Vietnam also needs to upgrade its living space, transportation, and infrastructure, but the hardware is not enough; software that controls energy, communication, and safety should be considered as well.

The country needs software, telecommunications, and management systems to make that infrastructure user-friendly and safe. The train system requires time management, a smooth ticketing system, safety precautions, and services for disabled people. Tokyo has built one of the most complicated subway systems in the world, where every train runs every minute.

On the other hand, Vietnam has areas and sectors that are more advanced than in the Japanese economy, particularly in the consumer sectors. Vietnam has ride-hailing and delivering platforms like Grab and GoViet, while Japan does not have that kind of systems. In addition, smartphones are more popularly used by the Vietnamese.

For business-to-business (B2B), however, the Japanese systems are much more advanced, in terms of business transactions, factory automation, and government systems.

To attract investment in the high-tech sector, incentives are important, but they should be easier to apply. The incentives cannot solely drive more investment – businesses need markets and reliable partners as well.

 

Movements in investment

As the Vietnamese business environment improves, more Japanese companies invest here. And now, more Vietnamese groups are pouring money into Japan. For example, FPT already has ten offices across Japan and more Vietnamese companies also set up there. The more the Japanese companies know about Vietnamese partners, the more they expand business with Vietnam.

To assist Japanese businesses to establish an entity in Vietnam, the JETRO provides several different services. First, companies need accurate information about what’s happening in Vietnam. We try to provide reliable information to them in collaboration with the Japanese Embassy, the Japanese Chamber of Commerce and Industry, the Japan International Cooperation Agency, and other organisations.

Some companies may need to exhibit their products and services to Vietnamese consumers. JETRO assists them to participate in these trade shows and facilitate business matching.

The JETRO Business Support Center provides temporally office spaces as well. More than 85 Japanese companies use this facility in total and more than 55 companies have successfully established entities here.

Japanese investment in Vietnam is more diversified than before. Manufacturing is the largest sector among them in terms of value. In terms of numbers, we see more non-manufacturing sectors investing in Vietnam, such as retail, restaurants, wholesale, education, human resources, IT, construction, and transport.

Regarding the purpose of the investment, in the past they were mostly export-oriented. Recently, more companies are interested in the Vietnamese market, which is reflecting the growing domestic B2B and business-to-consumer markets. Vietnam is becoming wealthier – the market is still limited but the average consumer now has more consumption power.

Consumer products such as electronics, motorcycles, and processed foods, as well as related services, are very attractive for Japanese companies and this trend will continue to be maintained in the future.

Agriculture is one of the bright spots in Vietnam too, where 40 per cent of the population is involved. There are resources, but they lack modern technologies and a newer business model. On the contrary, Japanese agriculture is more technology-concentrated and its high productivity comes with a sensitive business model.

In the past few years, we have had huge Japanese investment projects in Vietnam – big energy projects in 2017 and a smart city project by Sumitomo and BRG Group in 2018, for example. For this fiscal year, we have not seen that kind of large project, but the number of projects as a whole has been growing.

Japanese investors still face problems in doing business in Vietnam, such as unclear regulations, permitting processes, land acquisitions, commercial transactions, and import and export rules. However, The Ministry of Planning and Investment and other government agencies in Vietnam have been very active in tackling those issues.

Recently, we see hiring and securing people is the largest challenge for Japanese companies according to JETRO surveys. Over the past several years, regulatory issues have been the number one concern but now, securing people is at the top. By the same token, labour costs, which increase significantly every year, become a big challenge. VIR

Japan’s retailers reaching out to Vietnam’s market

Japan’s retailers reaching out to Vietnam’s market

Japanese retailers are increasingly amplifying business activities in Vietnam as the country’s middle class expands amid market conditions in their home country slowing down.

Next phase of Japan ties kickstarted

Next phase of Japan ties kickstarted

Legal uncertainty in public-private partnerships, supporting industries, and manpower needs further changes to facilitate a new wave of Japanese investment in the coming months. 

 
 

Other News

.
Thousands of hectares of industrial zones approved in first quarter
Thousands of hectares of industrial zones approved in first quarter
BUSINESSicon  07/04/2021 

Dozens of industrial zone projects in 13 cities and provinces covering have been approved in the first quarter, promising thousands of hectares of new space for investors over the coming years.

HCM City approves 8 projects to boost industry, trading, e-commerce, exports
HCM City approves 8 projects to boost industry, trading, e-commerce, exports
BUSINESSicon  07/04/2021 

The HCM City Department of Industry and Trade said eight key projects have been approved by the city government to promote the industry, trading, e-commerce, and exports and facilitate goods transport.

Korean conglomerate buys 16.3 percent stake in Vietnam's largest retailer
Korean conglomerate buys 16.3 percent stake in Vietnam's largest retailer
BUSINESSicon  06/04/2021 

Korean conglomerate SK Group said it will make a strategic investment in VinCommerce, Vietnam’s largest retailer, to tap into the fast-growing e-commerce segment in the Southeast Asian market, reported Yonhap News Agency.

Inflation not a source of concern for Vietnam: SSI
Inflation not a source of concern for Vietnam: SSI
BUSINESSicon  06/04/2021 

Vietnam’s consumer price index (CPI) is set to average 2.89% in 2021, below the government’s target of 4%.

Shares gain on bank and real estate stocks
Shares gain on bank and real estate stocks
BUSINESSicon  06/04/2021 

The market closed higher on Monday as a series of banking and real estate stocks surged, propelling the indices.

VIETNAM BUSINESS NEWS APRIL 6
VIETNAM BUSINESS NEWS APRIL 6
BUSINESSicon  06/04/2021 

Vietnamese fruit and vegetable sector targets export revenue of $10 billion

Capital market must work to invigorate SOEs
Capital market must work to invigorate SOEs
BUSINESSicon  05/04/2021 

Developing the capital market will help in promoting State Owned Enterprises (SOEs) to mobilize capital and reduce the proportion of commercial credit loans, and diversify in forms of mobilization to supplement capital.

Prices surge on stock market, VN Index reaches record high
Prices surge on stock market, VN Index reaches record high
FEATUREicon  05/04/2021 

Many new investors have made high profits after the stock market reached a record high.

Vuong leaves Vinmart, Quang takes over
Vuong leaves Vinmart, Quang takes over
BUSINESSicon  05/04/2021 

Billionaire Nguyen Dang Quang will build The CrownX into a $10 billion firm and change the name of VinMart to WinMart, which will follow a new operation model after Vingroup, owned by Pham Nhat Vuong, leaves.

Wind power: investors wait for PM’s decision on Feed-in-Tariff price
Wind power: investors wait for PM’s decision on Feed-in-Tariff price
FEATUREicon  06/04/2021 

The Feed in Tariff (FIT) price of VND2,000 per kwh will expire in seven months, but the price for the next period has not been fixed yet.

VIETNAM BUSINESS NEWS APRIL 5
VIETNAM BUSINESS NEWS APRIL 5
BUSINESSicon  05/04/2021 

Manufacturing, processing maintains strong growth in Q1

Da Nang warns about property speculators
Da Nang warns about property speculators
BUSINESSicon  05/04/2021 

The Da Nang Department of Natural Resources and Environment has warned that the tricks of several property speculators could drive up land prices in the central city after recent announcements of adjusted master planning.

Vietnam’s manufacturing sector strengthens in March
Vietnam’s manufacturing sector strengthens in March
BUSINESSicon  05/04/2021 

Vietnam’s manufacturing sector gained growth pace at the end of the first quarter, with marked increases in output, new orders and exports, leading to stronger rises in employment and purchasing activity, according to a report by tIHS Markit.

Vietnam earns $11bil from agricultural exports
Vietnam earns $11bil from agricultural exports
BUSINESSicon  05/04/2021 

In the first quarter, agricultural products such as rubber, tea, vegetables, cassava, shrimp and forestry products earned high export value, bringing total export turnover of agricultural products to nearly US$11 billion.

Field-mouse meat more expensive than pork, wild vegetables pricier than US beef
Field-mouse meat more expensive than pork, wild vegetables pricier than US beef
BUSINESSicon  05/04/2021 

The price of field-mouse meat in the Mekong Delta is now higher than that of pork. And in Hanoi, wild vegetables cost more than imported beef bacon, or 10 times more than chicken.

Tier system revamped for high-tech strategy
Tier system revamped for high-tech strategy
BUSINESSicon  05/04/2021 

Driven by its digital transformation strategy, Vietnam will set more favourable standards for high-tech businesses’ recognition from next month in a move to develop the country into a high-tech hub.

For natural development of the Mekong Delta
For natural development of the Mekong Delta
BUSINESSicon  04/04/2021 

Resolution 120 on sustainable development of the Mekong Delta issued three years ago has helped create “living with nature” methods as targeted.

Night businesses on Bui Vien Street suffer heavy losses
Night businesses on Bui Vien Street suffer heavy losses
BUSINESSicon  04/04/2021 

Business owners on Bui Vien pedestrian street in downtown Ho Chi Minh City are suffering from a lack of customers due to the impact of the COVID-19 pandemic.

Ministries tighten land management to prevent 'land fever'
Ministries tighten land management to prevent 'land fever'
BUSINESSicon  04/04/2021 

The Ministry of Construction (MoC) and the Ministry of Natural Resources and Environment (MONRE) have requested provinces and cities review State management on land prices amid 'land fever' in some localities.

New trading system in place this year: HoSE
New trading system in place this year: HoSE
BUSINESSicon  04/04/2021 

The new information technology system for the entire stock market, known as KRX, is expected to be put into operation this year, according to the Ho Chi Minh Stock Exchange (HoSE).

 
 
 
Leave your comment on an article

OR QUICK LOGIN