“We want to follow procedures to set up a branch in South Korea, but are facing problems,” said the representative of a digital firm at a meeting of VINASA (Vietnam Software & IT Services Association) earlier this year.

The problem was the differences between Vietnamese and South Korean laws related to capital transfer abroad in order to set up a branch.

“We have to consult with many lawyers and hope VINASA helps us solve the problem,” he said.

A representative of another software firm said after VINASA kicked off the green economy program, his business contacted foreign partners to discuss opportunities for cooperation.

“A Japanese company has designed ESG (Environmental, Social and Governance), a set of standards to assess the factors related to enterprises’ sustainable development, and has been accepted in Japan. However, we cannot apply Japanese standards in Vietnam,” he complained.

“For example, the Japanese method of calculating the volume of energy consumed and the emissions when generating a certain volume of electricity is different from the Vietnamese one,” he explained.

Many Vietnam digital firms are facing obstacles on the way to the world market. However, VINASA leaders have brought a ray of hope to enterprises that are trying to enter the world market.

In the case of the tech firm which wants to set up a branch in South Korea, VINASA’s chair Nguyen Van Khoa said that VINASA will help solve the problem, and if necessary, the association will contact the Foreign Investment Agency (FIA) to ask for guidance.

As for the ESG certificate, VINASA’s deputy secretary An Ngoc Thao said ESG standards are created by businesses, not by state agencies or governments.

“We can learn from their standards. VINASA plans to join forces with some units to design a set of ESG standards. However, this is a new matter and I hope businesses will cooperate with VINASA to do this, rather than rely on VINASA’s experts,” Thao said.

According to VINASA secretary general Nguyen Thi Thu Giang, VINASA organized 13 international trade promotion trips in 2023 to 11 countries, and helped Vietnam’s tech firms participate in exhibitions, conferences and compete for international awards (ASOCIO - Asian-Oceanian computing industry organization, and APICTA - Asia Pacific ICT Alliance).

Alliances

A report of the Ministry of Information and Communications (MIC) shows there are 1,500 Vietnam’s digital firms operating overseas. They had total turnover of $7.5 billion in 2023, of which FPT alone earned $1 billion.

More and more Vietnam’s digital firms have shifted their focus from the domestic market to the international market. 

“Many firms want to export their products, but find it difficult to penetrate target markets. Therefore, they want to have fellow travelers and go together to the world,” said VINASA deputy chair Lam Quang Nam.

Nam suggested that it would be better if small companies with different advantages ally with each other to create medium-sized companies to enter foreign markets more easily. 

Vietnam had such alliances in the past, such as Club 192 which included software export companies established by Thanh Nam; HighTech Club of VAIP (Vietnam Association for Information Processing) led by CMC Corporation; and the Vietnam Software Outsourcing Club.

A group of four Vietnamese software outsourcing companies is going to organize a meeting in Japan to introduce themselves to potential clients. The cooperation model, according to Nam, can create stronger resources and better persuade international clients.

Khoa said that establishing alliance is a feasible orientation amid the vendor consolidation trend in the world.

Khoa said Japan would be a good market, but he thinks it would be more difficult to access the South Korean market because South Korean institutions and businesses just work with some chaebols (huge family-run private groups). 

In the South Korean market, Vietnam’s firms are only sub-contractors in huge projects. However, Khoa said Vietnamese firms may become major partners after a period of working as sub-contractors and proving their capability.

Thai Khang