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As Vietnam’s advantages in labor and production costs narrow, local companies are being pushed to find new ways to stay competitive. Technology, data, innovation and stronger brands are increasingly becoming decisive factors in how far they can move up the global value chain.
Competing on cost is no longer enough
Speaking at the Strategy and Competitive Branding Forum on Sept. 23, Le Tung, strategy director at Vietnamese household appliance manufacturer Sunhouse Group, said the cost advantage once enjoyed by Vietnam and its businesses is no longer what it used to be.
The question, he said, is what Vietnamese companies will compete on over the next three to five years.
In the domestic market, businesses can take advantage of value chains they have already built to serve local consumers. Competing internationally, however, requires much more.
Companies need competitive capabilities across the entire value chain, from research and development (R&D) and manufacturing to supply chains, branding and distribution.
Businesses that focus solely on manufacturing retain a relatively small share of the value because profit margins are thin. To improve their position, they need to gradually expand into higher-value activities.
Tung said Sunhouse is pursuing an approach that combines multiple links in the value chain.
In Vietnam, the company aims to control more stages, from raw materials and manufacturing to supply and distribution. Overseas, it takes a more flexible approach, developing its own brand in neighboring markets and the US while continuing original equipment manufacturing (OEM) for international corporations and strengthening its R&D capabilities.
Tung cited the cost of manufacturing a product for a US partner as an example. Five years ago, producing the item cost around $50. Today, that figure has fallen to about $25.
He said operating in international markets with demanding requirements puts pressure on companies to improve, ultimately increasing manufacturing efficiency and productivity.
International competition, in other words, is not simply about selling products. It can also become a process through which companies learn and upgrade their own capabilities.
Innovation must create market value
Tung said innovation is essential to improving competitiveness, but it should not be measured simply by how many R&D departments a company has or how many technologies it possesses.
What matters is how businesses use technology, data and research to create products and services that the market is willing to accept.
For manufacturers, technological innovation needs to improve efficiency.
Vietnam still faces a substantial technology gap with developed economies, meaning competing solely on access to the most advanced technologies may not always be realistic.
A more important question is how companies can use the technology and data already available to make better decisions and respond more quickly to changing markets.
Associate Professor Nguyen Quoc Thinh, a senior lecturer at Thuongmai University and a member of the expert panel for the Vietnam National Brand Programme, said businesses should consider innovation across at least four areas: products, processes, organization and tools, particularly digital tools.
These four dimensions are interconnected and, when developed together, can help create what he described as corporate “soft power.”
With artificial intelligence significantly shortening product development and management-system timelines, he said, the demands facing businesses are becoming even greater.
Chu Duc Hoang, chief of office at the National Technology Innovation Fund under the Ministry of Science and Technology, said Vietnamese companies also need to move beyond simply using technologies developed by others.
Instead, they should gradually build their own core technologies and proprietary data.
That would give companies a basis for genuine differentiation rather than simply replicating existing products, business models or solutions.
Three pillars of corporate soft power
A good product alone is not enough to build a strong brand.
Customer trust is also shaped by how a company delivers its products, how flexibly it responds to demand, how it communicates with customers and whether it fulfills its commitments.
According to Thinh, brand, innovation and culture are three important pillars of soft power for businesses and organizations - and, on a broader scale, for a country.
Culture, he said, is the foundation.
Corporate culture is not simply a matter of internal rules or stated values. More importantly, companies need to create a humane working environment that encourages creativity and sustains those values across generations of employees.
“The ultimate goal of building culture within a business, a locality or even a country is to create a humane working environment and, especially, one that stimulates creativity,” Thinh said.
If brand, innovation and culture provide the foundations for competitiveness at the corporate level, those same elements need to translate into Vietnam’s image, reputation and competitiveness in international markets at the national level.
Vietnam’s National Brand Programme was approved by the Prime Minister in 2003 with the goal of strengthening the country’s image.
Under current orientations, the 2026-2030 period will focus on laying foundations and making fundamental changes, including refining the National Brand criteria, accelerating digitalization and expanding trade promotion on global platforms.
The 2030-2035 period is intended to develop Vietnamese companies with strong regional and international brands.
By 2035, the target is to have five to 10 Vietnamese corporate brands enter the global top 500 while lifting the value of the Vietnam National Brand into the world’s top 25.
Thinh said Vietnam initially chose the easier approach of building its national brand around product brands, with plans to reposition the country roughly a decade later.
“But unfortunately, we are now in the 23rd year, and only now are we discussing how to reshape it,” he said.
A national brand, Thinh argued, is not simply a collection of a country’s leading corporate brands. It is also about how the country itself is perceived by the rest of the world.
That raises a larger question: How does the world see Vietnam today, and how does Vietnam want to be seen?
The answer cannot come from communications campaigns alone.
Products with a distinctive identity, if strengthened through better design, quality, storytelling and market positioning, can become part of the broader Vietnam brand.
For Vietnamese businesses, that could also mean retaining a greater share of the value they create within global value chains.
Ngoc Ha
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