According to the Spring 2023 Business Outlook Report by AHK Vietnam, 91 per cent of German companies here are looking to expand their investments. Notably, 57 per cent here are actively seeking new suppliers to diversify their supply chains.

Vi Thanh Tuan, Board member German Business Association

Vietnam has attracted a significant amount of foreign direct investment in past decades. This has helped maintain economic growth, create job opportunities, and accelerate the technology transfer process. The Vietnamese market is also increasingly open and deeply integrated with the world.

According to the Ministry of Planning and Investment, German companies have registered a total investment of $159.4 million in Vietnam through 18 new projects in the first half of this year.

Meanwhile, the EU-Vietnam Free Trade Agreement kicked off a new era of economic cooperation. Beyond trade liberalisation, the agreement has been a catalyst for Vietnam’s digital transformation. It provides access to European technology, encourages foreign investment, fosters e-commerce, promotes intellectual property rights, raises quality standards, and ensures data protection.

As Vietnam continues to align with European standards, it is hoping to further integrate into the global digital economy. The trade deal is not only about trade, but also about creating a foundation for a more advanced, competitive, and digitally vibrant Vietnam.

Industry 4.0, often referred to as the Fourth Industrial Revolution, is characterised by the integration of digital technologies into manufacturing processes. Germany is widely recognised as the birthplace of this revolution. The term was first coined at the Hannover Messe trade fair in 2011, and it has since become a global standard for smart manufacturing.

German companies, research institutions, and policymakers have been instrumental in driving this technological shift. Key components of Industry 4.0 include the Internet of Things, AI, big data, and automation.

Vietnam, with its promising economy and youthful population, has been eager to harness the benefits of digitalisation. German investment and expertise have played a significant role in supporting Vietnam’s digital transformation.

German companies have been actively investing in Vietnam to foster technology innovations. Industrial and automotive supplier Schaeffler established a new manufacturing facility in Vietnam in 2019, contributing to advancements in areas such as smart manufacturing and real-time data analysis.

One system that stands out here is the Schaeffler condition monitoring systems. These systems are essential for predictive maintenance, which aims to detect and address issues before they lead to costly downtime or equipment failures.

Major groups have invested in development centres and new manufacturing facilities, Photo:GBA

Another example is Bosch, which has been actively involved in Vietnam’s digital transformation journey. The company has invested in research and development centres and manufacturing facilities, contributing to the development of cutting-edge solutions in areas like automation, energy efficiency, and smart city technologies.

Those two companies are only a few examples of many companies, which are also part of the German Business Association (GBA) in Vietnam, which serves as a platform for fostering cooperation between German companies and Vietnamese partners.

GBA members, ranging from multinational corporations to small businesses, actively engage in knowledge exchange, technology transfer, and capacity building, further promoting Vietnam’s digital transformation. The GBA is supporting that with the organisation of several events around the topic Industry 4.0, their own startup challenge and excursions to different state-of-the-art manufacturing facilities.

In Vietnam, where the potential for digital transformation is vast, the GBA recommends a series of policies to accelerate the process, ensuring that the nation remains competitive in the global digital landscape.

One of the key pillars of digital transformation is a robust digital infrastructure. Vietnam should focus on enhancing its broadband connectivity and expanding 5G networks to cover more areas. Investments in undersea cables, data centres, and high-speed internet access are essential for creating a foundation for the digital future.

The GBA suggests that Vietnam should prioritise e-government development. Streamlining government services online reduces bureaucracy and increases transparency and efficiency. Establishing a secure, user-friendly, and unified e-government platform would encourage citizens and businesses to interact with the government more easily.

A skilled workforce is the backbone of any digital transformation. Vietnam should invest in digital education and training programmes, with a particular focus on tech-related skills, such as software development, data analysis, and digital marketing. Collaborations with universities and businesses can help in tailoring education to the needs of the job market.

The GBA recommends creating a conducive environment for innovation and startups. This includes simplifying the registration process, offering financial incentives, and providing support through incubators and accelerators. Supporting technology-driven entrepreneurship can spur innovation and create jobs.

As digitalisation expands, so does the need for strong cybersecurity and data privacy regulations. Vietnam should establish a comprehensive legal framework to protect sensitive information, foster trust in the digital ecosystem, and encourage foreign investments.

Smart city development involves leveraging digital technologies to improve urban living. The GBA recommends that Vietnam invest in smart city projects, including efficient transportation systems, sustainable energy solutions, and integrated data platforms that enhance urban planning and public services.

To encourage innovation and the creation of digital content, Vietnam should reinforce intellectual property rights. This would provide greater protection for patents, copyrights, and trademarks, attracting investments in technology and creative industries.

Collaboration with international organisations, other governments, and private enterprises can provide valuable insights and resources. Vietnam should engage in partnerships and collaborations to benefit from global expertise and investment.

Germany’s leadership in Industry 4.0 has paved the way for a global technological revolution. Its support for Vietnam’s digital transformation is a testament to the collaboration between nations in an increasingly interconnected world.

Challenges persist, but with the right strategies and international partnerships, Vietnam can harness the power of digitalisation to drive economic growth and innovation. Companies like Schaeffler and Bosch, and organisations like ours, play a vital role in this transformative journey, and their contributions will continue to shape Vietnam’s digital future.