Tech giants take starting positions
International technology giants are eyeing Vietnam’s consumer market as the country’s rapid digital transformation offers bright prospects on the back of a new legal framework and an ever-growing demand for innovative technologies.
Tech firms are branching out across sectors and teaming up with domestic groups in order to snap up more of these markets
Surrounded by lots of green lie the headquarters of Lenovo in Beijing. The location is also home to the company’s Future Centre where some of Lenovo’s smartest products are being developed.
They include some of the most widely-used business laptops, such as the ThinkPad series as well as the recently launched ThinkBook laptops, which combine useful business features with sleek design elements.
At its headquarters, Lenovo – a $50 billion Fortune Global 500 company – shows what the future of life, work, and entertainment may look like. Also located here is Lenovo’s impressive patent wall showcasing thousands of the company’s patents, which symbolise the tech giant’s great ambitions to become a global leader of intelligent transformation.
Vietnam is among the most interesting markets for Lenovo to embrace its vision by promoting new products.
Ken Wong, senior vice president of Lenovo Group, said that powerful emerging markets like Vietnam, along with many others in Asia Pacific, have both an appetite for innovation and the growing industrial base that make his company’s strategy possible. Lenovo calls its strategy the “Three S” – smart Internet of Things (IoT), smart infrastructure, and smart vertical industries.
“In the area of smart infrastructure and smart verticals, our focus in Vietnam is on education, healthcare, financial services, and manufacturing,” Wong told VIR.
“Education in Vietnam, for example, is an area with very strong growth potential with the power of technology. Our solutions for education include both devices like laptops suitable for students and faculties, and services and advanced solutions like virtual reality systems for education.”
Lenovo targeting Vietnam’s manufacturing sector is no surprise as the sector’s vibrant growth has already attracted so many foreign financiers that it counts as the most attractive sectors among foreign-invested companies, accounting for nearly 70 per cent of the country’s total foreign direct investment (FDI).
“What we see is the opportunity for Vietnam to leapfrog the typically slow manufacturing evolution and make the transition to smart usage of IoT,” said Wong.
“One of the best ways to make this happen is by adopting smart manufacturing methods. Instead of moving everything into the cloud or keeping everything on site. Our company is introducing a new portfolio, which contains the building blocks of smart manufacturing.”
Seeing the growth potential ahead, other technology giants are treading the same path.
Sweden’s Ericsson, which boasts about 40 per cent of the world’s mobile traffic carried through its networks, and technology giant ABB, are creating advanced factories where intelligent automation is wireless. To maintain market leadership, the partners are laying the foundation for flexible production and will bring it to Vietnam in 2020, when 5G is officially launched.
In addition to manufacturing, the technology giants are targeting other sectors including education, healthcare, retail, startups, and business segments, among others which see obvious movements in digital transformation.
In late November, Lenovo made new moves in the lucrative Vietnamese market by introducing its innovative ThinkBook family, an all-new sub-brand of Lenovo laptops targeted at small- and medium-sized enterprises (SMEs) which is one of the key areas the company focuses on.
Following this trend, Americans Qualcomm, one of the world’s biggest chip designers and suppliers, announced in December the launch of the Qualcomm Vietnam Innovation Challenge in 2020 to support the development of Vietnam’s rising technology ecosystem.
With the competition, Qualcomm targets innovative SMEs by supporting and encouraging them to design new products related to 5G, IoT, machine learning, smart cities, and multimedia utilising Qualcomm’s mobile platforms and technologies. The launch is expected to give Qualcomm a push to venture further into the profitable market.
“In the view of Vietnam’s policies to actively join Industry 4.0, Qualcomm has been expanding its presence in the country to provide better support to Vietnam and our Vietnamese partners. We are planning to build new international-standard laboratories in Vietnam in 2020,” said Nam Thieu, country manager of Qualcomm Vietnam, Laos, and Cambodia.
Similarly, Huawei, the world’s leading provider of ICT infrastructure and smart devices, is seeking co-operation with the Commission for the Management of State Capital at Enterprises (CMSC) on digital transformation and the digital economy. The CMSC is now the representative of the state holding 19 state-owned corporations which are powerful locomotives in vital economic sectors, including PetroVietnam, Electricity of Vietnam, Vinacomin, VNPT, and MobiFone, among others.
New race ahead
A senior official of Vietnam’s Ministry of Information and Communications (MIC) said that more multinational corporations are seeking to co-operate with the MIC in digital transformation in the wake of the strong development of technology-related fields. Statistics from Vietnam’s Ministry of Planning and Investment show that about $1.3 billion worth of FDI was spent on sci-tech in 2019, ranking fourth among the most attractive sectors.
“As Vietnamese businesses’ awareness about the importance of technology has much improved, they are rushing to apply advanced technologies, thus creating new opportunities for multinationals. The market will be more open to technology firms if the country provides good policies and infrastructure to support them. We are, therefore, currently completing the national scheme on digital transformation,” the official told VIR.
Under the national scheme, according to which ministries and agencies will then build their specific digital transformation schemes, which was expected to be submitted to the government for approval this month, some vital supporting policies are expected to be included. Accordingly, there may be special incentives for companies, so that they can act quickly and successfully.
Moreover, there will likely be regulations to ensure that technology firms can develop without being a subject to the existing management process. For example, research and development activities and successful ventures will get encouraging policies. “In the past, many technology companies failed, despite generally successful ventures. However, the situation will change thanks to new supporting policies,” the MIC official added.
There is no doubt that the new developments by Lenovo, Ericsson, Qualcomm, and Huawei are also attributing to their overall robust performance in Vietnam and globally in 2019. For example, in the third quarter, Huawei achieved a growth rate of 24.4 per cent and a turnover of about $85.5 billion. The company has signed more than 60 5G commercial contracts with the world’s leading carriers and shipped more than 400,000 5G base stations around the world, maintaining the largest market share for 5G technology.
Meanwhile, Lenovo recorded a solid performance for the first half of its fiscal year 2019-2020 in Asia-Pacific with 18.6 per cent rise in consumers, a 34.5 per cent hike in the commercial segment, and a 50 per cent on-year growth in its workstation segment.
The future for these companies seems bright as studies show that by 2025, the number of people using 5G tech will reach 1.57 billion, and the technology will contribute $289 billion to global GDP by 2025. Moreover, Vietnam is expected to be the first Southeast Asian country to launch commercial 5G next year.
All technology firms are aware of the sunny prospects and growing market demands. Moreover, many newcomers, such as Hindustan Computers Ltd., are joining the market. These may begin a new race to gain market shares. Qualcomm’s stock had stiff competition from China’s telecom giant Huawei; meanwhile, Huawei is placed in the same business segment as Ericsson, and others.
Industry insiders said that in addition to new developments, Lenovo, Ericsson, Qualcomm, and Huawei are rushing to boost co-operation with Vietnamese technology giants such as Viettel, VNPT, and FPT as a helping hand in their Vietnamese strategies. On the contrary, these domestic tech companies are also expected to be beneficiaries of the new supporting policies, together with many other local businesses. VIR