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How should Vietnam’s businesses respond to the technology revolution?

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The technology revolution has had great impact on many different business fields in Vietnam.  

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It could be a growth engine for businesses in the next few decades, and the factor that pushes businesses to bankruptcy within a shorter time.

In late June, Minh Long, a well-known ceramic and porcelain wares manufacturer, joined hands with Tiki.vn, an e-commerce site, to distribute its stock pots.

Minh Long is the third traditional manufacturer entering e-commerce over the last two years. The other two are Vinamilk and Biti’s.

The e-commerce retail segment makes up 2 percent of the total retail market. 

The demise of Toys ‘R’ Us stores in the US has influenced decisions of large retail companies to enter ecommerce. The biggest toy retailer in the US declared bankruptcy after 60 years of operation.  It was said that Amazon killed one of the big business names in the US.

Vietnam doesn’t have Toy ‘R’ Us, but it is witnessing how technology apps can deal a blow on traditional business fields. Just after four years of joining the taxi market, Grab and Uber caused Vinasun and Mai Linh, the two largest taxi firms, lose hundreds of billion of dong in revenue.

Analysts say that the struggle between technology apps (Grab & Uber) and traditional taxi firms shows the strength of technology, and that businesses will be defeated if they stay outside the technology revolution.

WEF (the World Economic Forum) noted that with the GDP growth rate of nearly 7 percent in 2017, Vietnam is one of the fastest growing economies in the world. 

However, to maintain a high growth rate, it will need more policies to develop in the 4.0 era, when AI, self-propellers, IoT and Blockchain are present in all aspects of life.

Biti’s and Vinamilk have decided to invest in e-commerce and have made hectic preparations to adapt to the 4.0 revolution.

Tran Ngoc Thai Son, founder and CEO of Tiki.vn, said e-commerce only makes up 2 percent of the total retail revenue, but the figure would soar to 7.7 percent by 2025, while B2C e-commerce would develop very rapidly with CAGR of 39 percent.

Explaining his prediction, Son said with increasingly high income, Vietnamese consumers will want authentic, high-quality products.

BCG, a market analysis firm, predicted that by 2020, Vietnam would have 60 million people with above average income or more.

Vietnam’s businesses have also invested in AI. Minh Phu Seafood uses AI for its smart factory. Sacombank uses face identification technology to recognize VIP clients. Vietcombank’s chatbot helps clients make simple transactions.

 

Source: VNN

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