Vietnam is among the 50 leading economies in the world and has made tremendous progress since the post-Vietnam war era. Despite the hit she took during the COVID-19 pandemic in 2020, Vietnam was one of the fastest-growing economies worldwide, with a GDP growth of 2.7%. This economic transformation has increased the presence of global tech giants in Vietnam.
Notably, the country has continuously attracted substantial foreign direct investments (FDIs) in various sectors, including electronics and textiles manufacturing. The investors are building numerous research and development centres across the country, establishing Vietnam as an R&D hub ahead of its competitors in Southeast Asia.
In an interview, the director-general of the Vietnamese Foreign Investment Agency, Do Nhat Hoang, disclosed that the FDI task force has been in talks with numerous established companies looking to expand their operations to Vietnam. According to him, Vietnam remains a fertile ground for foreign investors. The United Nations Conference on Trade and Development (UNCTAD) released the 2020 World Investment Report predicting that the flow of global FDI will decline by up to 40% during the year.
Vietnam is now leading APAC in digital progress
Developing economies were hit hardest by the steep decline in investment flow caused by the COVID-19 pandemic. The report also reveals that the affected nations will start recovering by 2021. Hoang pointed out that Vietnam only recorded a 14% year-on-year decrease by August 2020, making it one of the most resilient economies to weather the pandemic. Concurrently, the country recorded a 6.6% and 22.2% increase in newly registered projects and capital expansion projects.
Which companies are moving to Vietnam?
A good example of the newly registered project is the $220 million USD R&D centre being developed by Samsung in Hanoi. To establish itself as one of the global tech giants in Vietnam, the company aims to complete the project by 2022 and create employment opportunities for 3,000 engineers.
The objective of this facility is to develop smartphones for the ASEAN market, operate as a testing hub for the 5G network, and build software for Europe, New Zealand, and Australia. Samsung also has 11 other R&D centres in the country focused on household electrical appliances, mobile devices, data analysis, and artificial intelligence.
These laboratories were set up in Vietnamese universities to initiate collaborative education programs, enabling students to participate in research related to mobile phone technologies. Samsung has also hired some outstanding students as researchers.
Also, US-based chip company Qualcomm opened its R&D centre in Vietnam in June 2020, making it the company’s first R&D facility in the ASEAN region. The Hanoi-based R&D centre comprises four laboratories for developing camera technologies, wireless technologies, and enhancing the battery performance of mobile devices. It currently has an employee capacity of 50 engineers, all of whom are Vietnamese.
Other companies, including Grab, LG Electronics, Panasonic, and Toshiba, have also chosen Vietnam as an R&D hub to set up their laboratories.
Favourable factors that prompt tech companies to expand to Vietnam
Vietnam’s large youth population is a point of attraction for global investors. This is an excellent opportunity for the companies because they can easily hire bright minds to help them scale and progress.
Less competition for talent
The companies moving to Vietnam today have an early bird advantage because the market is currently saturated, making it easy to find young talents. Also, Vietnamese talents are eager to work for global companies since they see it as a means to build their work portfolio and progress quickly.
Global companies can also take advantage of their status, coupled with attractive remunerations and learning-friendly environments to attract skilled tech talents. This will certainly keep them on the progressive path and ahead of their competitors.
A new generation of talent
First-world countries are currently experiencing a shortage of young tech talent. However, Vietnam has a predominant youth population. Plus, it is a breeding zone for tech talents as the number of IT developers in the country is on a steady increase. As such, global tech giants in Vietnam can benefit from this trend by hiring skilled developers from the country’s gigantic pool of tech talent.
Although the presence of global tech companies will positively impact the Vietnamese economy, it also has a downside. Most local tech companies now have to compete with international companies to attract bright minds. However, this problem can be eliminated if global companies can train their own R&D engineers.
The fact that numerous tech giants are moving to Vietnam shows that the country has much to offer to the global community. Experts consider Vietnam an R&D hub because it combines a friendly business environment, continuous institutional reform, and a solid legal framework. With the benefits in place, the presence of global tech giants in Vietnam will increase in the coming years.