Welcome to Silicon Vietnam - Creating a technological eco-system
Reflecting on recent business trips to US, Europe, Japan and Korea, I’m struck by the level of interest from businesses outside of Vietnam on tech development inside Vietnam. A quick internet search on my return revealed many articles asking such questions as ‘is Vietnam the Silicon Valley of South East Asia?’, while on the ground there is the transformation of 3 districts in Ho Chi Minh City into ‘innovative urban areas’ and a bold declaration that ‘this will be Vietnam’s Silicon Valley’.
Even within the old-fashioned manufacturing industry where Vietnam is benefiting from being a cheaper alternative to China, the talk is of ‘Industry 4.0’ and smart factories in the Vietnam supply chain.
Within the general tech community as well, you will hear about tech savvy young Vietnamese, and that a glut of international companies (Rouse included) are using teams in Vietnam to develop their software programs.
It’s not just bluff as Vietnam has steadily climbed up the Global Innovation Index and in the most recent report it is in 45th place, just behind Thailand and well ahead of Indonesia and Philippines. China is in 17th place. Francis Gurry, General Director of World Intellectual Property Organization said, “countries that we see climbing rather consistently are India, Iran, Thailand and Vietnam”.
Developing the links in the ecosystem around innovation, investors and entrepreneurs is generally seen as the way forward for economies as they try to develop an innovative culture. We’ve seen it happen in China, where Shenzhen has a formidable tech ecosystem and of course in other jurisdictions as well.
So, is Vietnam now leading the surge in SEA and becoming the regional Silicon Valley? Are the tech savvy teams developing software at the tip of the iceberg in terms of skill-sets, or is this simply another outsourcing model and cost arbitrage? Does all the talk of ‘Industry 4.0’ mean that Vietnam will lead SEA in smart factories?
The Silicon Valley, Shenzhen and other models require the smooth interaction of many parts for them to work.
In this post, we look at the essential elements for such a model and whether Vietnam has these elements; and if it does, are they working together in such a way that it can justifiably be called the Silicon Valley of South East Asia? In later posts, we will consider the implications of our findings for businesses and their stakeholders – the opportunities and the possible pitfalls.
Firstly, let’s consider those essential elements. The list below is not by any means exhaustive, but should give an indication whether the ground is sufficiently fertile for an ecosystem to develop.
Intellectual Property/ Assets
A critical component is intellectual property – how it’s treated, encouraged, and rewarded. Has patent filing been encouraged by the government (as in China), or is there a general culture of enrichment through patent filing (as in US)? An indicator of development is whether there has been a significant increase in patent filings in key tech
areas, in particular computer technology.
Tech clusters/ science parks
Are specific technologies clustering together and developing a culture of innovation and entrepreneurship? Are innovative supply chains developing around certain industries?
Capital and funding
Are the ventures and start-ups supported by an ecosystem of financing and investment?
Is the talent pool deep enough? Are the Universities and tech colleges getting the right raw materials, and are they then developing the talent in the right way? Is the education system sufficiently robust, and does it produce people who challenge the usual order? In short, does it produce disruptors?
Government will and support
Is the government supporting where appropriate and getting out of the way where necessary? Is it investing in the right areas? Does it over regulate? Do immigration regulations allow foreigners with specific skills to enter the market?
Sufficient diversity within the digital workforce
Chinese students educated in western universities were not returning home. Now, they are being welcomed and the Chinese tech sector is reaping the benefits of knowledge transfer from skilled workers that have studied and worked abroad. Is Vietnam following this model?
In the next post we will examine how Vietnam is meeting these requirements.
 Le Van Thanh from the HCMC Institute for Development Studies
 Gaule, A. (2017) Purpose to Performance: Innovative New Value Chains. New York: Gallery Books.