Vietnam has become a major destination for global manufacturing thanks to its strategic location, large workforce and infrastructure to support exports. Taiwan has been a strong contributor to this growth as Vietnam's fourth-largest investor. We explore the opportunities for closer business links as Vietnam pushes for more advanced technology in its industries.
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00:00Welcome to Southbound, your ticket for a deeper look into Taiwan's business links with Southeast
00:16Asia and beyond. I'm Joyce Sun, and we're at National Taiwan University in Taipei. As
00:22Taiwan diversifies its trading partners, one key destination has emerged, Vietnam. Taiwan
00:29has long done manufacturing business with the Southeast Asian country, but as Vietnam
00:34pushes for more high-tech, Taiwanese factories there are at a crossroads. Taiwanese businessman
00:41Tsen Yen Tsen has been making ceramic pigments at this factory in southern Vietnam for 20
00:47years, producing as much as 400 tons of colors a month for tiles. Tsen was part of a wave
00:56of Taiwanese manufacturers who came to Vietnam in the early 2000s. Land and labor were cheap,
01:03and from here they could tap into new overseas markets previously inaccessible from Taiwan.
01:26Once among the world's poorest countries, Vietnam has emerged as one of the region's
01:35leading economies. Its strategic location, large workforce and infrastructure to support export
01:42have helped the country become a hub for manufacturing, a sector which makes up
01:47about a quarter of its GDP. Vietnam has also benefited from a global production shift away
01:54from China amid Beijing's crackdowns on foreign firms. Taiwan has been a strong contributor
02:01to this growth, becoming Vietnam's fourth largest investor. Taiwanese investment here
02:06in Vietnam has quadrupled in the last few years. In Ho Chi Minh City, once a land filled
02:12of swamps, forests and empty patches of flat areas like the one behind me, has now transformed
02:19into a bustling metropolis. The city and the country's capital, Hanoi, are both among the
02:24top fastest growing cities in the world. In fact, Vietnam is expected to lead Southeast
02:31Asia as the region's economic growth is projected to outpace that of China's in the next decade.
02:38Taiwanese store owner Xu Yuling has long been optimistic about Vietnam. A long-time
02:43investor here, he believes Taiwan's status as a leading maker of cutting-edge chips has
02:49now made it a desirable partner for the region.
03:12To attract the desired tech players, Vietnam is also working to upgrade its manufacturing
03:18sector overall, and the Taiwanese factories already here are trying to keep up.
03:25By scanning a QR code, deputy production manager Kim Thuy logs how many screws have been made
03:32in the factory line. She works at Anchor Fasteners, a Taiwan-owned company in southern Vietnam.
03:40Every day they make tens of thousands of screws of varying shapes and sizes for top-tier motorbikes
03:47from auto giants Honda and Yamaha. On this computer, Kim can track each piece at different
03:53stages of production on a centralized online system, a process that used to involve filling
03:59out stacks of paper spreadsheets.
04:08This is all part of the factory's effort to go digital. Getting production lines online
04:13is a way to stay competitive in Vietnam, a nation working to rebrand itself from a cost-effective
04:20manufacturing hub to one capable of high-tech projects.
04:24Social scientist Trinh Thi Mong Thuyen has watched her country evolve, and says digital
04:30transformation is crucial if Vietnam wants to become a developed economy.
04:44Vietnam is looking to pull off an industrial revolution, using the world's latest smart
05:04factory technology and artificial intelligence. To help with the modernization of the fastener
05:12factory, its General Director Shi Bo-Chang turned to mechanical engineer Kenneth Chen.
05:19Chen, who formed the A1 Smart Factory Alliance, custom-makes roadmaps for firms intending
05:25to go digital.
05:26Most of the factories or companies, they are not ready for the so-called digital transformation.
05:33They don't even have the basic foundation yet. In Vietnam, you have more opportunities
05:38because people have no burden, no background, so they are used to accepting new technology.
05:45Chen says the key is to start small and do it in stages, like computerizing data from
05:51different parts of the factory and gathering them in a way machines can process and in
05:56the future act on. This frees up employees from simpler, repetitive tasks and lays the
06:02foundation for more ambitious upgrades.
06:05One example of how this factory can up its digital journey is with those cameras up there.
06:12Right now they're part of a surveillance network to monitor the shop floor. But these cameras
06:17could have another purpose in the future by integrating AI. What that would look like
06:22is that an AI-trained camera can see a gesture or motion like this and automatically signal
06:32to machines to change a control.
06:35Ultimately, for factory head Shi, upgrades must make sense for the business and help
06:40it survive through Vietnam's changing market.
06:51For business owner Chen, it's been tough. Ceramics are not as popular as before and
06:57he's been focusing on trying to keep the customers he has left.
07:06Vietnam's economy and government are moving quickly to push a digital transformation.
07:15And some businesses there are faced with a decision to either keep pace with its ambitious
07:20high-tech goals or be left behind.
07:25Taiwan's high-tech expertise is what makes it a valuable partner for countries like Vietnam.
07:30While I was there, I spoke with Hank Han, Taiwan's top envoy to Ho Chi Minh City, and
07:36he told me what he thought were still obstacles between the two countries working more closely
07:41together on advanced tech.
07:44So one thing I have to maybe remind the Vietnamese government that when Taiwan is considering
07:52where to set up this semiconductor factory, we have to consider the national security
07:59factor. Take United States, Japan and Germany for example. Their governments are very flexible
08:11when dealing with our high-level officials to visit their countries. But Vietnam is not
08:19so willing. We hope they can be very flexible to handle this purely economic investment
08:30plan.
08:30We can reach a so-called win-win situation. Vietnamese students can get a degree and get
08:38a good job. And for Taiwanese enterprises in Taiwan, they can get a good job.
08:48They can get the staff that they require.
08:54As you just heard there, talent is a big part of this collaboration. Here in Taiwan, universities
09:00like NTU are a key source of talent for the likes of TSMC and MediaTek. It's a pipeline
09:07that Vietnam wants to establish, and I met with aspiring engineers in Ho Chi Minh City
09:13to find out how they're training to grab their spot in the hot sector.
09:18With just months to go until graduation, Vietnamese engineering student Thanh Nhat
09:22Huy is dreaming big to land a job in robotics at a foreign tech firm. He's honed his craft
09:29in mechatronics, a cross between mechanical engineering, electronics and computer science,
09:35a varied skill set he believes will give him an edge.
09:39I can actually connect other engineers together, because if I only study on one field, then
09:44probably I will hardly understand the other field. Maybe I can even connect Vietnam to
09:49other countries. For example, in Taiwan, I can maybe build a bridge.
09:54In an interconnected world, reliant on technology and diverse skills, talents like Thanh are
10:00highly sought after. He's one of thousands of students at Industrial University in Vietnam's
10:06economic hub Ho Chi Minh City, vying for a spot in a competitive global tech market that's
10:11increasingly investing in the Southeast Asian country. The school is no longer just focusing
10:18on skills for Vietnam's historically dominant sectors, like making clothes, machines and
10:23electronics. It's expanded into courses like high-tech design, and investing millions of
10:30dollars into a smart factory lab to train students on top-grade devices.
10:36This university enrolled a record number of students into its mechanical engineering program
10:41this year. Students and professors alike are working to seize this opportunity to bring
10:47local talents up to scratch as more foreign tech firms invest in Vietnam.
10:53That includes chip-making companies from Taiwan. For the global tech leader, Vietnam presents
10:58a prime opportunity. With over four times the population of Taiwan, Vietnam has a large
11:05and young workforce, which is why Taipei-based AI software exec Jonathan Yu has high hopes
11:11for Taiwan and Vietnam's trade ties.
11:14Lots of our customers from semiconductor or even like IC design house, they found out
11:20that some of the best students in Vietnam, you have the chance to get the best students
11:28in Vietnam to join your company. But if you do the same hiring strategy in Taiwan, it's
11:32very difficult because maybe the best will go to TSMC. But now you can hire the best
11:37in Vietnam.
11:39Though Vietnam has a lot of promising talent, much of the labor force lacks proper training.
11:45Master of Engineering candidate Le Hieu Ang says he's one of the lucky ones, with access
11:50to some of the latest machines and equipment to learn.
12:03As more foreign firms look to set up shop here, it'll be up to Vietnam to educate and
12:08prepare a workforce that's ready to meet the challenge of a globalized high-tech economy.
12:15Thank you for joining me for the first episode of Southbound. If you want more from Vietnam,
12:21come with me on a ride in an electric taxi, a key driver in the country's bold net zero
12:26goals. Go to TaiwanPlus.com for that.
12:29I'm Joy Sun in Taipei. Take care and catch you next time.