Vietnam Smart Factory Push: State-owned firms adopt Industry 4.0, as SMEs struggle to keep up with tech change

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Vietnam has long been a huge magnet for foreign direct investment because of its cheap and abundant labor. But economists say the labor-intensive industry is not the path to sustainable long-term prosperity. Now, many state-owned firms are ramping up their use of automation, robotics, and artificial intelligence. CGTN's Rian Maelzer reports from Hanoi.

With barely any workers in sight, this state-owned yarn-spinning factory is in sharp contrast to the labor-intensive model on which Vietnam's manufacturing growth has been built. Some foreign investors here are also starting to rely more on technology, while other foreign firms like Sweden's Tetra Pak are helping Vietnamese companies make the shift to Industry 4.0.

JEFFREY FIELKOW, MANAGING DIRECTOR TETRA PAK VIETNAM "We have customers who have essentially nearly a 4.0 facility from automated batch production to sensors on all processing to ensure automation on quality monitoring and control, all the way through the filling machines when looking at integrating into a smart warehousing system as well."

State-owned Vinasoy is among those companies embracing Industry 4.0, including using augmented reality to get help from Tetra Pak's overseas experts.

RIAN MAELZER HANOI "Vietnam's recognition of the need to move up the economic value chain, reduce reliance on labour-intensive industries and adopt the use of the latest technologies in manufacturing and services is an important first step, but just a first step nonetheless."

Some 94 percent of Vietnam businesses are small or micro enterprises, and three percent more just medium size and economists say they are struggling even to adopt the basics like e-commerce or e-payments.

MATTEO VIDIRI MEKONG ECONOMICS "Many industries in Vietnam, they talk about Industry 4.0 but they don't understand exactly what it is. So the government needs to invest a bit more on raising awareness towards the people and the businesses especially the private businesses towards to what it means."

As wages continue to rise, Vietnam's labour-intensive model will lose its competitiveness. So more companies will have to do like Vinasoy, and adopt Industry 4.0 to boost their productivity, even if only in small, incremental steps for now. Rian Maelzer, CGTN, Hanoi.