Cheap labor cost makes Vietnam robot market unattractive

Trade war has turned Southeast Asia into a new factory for the world. Several companies have been shifting production into the region and Vietnam.

Vietnam’s high economic growth and the high demand of the domestic market have stimulated investment, attracting manufacturers around the world to expand their business in this favorable market.

However, the chance of selling robots to Vietnam is not high for all manufacturers. Cheap labor cost is still one of the advantages manufacturers want to take advantage of, said Nguyen Thanh Hoa, Vietnam country director of Makino, a leading machine tools and solutions provider.

Vietnam's automation sector market has value at only $184.5 million in 2021, according to a survey of Universal Robots.

Therefore, Makino’s business in Vietnam has been mainly focused on observing and introducing new products to only 13% of domestic manufacturers who are really interested in applying automation systems into production.

"We have not assessed the automation system demand of domestic manufacturers," Hoa said.

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For Vietnam market, during the past 10 years, Makino restricted introducing high technology products. It has begun introducing new products in this market for 2 years.

The decision on automation technology application of enterprises is not the main hurdle. Restrictions on the ability to access the technology and use of human resources are the main barriers for Vietnam automation market, Hoa said.

The National Digital Transformation Project aims to have 50% of Vietnamese SMEs move to digital platforms by 2025 and there will be least 80,000 digital businesses.

However, companies are still hesitant for automation transformation.

Vietnam's global innovation index (GII) is growing. In 2019, Vietnam increased by 3 places to 42/129 economies. In 2018, it was 45/126.

With this ranking, Vietnam ranks first among 26 low-middle income countries and ranks third in ASEAN, after Singapore and Malaysia.

Vietnam is in its early stages of automation production, leaving great opportunity for automation technology suppliers to sell their products in the market. But this opportunity could be more difficult than Singapore, Malaysia or some other countries in the world.