Over the past two decades, Vietnam has become one of Southeast Asia’s most important manufacturing hubs, supported by strong foreign direct investment and deep integration into global supply chains. But Vietnamese manufacturers are under increasing pressure to deliver higher productivity, tighter quality control and greater consistency, while coping with rising labour costs and persistent skills shortages.
Sustaining competitiveness now depends less on low-cost labour than on smarter, more efficient production systems.
As a result, demand for industrial automation is accelerating across a wide range of sectors. And this is presenting great opportunities for providers of automation technologies and services right across the world, who can benefit from a manufacturing base highly open to international expertise.
Vietnam’s industrial expansion has been driven by electronics, machinery, automotive components, textiles, food processing and logistics – much of it fuelled by multinational manufacturers relocating or diversifying production away from China. This influx has raised expectations of efficiency, quality and traceability, particularly among global companies supplying Europe, North America and Northeast Asia.
A textiles manufacturing plant in Ho Chi Minh City, Vietnam
At the same time, the economics of production are changing. Wages have risen by 8% a year, labour turnover ranges between 24% and 30%, and factories face growing difficulties in recruiting skilled technicians and operators. So, labour-intensive processes are becoming harder to sustain at scale.
Against this backdrop, automation is no longer viewed simply as a capital cost. Increasingly, it is seen as a strategic investment that enables manufacturers to stabilise output, improve yields, reduce dependence on scarce labour and meet increasingly demanding international standards. For many Vietnamese producers, upgrading production capabilities is now essential to remain embedded in global value chains.
Robotics, machine vision, advanced control systems, manufacturing execution systems (MES) and industrial internet of things (IIoT) platforms are all helping Vietnamese factories to reduce downtime, improve quality consistency and gain real-time visibility over operations.
And such automation uptake is gaining momentum across a broad range of sectors.
Electronics manufacturers, including semiconductor assembly and consumer electronics producers like Samsung, LG, Amkor and Pegatron, are investing heavily in robotics, inspection systems and data-driven quality control.
Automotive and industrial components suppliers are following a similar path, driven by OEM requirements for consistency and traceability.
Food and beverage processors such as Vinamilk are adopting automation to improve hygiene, reduce waste and meet export certification standards. And logistics and warehousing operators like Viettel Post are deploying automated handling and tracking systems to cope with rising volumes and tighter delivery expectations.
Government policy is also reinforcing these trends. National programmes promoting digital transformation, smart factories and industrial upgrading are encouraging investment, while industrial parks and export processing zones are courting higher-value manufacturing projects.
Multinational manufacturers, in turn, are acting as anchors, pulling Vietnamese suppliers along the automation curve. And a growing ecosystem of Vietnamese system integrators and engineering firms is emerging to support this demand.
To meet this growing need, some Vietnamese companies are developing in-house automation solutions.
Telecoms and manufacturing giant Viettel Group, for example, has deployed its own logistics solutions including automated guided vehicles, conveyors and software control systems in large warehousing networks. And its intelligent platforms support process automation across industries.
Other large conglomerates such as Vingroup – through its subsidiaries such as VinFast and Vin Robotics – are also developing automation and control technologies and incorporating them into smart manufacturing and advanced production systems.
But it’s only a small minority of Vietnamese companies that have the capability to develop their own systems, with most technologies needing to be imported from overseas. And even the few companies that are developing in-house often need to bring in more advanced technologies in areas such as AI and cybersecurity.
And this is presenting major opportunities for specialists from around the world to sell innovations spanning hardware, software and services.
Advanced robotics, high-precision motion control, sophisticated machine vision, data integration platforms, cybersecurity and full smart-factory architectures are areas where Vietnam’s home-grown solutions are particularly limited.
There’s strong demand for sensors, MES, IIoT and analytics platforms, system architecture and integration knowhow, plus training programmes to build local operational capability.
International firms can also add great value through lifecycle services including maintenance strategies, upgrades and performance optimisation.
Equally significant is the shortage of experience in Vietnam in designing automation systems that scale across multiple sites or integrate seamlessly with multinational customers’ global production and quality systems.
And demand is perhaps highest of all for advanced technologies and expertise that help manufacturers move from isolated automation projects to integrated, scalable production systems.
These are areas where international firms have a strong role to play, particularly those offering not just equipment but system design, software, analytics and long-term lifecycle support. These technologies and services align closely with Vietnam’s Industry 4.0 ambitions and its push toward higher-value manufacturing in electronics, precision engineering and processed food.
Despite its openness to overseas input, though, Vietnam is not a straightforward market for international companies to address.
Purchasing decisions are often decentralised, technical specifications vary widely between factories and price sensitivity remains high, particularly among Vietnamese manufacturers.
Factories are cautious about adopting unfamiliar technologies without clear evidence of performance, reliability and after-sales support. And regulatory requirements, localisation expectations and the need for on-the-ground technical support add further complexities.
All this means successful market entry typically involves collaboration with Vietnamese players.
Common models include working with established distributors or system integrators, partnering on projects led by multinational manufacturers, and developing longer-term service relationships with large Vietnamese industrial groups.
In several recent projects we’ve managed, overseas tech providers have entered the market by supporting pilot installations with global manufacturers, before expanding through Vietnamese partners.
But distributors and integrators vary significantly in technical depth, sector focus and geographic reach. And choosing the wrong partner can be costly, both in time and reputation.
These challenges underline the importance of a structured market entry and expansion strategy. And working with specialist advisors who understand the industrial landscape, have established relationships with buyers and can bridge cultural and technical gaps is often critical to success. For many overseas firms, such support turns theoretical opportunity into sustainable commercial traction.
This was demonstrated recently by the trade mission to Vietnam and Thailand we organised for a US-based, non-profit Industry 4.0 business association which promotes innovation and automation. The delegation comprised eight American companies spanning industrial automation segments from automotive solutions and fluid power products to marking identification solutions and AI systems such as text-to-speech technology.
There was a good deal of interest in these companies’ offerings and, across both countries, they had 67 targeted meetings to progress concrete commercial conversations.
So, Vietnam’s manufacturing sector is evolving fast. The demand for automation is significant, growing and increasingly sophisticated, driven by long-term structural shifts rather than short-term cycles.
But success in this market depends on a carefully considered approach and plenty of determination – and on investing the time to understand Vietnamese manufacturers’ needs and build relationships with the right partners.
Companies that approach Vietnam with a clear value proposition, a collaborative mindset and strong in-country support will be well positioned to participate in the nation’s next manufacturing leap and embed themselves in one of Southeast Asia’s most dynamic industrial markets.
To discuss the potential of your industrial automation business in Vietnam, contact Thao at thao.pham@intralinkgroup.com