You have just returned from a business trip to Japan to learn about the development of Vietnamese tech firms. Do you think Vietnamese firms have opportunities to develop in Japan?

Japan is a vast IT market valued at $455.7 billion in 2023, and the figure is expected to increase to $480 billion by 2028.

However, according to JISA (Japan Information Technology Services Industry Association), Japan is seriously lacking IT workers, including software workers. Japan’s population is aging rapidly, and young people don’t want to study IT, they just want to study psychology and sociology.

Japan needs IT workers more than ever before. Many Japanese institutions and enterprises have been relying on an imported workforce to exist.

The Japanese government is applying new policies aimed at attracting qualified workers to stay and work in Japan and expand the categories of professions for the specified skilled worker No2. 

Foreign workers, after joining the skilled internship program, will be helped to improve their working and Japanese language skills, in order to go to the next level – a program on the specified skilled worker No 1 which lasts five years.

Japanese enterprises also hope that their government will take the next steps to expand opportunities to receive more foreign workers to Japan to work in many business fields which seriously lack workers, including IT.

However, because of the economic growth slowdown, the weak yen and the low salary, even new graduates hesitate to go to the third largest economy in the world.

Reports show that the average wage in Japan has not changed much over the last 30 years. According to OECD, the average wage only increased by 3 percent in 2001-2021, much lower than the 40 percent figure in South Korea and 29 percent in the US during the same period.

Levels.fyi reported that the average pay for a software engineer in Japan in 2022 was 23 percent lower than pay to a counterpart in Singapore and 17 percent lower in Seoul.

Japan has become a great opportunity for Vietnam’s IT firms to fill the gap left by Chinese workers who have departed and returned to their home market. 

Vietnam has become Japan’s important partner in providing software solutions and IT services.

Could you please tell us about Vietnamese firms’ capability of satisfying the requirements of Japanese clients?

Vietnam IT firms’ capability has upgraded significantly compared with the time when they began joining the market, including improving human resources, solving questions as ordered, giving advice, and providing package solutions.

Some Vietnamese IT firms are bringing made-in-Vietnam products to sell in a third country from Japan. However, in order to have large IT projects, Vietnamese IT firms need to build strong ecosystems including domestic and overseas companies to serve international markets.

Vietnamese IT domestic companies now have strength in new technologies, new products, but don’t have an advantage in sales. 

Meanwhile, overseas Vietnamese companies have better sales teams and have strong networks with Japanese companies. Vietnamese companies in both Vietnam and Japan should join forces to exploit the Japanese market.

Some tech firms in Japan plan to cooperate with Vietnamese firms, such as Rikkei Soft and Viettel Security in the near future, in order to penetrate the Japanese and global markets. 

Do Vietnamese firms have know-how to succeed in Japan?

We have summarized nine strategies and experience for success from working sessions during the last business trip: 1/ moving from small provinces to the political and economic center in Tokyo to affirm Vietnam’s fame and brand, and from there, reaching every corner in Japan; 2/ shifting from ‘offshore’ to ‘nearshore’ and ‘bestshore’; 3/ using Japanese people to access Japanese market; 4/ developing human resources on the spot; 5/ supporting new workers in accommodations; 6/ setting up ecosystem of members, diversified products, solutions and IT services; 7/ going to the world from Japan, using Japan as the jumping board; 8/ upgrading to become experts, not just writing codes; and 9/ taking full advantage of influences in the international markets to conquer new markets.

What are the challenges faced by Vietnamese tech firms in Japan: and have there been any proposals to the state?

Many firms have proposed that the Ministry of Information and Communications (MIC) work with the Ministry of Industry and Trade (MOIT) to allocate a more appropriate budget for foreign trade promotion for the IT industry. Currently, the state only allocates a small budget, just VND2.5 billion a year for this. Another issue that needs attention is human resources for IT. 

Binh Minh