How ASEAN Businesses Embrace Digitalization

COVID-19 has hit ASEAN economies hard. With the pandemic forcing countries to enforce lockdown measures and stop global trade, countries that rely on tourism and exports for economic output have taken a great hit. However, on the bright side, the pandemic is also speeding up digitalization in many areas of the ASEAN economy. E-commerce, digital trade, digital manufacturing, and digital marketing have all seen an uptick since the outbreak of the virus, and ASEAN businesses are greatly benefiting from this recent trend.

Garment 10 in Vietnam: a digital frontrunner

Garment 10 Corporation JSC, one of Vietnam’s 500 largest businesses, is an example of how ASEAN businesses are incorporating digital tools into their systems. The textile manufacturer is applying digital technologies in its administration, production, and distribution. “Applying new solutions into production for both domestic and overseas markets, collecting the information of customers, markets, tastes, and designing has brought numerous achievements to the corporation recently,” explains CEO Hoang The Nhu. “In addition to standardizing all processes, applying Industry 4.0 and automation has already improved the performance and productivity of all units.” 

Besides manufacturing, Garment 10 also uses digital tools in online marketing and sales, where digital channels contribute significantly to the firms’ bottom-line. “This confirms that digitalization is a proper movement for the corporation, bringing a new experience to customers and reporting better performance than via traditional methods,” Nhu believes.

The extent to which digital tools are contributing to the economic output varies within the ASEAN community. In Vietnam, only 10% of businesses apply digital tools, making Garment 10 an exception. On the other hand, Singapore, Jakarta, and Jangon are emerging as ASEAN’s tech hubs. 

Opportunities for small and medium-sized businesses (SMEs)

Small businesses also benefit from digitalization since it gives them more opportunities to reach out to customers and maintain a relationship. Especially in countries like Thailand, which has an internet penetration rate of 82.4%, businesses can use eCommerce and mobile platforms to sell products and connect with customers. 

While the internet infrastructure is well-developed and provides an opportunity for the SMEs, big-tech firms in ASEAN are not nearly as dominant as they are in the West. ASEAN markets are laden with the “old-economy” businesses like the finance and real estate sectors. This proves why the MSCI ASEAN index was down 19% in 2020, while the performance of large-scale tech stocks has caused world equities to wipe out their year-to-date losses.

However, this absence of dominant big-tech firms can also be an advantage for ASEAN businesses, since there is more competition and opportunities for smaller firms to conquer a market share. The playing field is more leveled, making it easier for SMEs to compete. 

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