Breaking Free from Dependence on Low Costs: Implementation Strategies for Unstoppable High Efficiency in Vietnamese Factories - Strategic Thinking and Reform Measures for Vietnam's Transition Period -

Figure 2 shows the trends in investment amounts and project numbers for FDI in the manufacturing sector from 2015 to 2024. This shows that in 2023 the total investment amount recovered sharply, recording the largest growth rate since 2015. There were further increases in 2024, and the demand for investment in the manufacturing sector remains high. The dotted line indicating the number of projects shows a decline in 2022, but a rapid increase in 2023, and has recovered to around 1,200 projects. This shows that projects that were stopped during the pandemic have resumed all at once.

In addition, investment is concentrated in regions where existing industrial parks are clustered, such as Bac Ninh Province and Hai Phong Province in the north, and Binh Duong Province in the south (see Figure 3). In these regions, there has been ongoing factory construction and equipment expansion, indicating that hiring plans are intensifying in anticipation of operations starting earlier than planned.

It has become impossible to avoid raising wages. For this reason, it is essential to reevaluate staffing levels based on fair wages and focus on increasing individual productivity. In order to make this happen, conventional measures such as smart factory implementation and labor-saving and efficiency improvements through technology are essential. However, there are key points specific to Vietnam that must be considered when advancing such initiatives.

In Vietnam, there is a concept of protecting one's own job that is stronger than in Japan, which can make it difficult to share procedures and knowledge. Accordingly, the starting point for understanding the current situation is the design of reassurance and trust, not the introduction of visualization tools. Efficiency improvement is not about reducing staff. It is about initiatives to evolve roles, and the fact that shared activities will be evaluated positively is clearly stated in Vietnamese by the management themselves. In addition, promising the benefits that can actually be gained through sharing (reduction of overtime, reflection in allowances and skill evaluations, etc.) creates psychological safety. Only after completing these preparatory steps does process visualization aligned with actual site conditions become possible.

The basic way to proceed is to design the reward in advance so that sharing doesn't become a lose-lose situation. Specifically, contributions to standardization and handover will be made visible through evaluation and compensation (such as badges, monthly recognition, and bonus funds allocations), and roles of responsibility and support will be clarified. Only then can the current operations be visualized, which enables the identification of gaps between the current state and the target. This, in turn, lays the groundwork for implementing the measures necessary for factory advancement: establishing a roadmap based on priority and feasibility, verifying effectiveness and operational challenges through small-scale proof-of-concepts, and proceeding with full-scale implementation.

At factories in Vietnam, young engineers in their 20s and 30s play a central role with a high level of adaptability to new technologies and a strong desire to learn. At local manufacturing sites, Vietnamese engineers are increasingly thinking for themselves and taking an active role in equipment installation and improvement activities. In order to make use of this potential, it is essential to go beyond mere operational training and delegate authority for on-site improvements such as proposals and machine settings early on, thereby fostering a sense of ownership.

In addition, placing key site personnel in leadership roles within the project engages them not as those who lose influence but as those who drive transformation. This approach is the decisive factor in transforming resistance from sites into positive change. In Vietnam, where the culture of respecting elders is strong, when standardizing processes dependent on someone who has been in a key position for years, skilled workers holding authority often worry about their influence diminishing. By involving them as improvement committee members or line leaders and assigning them the role of key partners in knowledge transfer, both knowledge transfer and psychological resistance can be resolved. Establishing a system that makes use of both young talent and experienced workers as the dual engines driving implementation of measures, reform will accelerate rapidly.

The “Act first and learn from it" characteristic rooted in Vietnam sites is a powerful engine for improvement activities. During the planning phase, Return on Investment (ROI) and risk hypotheses are visualized with Japanese-style meticulousness, and during the execution phase, there is a rapid cycle through PDCA using a short rhythm of weekly small experiments, biweekly demos, and monthly retrospectives. Both successes and shortfalls are shared openly, celebrating failures as material for refining the next hypotheses. This light rhythm design and visualization of failures are operational practices we've refined in Vietnam sites. They form the foundation for running parallel without collision between caution (Japan) and speed (Vietnam).

To continue improvements, it is essential to design personnel and evaluation systems in tandem with operational processes. Site contributions are continuously visualized through improvement boards, KPI dashboards, and metrics like the number of adopted or replicated proposals. This visualization is directly linked to evaluation and rewards (monthly recognition, allocation of productivity bonus funds). As explained in the previous section, authority for improvement proposals and minor machine adjustments is delegated to young staff early on, while clearly defining the evolving roles of supervision, review, and training for senior staff to raise the quality of their influence. These measures are backed by linking the skill matrix with grades and allowances, which establishes a system where sharing pays off. Visualizing contributions and designing rewards in this way is also an effective strategy for ensuring these initiatives progress reliably in Vietnam.

Finally, a governance framework that clearly defines the division of decision-making responsibilities is established. The Japanese side will lead design, investment decisions, and risk management, while the Vietnamese side will lead implementation, operations, and prioritization of improvements. These roles will be defined and the procedures for change management and standard revisions formalized. The headquarters and local sites seamlessly bridge both sides in two languages, continually renewing agreements through metrics (ROI, quality, lead time). This Japan-Vietnam hybrid operational framework itself embodies the implementation know-how cultivated at our support sites. By clarifying decision-making and increasing on-site autonomy, the Vietnam base is elevated from a low-cost factory to a continuously learning innovation base.