The Current Status of Digital Transformation Among Small and Medium-Sized Enterprises (SMEs) in Vietnam

Small and medium-sized enterprises (SMEs) make up the majority of Vietnam’s economy. According to the Ministry of Planning and Investment, by the end of 2024, Vietnam had over 940,000 enterprises, of which SMEs accounted for 98%, contributing approximately 40–45% of the national GDP and creating 60% of total employment.

These figures demonstrate the crucial role SMEs play in Vietnam’s economic structure.

In the context of the Fourth Industrial Revolution (Industry 4.0) and the growing digital economy, digital transformation (DX)—defined as the integration of digital technology into all areas of business operations, management, and models—has become not merely an option but a necessary condition for survival and development.

However, in practice, the implementation of digital transformation among Vietnamese SMEs still faces many limitations, with a large gap between awareness and action.

1. The Current State of Digital Transformation in Vietnamese SMEs

1.1 Positive Developments

• According to the 2022 report by the Ministry of Planning and Investment (MPI), many SMEs have improved their awareness of digital transformation and have begun applying digital technologies in marketing, distribution, multichannel sales, warehouse management, and production—and this number continues to grow.
• The SME Digital Transformation Support Program (2021–2025) has been rolled out nationwide: over 16,000 enterprises used digital platforms in 2021, rising to 48,000 by October 2024, showing a significant increase compared with previous years.
• In localities such as Ho Chi Minh City, the digital economy accounted for 21.5% of GRDP in 2023, with the city targeting 25% by 2025.

1.2 Implementation Levels and Remaining Gaps

• According to a 2022 survey, only 2.2% of SMEs were in the “initial” stage of digital transformation (stage 2), while 48.8% had used digital solutions but had discontinued them or failed to sustain long-term adoption.
• In Ho Chi Minh City, among over 2,000 surveyed enterprises, stores, and business households, about 56.41% expressed interest in digital transformation, but only 3.75% had actually applied information technology in their operations.
• Many SMEs remain at a basic level, using only simple digital tools such as email and social media, without yet adopting advanced technologies like Big Data, IoT, or AI, or transforming their management and business models accordingly.

2. Major Challenges Facing SMEs in Digital Transformation

When pursuing digital transformation, SMEs in Vietnam face several significant barriers, which can be summarized as follows:

• Limited Financial Resources:

Investments in digital infrastructure, technology, and workforce training require substantial funding, which many small-scale enterprises cannot afford.

• Insufficient Human Resources and Digital Skills:

Many business leaders lack a clear vision for digital transformation; employees lack the necessary technical skills, and most enterprises do not have a dedicated digital team.

• Unclear Technology Infrastructure and Transformation Strategy:
  Digital infrastructure remains fragmented, adopted technologies are often unsuitable for smaller enterprises, and many SMEs lack clear roadmaps and objectives.
• Cultural and Mindset Barriers:
  Digital transformation is not only about applying technology—it also requires changing how businesses operate, manage, and interact with customers and data. Many SMEs have not yet addressed this aspect.
• Cybersecurity and Data Protection Risks:
  As businesses digitize, data becomes both a valuable asset and a security risk. Many SMEs still lack adequate data protection measures or do not prioritize cybersecurity.

3. Opportunities and Benefits of Digital Transformation for SMEs

• Enhanced Management and Operational Efficiency:
  Digital transformation helps automate business processes, reduce costs, and improve productivity (e.g., digitizing warehouse management or multi-channel sales).
• Expansion of Digital Market Access:
  SMEs can leverage e-commerce and digital platforms to reach new customers and potentially expand internationally.
• Improved Competitiveness:
  Digitally enabled enterprises are more agile in engaging customers, analyzing data, and making informed business decisions.
• Governmental Support:
  Both central and local governments have introduced initiatives to help SMEs access technologies, training, and digital solutions—such as the SME Digital Transformation Support Program (2021–2025).

4. Recommended Solutions for SMEs

To ensure that digital transformation among SMEs is both effective and sustainable, a comprehensive and coordinated approach is required, including the following:

• Enhance Awareness and Training:
  Enterprises should participate in programs, workshops, and training sessions on digital transformation for both leaders and employees. Enhancing knowledge of technology and digital skills will help shift mindsets, shape strategic visions, and foster proactive execution.
• Allocate Budgets for Digital Transformation:

Each enterprise should define an appropriate investment plan and view digital transformation as a long-term investment, not a short-term expense. Budgets can be allocated in phases to ensure feasibility.

• Develop a Step-by-Step Digital Transformation Roadmap:

SMEs should begin with specific, short-term, and easy-to-implement goals, such as digitizing sales, accounting, or customer service. Once positive results are achieved, the transformation can expand to other areas toward full digitalization.

• Select Appropriate Technology Solutions:

Instead of adopting multiple solutions simultaneously, SMEs should choose technologies suitable for their scale, industry, and capacity. Starting with existing management platforms such as ERP, CRM, HRM, or affordable, scalable SaaS solutions can be effective.

• Strengthen Collaboration within the Digital Ecosystem:

SMEs should actively connect with technology providers, business associations, regulatory agencies, and support organizations to receive consulting, share experiences, and participate in government-backed initiatives.

• Foster a Digital Culture and Modern Management Model:

Digital transformation requires not only new technologies but also a shift in corporate culture and management thinking. Enterprises should promote flexibility, transparency, and data-driven operations—treating technology and data as strategic assets to enhance long-term competitiveness.

5. Case Study: Ho Chi Minh City

As Vietnam’s leading economic hub, Ho Chi Minh City provides valuable insights into SME digital transformation:

• The city aims to raise the digital economy’s contribution to GRDP to 25% by 2025.
• A survey of over 2,000 enterprises and business households found that 56.41% showed interest in digital transformation, but only 3.75% had adopted IT in their business activities.
• The city has implemented plans to support SMEs in digital transformation, including developing sales management platforms, e-payment systems, and organizing training and consulting programs.

These findings indicate that while awareness has improved, actual and systematic implementation remains limited, especially among smaller enterprises.

Conclusion

Digital transformation represents both a significant opportunity and an inevitable requirement for SMEs in Vietnam to adapt to the digital economy and intensifying competition.
Although awareness and policy support have increased, the majority of SMEs remain in the initial or experimental stages, with limited progress toward comprehensive transformation.

Successful digital transformation goes beyond simply “buying technology” — it requires a fundamental change in management mindset, business model, corporate culture, and customer interaction.

For SMEs, the key is to start small, focus on priorities, and expand gradually to avoid large, inefficient investments.

Government agencies and the broader digital ecosystem must continue to enhance financial, consulting, training, and technological support, particularly in key economic areas such as Ho Chi Minh City.