Digital transformation present in all kinds of business

Last week, Ho Chi Minh City held an Economic Forum with a focus on developing the digital economy. As one of the major economic, scientific and technical centers of the country, digital transformation has taken place strongly in the southern metropolis for many years with its presence in all kinds of businesses.
Digital transformation present in all kinds of business ảnh 1 An employee of a business store prepares goods for customers to order online (Photo: SGGP)
It can be said that, up to this point, businesspersons have been converting from a traditional model to a modern digital technology application model; therefore, digital transformation has touched every corner of production and business activities in Ho Chi Minh City in particular and the country in general.
Some famous traditional markets in the southern largest city which attract a lot of tourists to visit and shop, such as Ben Thanh in District 1, An Dong in District 5, Binh Tay in District 6, are now quietly waiting for customers. Many stalls in these markets are still closed or operating in moderation at weekends. Ms. Trang Hoang, a small trader specializing in clothing sales at An Dong market, moaned that business is sluggish, she sometimes just sells three or four shirts and a few pairs of pants, the profit is less than VND100,000 a day, not enough to pay employees’ wage, but she doesn’t want to give up as she has stayed in the market for 20 years.
Many people think that it is due to the epidemic, but it’s not been so, because when the outbreak of the Covid-19 epidemic has not broken out, businesspersons in traditional markets had faced fierce competition from their peers who have been taking advantage of social networks to sell commodities. At that time, many markets had nearly half a stall compared to before.
Contrary to the severe decline in business in markets, according to market research firm Statista, the value of the e-commerce market in Southeast Asia has increased 24 times in the past six years, from US$5 billion in 2015 to US$120 billion in 2021; furthermore, it is expected to reach US$234 billion in 2025. For Vietnam, the retail e-commerce market is forecasted to grow by 300 percent, from US$13 billion in 2021 to US$39 billion in 2025.
Not only the traditional market, but post offices are also now empty of people to send letters and make phone calls as before. An employee of the District 5 Post Office said that people now call online with pictures via Zalo, Viber, and very few people come to send letters. Thereby, many post offices have to undertake other services such as collecting electricity and water bills to get more income.
However, it can be said that one of the most prominent digital transformations in recent times is the application of technology in transportation firms that launch two-wheel ride-sharing services to connect with customers. The advent of the new types of transportation has pushed traditional transport companies into a very difficult situation. The competition is so intense that Anh Duong Vietnam Joint Stock Company (Vinasun) - a representative of the traditional business method, sued Grab Vietnam Company representing the digital transformation business demanding for compensation of nearly VND42 billion for its damage.
The matter has now been resolved, but its aftertaste is still lingering until today when the Ministry of Transport submitted to the Government the draft revised Road Traffic Law which still provoked many controversies over the same management model for traditional taxis with taxis applying technology.
There have been many conflicts between drivers of technology-applied 2-wheel motorbikes and the traditional motorbikes. The phenomenon has shown that how intense the digital transformation process is as it has not only pushed those who have not yet changed to access technology into a difficult situation, but also created great challenges.
Vu Kim Hanh, President of the Association of High-Quality Vietnamese Products, said that most traditional businesspersons fully grasped the current competitive pressure, but they do not know how to start and how to implement it effectively.
To adapt to the actual situation, a number of small traders at traditional markets such as Ben Thanh, Binh Tay, An Dong have implemented online sales in parallel with direct sales. These small businesses shared that during the epidemic, the number of online visitors increased by 15 percent-20 percent compared to normal days and this is really a good sign.
E-commerce is an excellent way for small businesses to find new customers; however, some elderly sellers have not been familiar with technology; as a result, they are unable to use e-commerce while their children do not want to take over the traditional family business.
Presently, these people are taking advantage of direct selling which customers can touch and see their commodities before deciding to buy. Nevertheless, according to many small businesses, all these efforts are also difficult to help them compete fairly with online sellers.
Ms. Trang Hoang explained that many traditional market traders have to pay flower tax to compensate for the work of order, hygiene, and fire prevention whereas there are still many sellers through social networks who have found ways to avoid taxes. Business is not fair like that, how can small traders in traditional markets survive?
The ‘fight’ between traditional taxis and technology cars has subsided, but which model to manage these vehicles is still controversial. The Ministry of Transport has made many efforts to find a proper solution for technology vehicles that can be equal to traditional taxis, but the model proposed by the ministry in the draft Road Traffic Law has not shown that.
According to many experts, one of the advantages of technology cars is to adapt quickly, often offering prices in line with market development, freight rates are high at peak hours, but at off-peak hours are lower, passengers are informed in advance of the route and know the fare to pay.
Meanwhile, many traditional taxis companies are bound by regulations. When traditional taxis companies complete this procedure, it is often past ‘peak hour’ or ‘off-peak hour’. Additionally, passengers will be highly likely to pay more for traditional taxi companies if they meet unscrupulous drivers.
Commenting on this, economic expert Vu Dinh Anh said that the Ministry of Transport cannot manage technology taxis the way it has managed traditional taxis and vice versa. Currently, many taxi companies have been actively applying technology in management and administration to increase competitiveness. Therefore, the responsibility of the Ministry of Transport is to both create a fair competition environment and promote the benefits of technology to ensure the legitimate interests of consumers.
The banking sector is one of the most successful digital transformation industries. In Ho Chi Minh City, digital payment activities in 2021 increased 168 percent over the same period last year. However, the banking industry still has to warn customers to be wary when making transactions with technology. All of this shows that reality is requiring the authorities to come up with an effective management model suitable for the digital age.
Professor Nguyen Thi Canh, former senior lecturer at Faculty of Finance and Banking of the University of Economics and Law under Vietnam National University Ho Chi Minh City, said that the demand for online purchases from customers has increased sharply, especially after the Covid-19 epidemic, which requires traditional business people to change soon. She supposed that among the above-mentioned traditional business models including markets, post offices, and taxis, traders in traditional markets take the longest time to change. Accordingly, authorities should pay more attention to help traders in traditional markets.

Other news