Speaker Introduction

Tsai Jui-ying is the Director of the Southeast Asia Solutions Center at Dingxin Digital. She has been based in Vietnam for several years, focusing on the strategies and implementation of manufacturing companies' southward expansion, spanning factory setup, process and system planning, supply chain, and tax compliance. She excels at using an integrated strategy of "local regulations × data governance" to help Taiwanese businesses reduce cross-border risks and quickly establish stable ASEAN bases.

Stress tests before a trend arrives: Supply chains are pushing you forward.

The New Southbound Policy is no longer just a slogan, but a mandatory course driven by "supply chain migration." Tsai Jui-ying pointed out a key reality at the beginning: "Companies that haven't gone global yet don't lack opportunities, but rather haven't felt the pressure yet ."

The US-China trade war and the pandemic over the past few years have reshaped the supply chain landscape. With Apple, Samsung, and Google all setting up factories in Vietnam, the global OEM/ODM system is being rearranged. This means that if your core customers move south, you can no longer stay where you are.

She cautioned, " It's not a matter of whether you want to go or not; it's that your client has already made the move. "

If your production line is still in Taiwan, but your customers' factory inspection schedule has been moved to Vietnam, then the rules of the game have changed. For Taiwanese businesses, "wait and see" has become the biggest risk.

Young labor force is the engine of Vietnam's production.

Vietnam's advantage lies not only in its cheap labor, but also in its young, stable, and willing-to-learn workforce . According to official data, Vietnam's labor force participation rate is as high as 68%, with over 70% of the population under 50 years old, and a young workforce exceeding 50 million. This demographic structure is a vital asset for the manufacturing industry.

Tsai Jui-ying added, "This group of young people is full of learning motivation, but at the same time they have expectations for the speed of promotion and the work environment."

For businesses, a large workforce doesn't necessarily mean easy management—a lack of clear training mechanisms and skill levels can easily lead to quality fluctuations. She suggests designing education and training modules, skill matrices, and salary grading systems before even starting work, making "stability" a competitive advantage.

The three arrows of foreign investment: labor costs, tariff preferences, and investment policies.

Vietnam's secret weapon for attracting foreign investment has three arrows:

1. Low labor costs
2. Tariff advantages brought by free trade agreements (FTAs)
3. Investment incentives (BOI, tax exemption period, land rent subsidy)

These policies have made Vietnam a popular location for Asian manufacturing chains. However, Tsai Jui-ying cautions, " Incentives are just an entry ticket, not a moat. " What truly allows businesses to establish a foothold is the ability to integrate their supply chains and the speed of local compliance. "Return on investment (IRR) must be evaluated in conjunction with cash flow cycles; otherwise, saving taxes but being stuck with cash flow is equivalent to not making any profit."

The diversity of local culture: friendliness does not equate to uniformity.

Southeast Asia is a diverse culture, and its religions and social systems profoundly influence business operations. In Malaysia, Muslims pray five times a day, and work schedules must avoid these times. In contrast, Vietnam, as a socialist country, provides strong protection for workers' rights, such as offering women up to six months of fully paid maternity leave .

Tsai Jui-ying said with a smile, "As a mother, I am very envious, but as a manager, I have to start calculating the manpower shortage."

She cautioned that a friendly system has two sides; if companies don't pre-arrange backup staff, flexible job duties, and multitasking training , they could suddenly "lose half a production line" during peak season. Therefore, cultural understanding is not a matter of politeness, but a cost factor affecting production stability .

Policy winds can change in an instant: The true story of solar grid connection

She cited Vietnam's energy policy as an example. From 2018 to 2021, the Vietnamese government heavily subsidized solar power generation, encouraging companies to build their own solar panels and sell excess electricity back to the national grid. Many foreign investors rushed in, but two years later the policy took a sharp turn—the government suddenly suspended the purchase due to financial burdens and power overload! However, last year, they reopened the buyback program, but changed it to a zero-profit price .

This example clearly illustrates that operating in Vietnam requires accepting the reality of " immediate changes in regulations and policy adjustments in response to changing circumstances ." Tsai Jui-ying suggests that companies establish a "policy scenario table": setting "policy changes × response plans × stop-loss points" for investment projects, and continuously monitoring local announcements.

Compliance is not something that can be accomplished in one go, but rather through dynamic monitoring .

Different interpretations of the same law: a change of official means a resetting of the process.

"Vietnam's regulations are consistent nationwide, but enforcement is not always uniform ." During the pandemic, she observed that a change in personnel in a region could alter the entire review process. For example, the order of tax document approvals and the content of fire safety inspections could be reshuffled due to official rotations. Her advice is pragmatic: " Don't treat relationships as insurance; turn procedures into documents. "

Local advisors and park management units need to work in parallel, and all consensus must be documented in signed meeting minutes, because "Vietnamese officials may change, but documents will not."

Competition Intensifies: North Vietnam Has Become a Frontal Battleground for Chinese and Taiwanese Investment

The investment boom in North Vietnam is palpable. Tsai Jui-ying joked, "You can get by speaking Chinese at hotel counters and grocery stores in Hanoi." This seems convenient, but behind it lies competitive pressure— Chinese companies have a deep presence and are expanding rapidly, with their presence covering everything from infrastructure to components ! Beyond price wars, Taiwanese businesses can differentiate themselves through "on-time delivery, engineering cooperation, and after-sales service capabilities," which are the moats that allow them to survive in the long run.

Taiwanese businesses have three major advantages: strong technological foundation, integrated supply chain, and precise cost calculation.

In Tsai Jui-ying's view, Taiwanese businesses are not weak competitors. On the contrary, our strengths are very clear:

• Technical expertise : Proficient in precision machining and electronics manufacturing
• Close collaboration across the supply chain : a familiar culture of cooperation from upstream mold making to downstream assembly.
• Cost calculation ability : export-oriented mindset, extremely sensitive to losses and gross profit.

She gave an example: "Japanese companies rely on high-end equipment to maintain quality, while Taiwanese companies rely on construction methods and management." This flexible model of "using technology instead of capital" allows Taiwanese companies to maintain strong resilience in the ASEAN market.

No system, no control: When inventory "grows legs"

Vietnam has cheap labor, but if management is not systematic, cheap labor can become expensive.

Tsai Jui-ying shared a real-life example: A Taiwanese company manufacturing copper wire fittings suffered a massive loss of assets due to the internal theft and sale of its raw material, copper wire coils, because it had not implemented a warehousing system. She concluded, "Management is not a matter of trust, but a matter of data flow."

Importing barcode/serial number tracking, access control, and anomaly alert mechanisms is essential to prevent human error and accounting loopholes.

The system isn't a luxury feature; it's an airbag.

Building a factory or moving in ready? First, consider the supply chain rhythm.

For companies considering entering the Vietnamese market, Cai Ruiying raised three key questions:

1. Is the demand for customization high?
2. How long is the order visibility?
3. Do we need to be close to the customer or port?

If you answered "yes" to most of the three questions, it's recommended to build your own factory. If you're still testing the waters, you can lease or acquire existing factory buildings to shorten the mass production cycle. She cautioned, "The southward expansion isn't about relocating; it's about restructuring the supply chain."

Capital allocation: Cash flow is the lifeline for survival.

Vietnam's policies encourage investment, but the financing environment still requires caution.

Tsai Jui-ying emphasized, " Cash flow is more important than interest rates. " Land, equipment, and working capital should be financed in separate modules, and local currency should be used for hedging and natural offsetting to avoid exchange rate losses eroding gross profit. Investment evaluations should include IRR, payback period, and stress testing to ensure that the project can remain self-sufficient even in the worst-case scenario.

Employment and Legal Compliance: System Design in Schedules

Vietnam has strict regulations on working conditions, including working hour limits, occupational safety and health regulations, and foreign worker permits. Tsai Jui-ying suggests incorporating these regulations into work schedules and personnel systems , establishing automatic replacement mechanisms and multi-skill training programs to prevent sudden absences from impacting production capacity.

In Vietnam, labor management is not the responsibility of HR, but of the production department.

Through education and training and digital attendance records, employee rights can be protected and evidence can be presented quickly during inspections.

Digital Governance: From Rule by Man to Data Governance

Tsai Jui-ying said, "We should have implemented a basic digital infrastructure from the very beginning." This includes master data, access control, barcode management, and real-time alerts for anomalies. Although these systems may seem like administrative burdens, they are the foundation of a company's growth! When data drives decision-making, people have the capacity to innovate instead of being chased by documents.

Management is only controllable when data is real-time.

Investing in automation: Don't be misled by "cheap labor"

Although wages are low in Vietnam, brand factories have high requirements and strict quality control. "Cheap labor does not mean you can take your time."

She suggested starting with automation at bottleneck sites, such as AOI, automated measurement, parameter monitoring and alarm systems, and then gradually expanding it to the entire production line. This would not only improve efficiency but also lay the foundation for future ESG audits and carbon disclosure.

Taxation and Compliance: Front-end Layout is Key to Cost Control

Vietnam has strict regulations governing everything from company establishment and tax number application to import and export, transfer pricing, and even carbon disclosure.

Tsai Jui-ying advises, " Tax strategies should be designed starting from the very first contract. "

The flow of invoices, goods, funds, and data must be consistent; otherwise, the risk of separation between accounts and documents can easily arise. Establishing an integrated system at the front end not only saves manpower but also makes tax filing, auditing, and subsidy applications smoother.

Launching the six main axes of the new southward expansion, paving the way for the southward journey.

To help more companies avoid pitfalls, Dingxin Digital has planned a series of in-depth sharing sessions: From factory construction strategies, financing arrangements, labor regulations, digital governance, production line automation to tax compliance , experts will provide in-depth analysis and practical advice in separate sessions. "This is not a single lecture, but a navigation system for companies going global." She hopes that every company that wants to expand southward can "understand the road and navigate it smoothly."

Conclusion: Only by stabilizing people, systems, and data can we talk about speed.

Tsai Jui-ying concluded by emphasizing, " The New Southbound Policy is not about who runs the fastest, but about who walks the most steadily. "

Once a company establishes its "people, systems, and data," regulations, culture, and competition become merely predictable variables.

The New Southbound Policy began with anxiety, but will ultimately end with strategy.

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