Why DX Now? Japan and Vietnam's Reality in Data | DX Fundamentals for Businesses, Part 2

Introduction: This is Part 2 of our series "DX Fundamentals for Businesses"

In Part 1, we clarified what DX really means and how it differs from digitization (converting analog to digital) and digitalization (digitizing specific processes). In Part 2, we examine why businesses must pursue DX now, using the latest data from Japan and Vietnam. The bottom line: DX is no longer a nice-to-have improvement — it is becoming essential infrastructure for sustaining operations amid labor shortages and a shifting competitive landscape.

1. Japan: The "2025 Cliff" Warning and What Actually Happened

In its 2018 DX Report, Japan's Ministry of Economy, Trade and Industry (METI) warned that failing to modernize legacy systems would cause economic losses of up to JPY 12 trillion per year from 2025 onward — the so-called "2025 Cliff" (METI DX Report, PDF). Now in 2026, that warning has shifted from projection to lived reality.

Labor shortage has become a direct cause of bankruptcy

According to Tokyo Shoko Research (TSR), labor-shortage-driven bankruptcies in fiscal 2025 reached 442 cases — an all-time record, up 43.0% year on year. Surging personnel costs alone accounted for 195 cases (+77.2%) (TSR Data Insight). Total corporate bankruptcies hit 10,505, a 12-year high, with labor-shortage cases rising for the fourth consecutive year (Jiji Press).

Key point: The main driver of these bankruptcies is not simply failing to hire — it is that personalized, undocumented work stops when a key employee leaves. When operations run on digital systems rather than individual memory, the shock of resignations and hiring difficulty is greatly softened.

SME DX is still at the starting line

The Organization for Small & Medium Enterprises and Regional Innovation (SMRJ) "Survey on SME DX Promotion (2025)" shows a stark divide: about 70% of companies with 101+ employees are already pursuing or considering DX, versus only about 25% of companies with 20 or fewer employees. Most progress stops at the "digitizing analog tasks" stage; few reach data utilization or business transformation (JCCI Assist Biz summary). The 2025 SME White Paper likewise reports that "heavy cost burden" and "insufficient DX talent" top the list of barriers at every stage (SME Agency, 2025 White Paper, Part 1, Ch. 1, Sec. 5).

Key facts about Japan (with sources)	Figure
Economic loss risk if DX is not pursued (METI DX Report)	Up to JPY 12 trillion/year from 2025
Projected IT talent shortage by 2030 (high scenario, METI survey)	~790,000 people
Labor-shortage bankruptcies (FY2025)	442 cases, +43.0% YoY, record high
DX "pursuing + considering" (101+ employees)	71.9%
Same (20 or fewer employees)	25.4%

2. Vietnam: Digital Economy as National Strategy

Vietnam is moving in the opposite direction, making DX a national growth strategy. On June 9, 2026, the Prime Minister issued Decision No. 1033/QD-TTg approving the "Digital Economy and Digital Society Development Program for 2026–2030". It targets raising the digital economy's value-added share of GDP to around 30% by 2030, supporting at least 500,000 SMEs in their digital transformation, and sets 27 national targets with 115 key tasks (Ministry of Science and Technology announcement).

Where things stand: still in the mid-teens, with large room to grow

Actual progress: the digital economy's share of GDP rose from 12.87% in 2021 to about 14.02% in 2025 (2026 Business Forum coverage, VTC). Reaching the 30% goal requires roughly doubling that share — the next five years are decisive for both government and businesses.

• Enterprise base: Vietnam has about 900,000 active enterprises, of which over 98% are SMEs. The national target is unreachable without transforming SMEs (Thuong Hieu Cong Luan).
• High awareness, shallow adoption: Surveys show around 92% of SMEs are interested in DX and have adopted it at a basic level, but only a minority have advanced to data-driven operations and process transformation (Giao Duc Viet Nam).
• Momentum at the base: In Q1 2026 alone, 1,394 new digital-technology enterprises registered, and IT product exports continue to expand.

3. Why Now: Three Structural Pressures

① Labor shortage is a shared management challenge

Japan faces structural labor shortage from a declining, aging population; Vietnam faces rising wages and high talent mobility amid rapid growth. In both countries, the "hire more people to keep running" model has reached its limit. Delivering the same quality with fewer people requires digitalized and automated operations as a precondition.

② Aging legacy assets

In Japan, legacy systems were explicitly identified as the shackle on DX in the "2025-nen no Gake" (2025 Cliff) warning. In Vietnam, the equivalent "analog legacy" — Excel ledgers, paper forms, work that only one person understands — plays the same role. The older the assets, the higher the renewal cost and the greater the barrier to using data.

③ Rising requirements from customers and partners

In business with Japanese companies, digital readiness — EDI, electronic invoicing, security standards, traceability — is becoming a precondition for winning orders. Domestically in Vietnam, mandatory e-invoicing made digital compliance the ticket to participate. Companies that cannot comply risk being excluded from supply chains.

4. Turning DX from an Obligation into a Weapon

The figures above read like a crisis, but DX is fundamentally an offensive option as well.

• Productivity: Automating routine work frees limited staff for higher-value tasks.
• Quality and repeatability: Systematized work maintains quality even when veterans retire.
• Data-driven management: Accumulated performance data improves estimation accuracy, delivery management, and inventory optimization.
• Recruiting power: Workplaces with less paper-based drudgery attract younger and foreign talent — a hiring weapon in the age of labor shortage.

Summary: The reason DX is necessary is not trend-following but three structural pressures: ① labor shortage, ② legacy limits, ③ changing deal requirements. There is no way to opt out — the only differentiator is how fast you start and how well you execute.

Next Episode

In Part 3, we cover "The DX Roadmap: assessing the current state, setting goals, and prioritizing." For SMEs unsure where to begin, we will walk through how to choose the first step and the failure patterns to avoid. Stay tuned!