Industry 3.5: Lessons from Taiwan (China) and policy implications for Vietnam

Abstract

This study examines an Industry 3.5 model in Taiwan (China) as a strategic intermediary pathway between Industry 3.0 and Industry 4.0, designed to address resource constraints faced by small and medium-sized enterprises (SMEs). The study focuses on the historical context of the emergence of Industry 3.5, its core policy pillars, the central role of SMEs, and the coordination mechanisms between the government, research institutes, and enterprises in practical implementation. Drawing on Taiwan’s experience, the article offers key lessons for Vietnam, an economy with a similar enterprise structure in which SMEs dominate but still face limitations in digital infrastructure, human resource quality, and innovation capacity. The study proposes several policy implications, including the selective adoption of the Industry 3.5 approach, the prioritisation of sectors with competitive advantages and strong spillover effects, and the development of industrial clusters and mechanisms of close coordination among enterprises, research institutes, and local authorities. The findings suggest that Industry 3.5 represents a feasible, pragmatic, and sustainable development pathway for Vietnam towards industrial upgrading, productivity improvement, and deeper integration into global value chains in the context of digital transformation.