Join the supply chain for sustainable development

	Domestic trade promotion helps spur economic growth
	Domestic trade promotion helps spur economic growth
	Radical reform needed to improve business climate

Industry linkages in enterprises will create favorable conditions for sustainable development. Photo: H. Diu.

Enterprises take the initiative

The benefits of joining the value and supply chain can be seen clearly through helping companies promote the connection,increased production value,and getting more sources of auxiliary materials. These are solutions to help businesses develop sustainably, improve competitiveness in the market. Therefore, in the recommendations of the sector development plan, the formation of the chain of association of enterprises is always placed on the top. In particular, enterprises can make horizontal links with businesses in the same business sector; which helps businesses increase value and ensure production as well as output.

Despite many difficulties through trade activities, trade promotion and propaganda, many enterprises are aware of the importance and have actively carried out many activities related to linkage in thesector. Ms. Nguyen Thi Lan, Director of Phuong Quynh Footwear Co., said that thanks to doing business, many companies received orders from Japan, but the number was too large compared with the production scale of the company. There are no conditions to invest in expanding equipment. Therefore, the company has negotiated with partners and implemented links with establishments and enterprises producing footwear in the region to produce together at the request of customers. As a result, orders are completed sooner than the expected time, increasing the prestige of the company with partners.

It can be seen, industry links help enterprises can carry out the whole process of production, meeting customers' requirements. This is the optimal solution not only for small and medium enterprises as above, but also for large enterprises which need to carry out production. TH True Milk is an example. Mr. Ngo Minh Hai, the Deputy Chairman of TH Group, said that even if resources were so great, businesses could hardly do all the production steps by themselves. Therefore, businesses have to link with farmers in the raw materials to provide more raw materials. But in order to ensure the value and quality of production, the enterprises and production establishments participating in the chain must also strictly comply with the requirements and conditions of production and processing conditions according to the regulations of enterprises and international standards.

Another benefit of sector linkage is that, in the case of loans, value chain enterprises will be given preferential loans because value chain production helps promote cash flows. Therefore, to take advantage of this opportunity, many enterprises have also made efforts to create the link chain. Ms. Nguyen Thi Huyen, the Director of Vietnam's production and export of cinnamon, said the company signed a contract to produce organic cinnamon and anise with more than 2,000 farmers to buy raw materials from 5 agents in Yen Bai and Lang Son. After the purchase, enterprises will preliminarily process and export goods to many markets, mainly in the EU, with 95% of revenues from export activities, creating both profit for businesses and income for farmers.

Need to strengthen

Despite the efforts and awareness of enterprises, many experts said that Vietnam enterprises' horizontal or vertical link was weak, not commensurate with their potential development. A representative of a textile and garment enterprise shared that businesses tried to form a chain of links among enterprises of the same industry and enterprises producing materials to support the textile industry. In many developed countries in the world, when the business sector creates the link, such as textile enterprises associated with dyeing enterprises, garment enterprises, it will help reduce the input value of the products as well as save production time.

Speaking about the cause of the situation, according to Mr. Quoc Anh, the Deputy Chairman and General Secretary of the Association of small and medium enterprises in Hanoi, enterprises have not strengthened the cooperation. Moreover, small and medium enterprises are always ready to participate in the chain to enhance their capacity but they need the leading participation of leading enterprises. Meanwhile, the capacity and standards of small and medium enterprises are not enough to meet the requirements of large enterprises, and it is not enough to create a linkage for both parties.

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Thus, the benefit of linking the industry is very large, so the problem is how to link the businesses together and help businesses with the same ideas and goals for the development of the industry and businesses. Experts said that it was necessary to build a strategic solution system based on the coordination among the State, enterprises and associations. Implementing these tasks, restructuring the key economic sectors will promote positive effects, help businesses develop sustainably.