Small and medium-sized enterprises: Cooperating to develop

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The difference in the level of production, mechanisms and legal system among countries are barriers for cooperation. Photo: H. Diu.

The cooperation between domestic SMEs and foreign enterprises is implemented and promoted. This is a difficult path, but it is necessary and useful for enterprises to integrate faster and more effectively in the process of development.

"Grasping" opportunities

In fact, more than 90% of Vietnam's enterprises are SMEs. Therefore, in the context of integration, the extensive association among enterprises is a right step to enhance the competitiveness and power of domestic enterprises in the global economy. An economist argued that in the context of global integration, with a great number of foreign enterprises entering Vietnam market, domestic enterprises will be weaker if they do not try to associate and support each other.

As reported by the International Finance Corporation (IFC), by October 2016, there were 21% of Vietnam’s enterprises participating in the global supply chain. This figure was relatively small compared to Thailand with 30% and Malaysia with 46%. Therefore, Vietnam should start work to strengthen the integration of domestic suppliers and service providers, especially SMEs. Therefore, extensive association and cooperation is necessary for both enterprises with foreign direct investment (FDI) in Vietnam and domestic SMEs.

Mrs. Tran Thi Thanh Huong, the Director of MTV Phuc Minh Phat Company Limited said that a close association between domestic enterprises and foreign enterprises will enhance their brand value, helping Vietnamese enterprises gain market share in the global market. Moreover, the extensive association will create favourable conditions for enterprises to join the supply chain effectively, with the best prices for consumers.

According to Mr. Mac Quoc Anh, the Vice-Chairman - Secretary General of the Hanoi Association of SMEs (Hanoisme), some countries such as Korea and Japan have a large number of SMEs, so they also have a strong demand in cooperation with foreign countries. Therefore, if Vietnam’s enterprises grasp this opportunity, they will be able to have experience in information exchange as well as enhancing trade opportunities. In fact, after the introduction of the Government Resolution on improving the business environment, the business environment in Vietnam has been relatively clear, meeting expectations of foreign enterprises.

Regarding Korean SMEs, Mr. Mac Quoc Anh said that with many similarities in culture, custom and tradition between Korea and Vietnam, the import and export between the two countries increased sharply. Korea has been mainly imported technology items, equipment and agricultural products from Vietnam, creating favourable conditions for enterprises of the two countries to develop.

Solving difficult problems

Over the years, trading activities between Vietnam’s enterprises and foreign enterprises have been promoted and appreciated by the business community. However, there have been many problems to be solved, especially a big gap in the level of production, mechanisms and legal system among countries.

Mrs. Pham Thi Thu Hang, the Secretary General of the Vietnam Chamber of Commerce and Industry (VCCI) stated that the association among enterprises was still limited because Vietnam's SMEs were small-scale enterprises. Meanwhile, many foreign countries' SMEs had a high level of development with higher requirements in association.

Mr. Nguyen Minh Phong, the economic expert said that due to lack of information, vision and competitive strategies as well as lack of funds, qualified human resources and technology, machinery, equipment and administration experience, most of Vietnam’s enterprises cannot join the global chain value.

Therefore, in order to grasp opportunities in cooperation, Mrs. Pham Thi Thu Hang said that Vietnam Government had many policies in supporting SMEs, such as the introduction of the Law on supporting SMEs. This has raised the trust of the business community in association as well as encouraging foreign enterprises to learn and cooperate.

Dr. Nguyen Minh Phong said that along with support from the Government, enterprises themselves must also proactively take advantage of opportunities to join the global supply chain, improving the quality of human resources, management capacity, organizational structure and production models. The supply chain should be developed vertically and horizontally, but in the long term, enterprises should focus on industry based on geographical location and support each other.

In addition, Mr. Mac Quoc Anh said that in order to assist SMEs to find cooperation opportunities, Hanoisme actively helped them to meet commercial counselors and organize meetings to exchange. Mr. Mac Quoc Anh also stated that in the short term, the cooperation between national SMEs and international SMEs would become a powerful wave, like the wave of investment into Vietnam from FDI enterprises.

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In general, the cooperation among SMEs can help Vietnam’s enterprises easily step into the world market. But many barriers have delayed this cooperation and many domestic enterprises expressed their "concerns" in meeting the high demands from foreign business partners. Therefore, the support of SMEs is essential, including a favourable legal system to promote and increase the trust of foreign business partners.