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Small firms urged to join global distribution network

Update: July, 28/2012 - 09:22

HA NOI — Integration into a global supply chain should be a lifeline for Viet Nam's small and medium-sized enterprises (SMEs), a conference in the capital last week was told.

Chairman of the Viet Nam Chamber of Commerce and Industry Vu Tien Loc told the conference on the global supply chain that SMEs have proved their durability and flexibility. However, their competitiveness was stunted and only weak links have been made with other SMEs and large businesses.

Chamber statistics showed there were only 300 SMEs that could meet global supply chain requirements.

A Ministry of Planning and Investment (MPI) survey last month showed Viet Nam had more than 658,000 registered businesses, 71 per cent of which were operating.

The number of SMEs had increased 22 per cent year on year, from 38,000 in 2000 to over 283,000 in 2010.

Nguyen Hoa Cuong, deputy head of the MPI's Enterprise Development Agency, said it was a relatively high rate compared to other economic sectors.

He said SMEs generated VND78.4 trillion (US$3.7 billion) pre-tax profits and created 22.11 per cent of jobs on average anually. They also contributed 29 per cent of total export earnings.

However, experts said SMEs faced challenges, including limited access to finance, a low quality workforce, backward technologies and insufficient management skills.

Compounding the problem was fierce competition from big businesses and the negative impact of international integration.

Tran Quoc Khanh, Deputy Minister of Industry and Trade, said SMEs could support the country's restructuring process by smoothing operations and cutting costs.

Khanh said Viet Nam had created opportunities for SMEs in the global supply chain when it negotiated agreements, especially the Trans-Pacific Strategic Economic Partnership Agreement.

He said SMEs had joined the world market and participated in the global supply chain.

Alice Pham, director of the Consumer Unity and Trust Society International's Ha Noi Human Resource Centre, said initial results showed multinational groups tended to produce the important detail in a product while accessories were supplied by SMEs worldwide through the global supply chain.

This had created business opportunities for Vietnamese SMEs.

Economist Pham Chi Lan said Viet Nam's SMEs would find it hard to compete in the global supply chain if they relied only on cheap labour and raw materials.

Lan said businesses needed skilled labour and high technology.

She said a strong financial abilitiy was also crucial, in creating new products.

Viet Nam should have better infrastructure and freight handling to help its industries to integrate into the global supply chain, she said. — VNS

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