Consumer sovereignty in the framework of social justice, economic equality and environmental balance, within and across borders

Firms aim to join global supply chain

April 22, 2014

HCM CITY (VNS) — Small and medium-sized enterprises in Viet Nam need to make more efforts to improve their competitiveness in the global supply chain, a workshop heard in HCM City yesterday.

Nguyen Phuong Dong, deputy director of the city Department of Industry and Trade, said Viet Nam is integrating widely and deeply into the world economy, and having a presence in the global supply chain is of great concern to companies and government agencies.

But because of their low competitive edge, limitations in business vision and strategy, and lack of resources, SMEs encounter challenges while trying to enter the supply chain, he said.

For that reason, most Vietnamese firms are in the lowest rung of the chain, doing assembly and outsourcing for foreign companies, he said.

Vietnamese firms are trying to improve their competitiveness with measures like investing in areas supplying raw materials, improving technology, and co-operating with foreign partners, he said.

Jeff McLean, general manager of UPS in Viet Nam, said 25 years ago a company could produce all the components it needed for its products, but that has changed now, and companies, especially multinationals, tend to outsource.

The outsourcing trend among multinationals, coupled with regional integration and free trade agreements, allow Vietnamese SMEs to participate in global supply chains, he said.

But to be competitive exporters, SMEs must be prepared to meet product and service standards and the new challenges in global trade, he added.

Pham Que Anh, director of Ha Noi Resource Centre, CUTs International, said that SMEs, with their limitations in capital, technologies, and market understanding, should provide services and intermediate inputs to firms involved in the global supply chain to learn international practices before thinking about exporting directly.

Loc Le, general director of An Viet Long Co.Ltd, a company that makes remote control helicopters and parts, said his company did just that — initially it did outsourcing for other companies, then did market research, invested more in technology and personnel, and built brands to directly export products.

From a company that had just 10-20 employees four or five years ago, it has grown into with 300 employees that exports to many markets, he said.

Having a clear business strategy, developing strategic products, and understanding target markets are among the factors that enable businesses to access the global market, he said.

Local firms should also improve their cash flow management and enhance productivity and efficiency to cut costs and promotional activities, Anh said.

They should co-operate with one another to integrate in the global supply chain, she added. — VNS