VN businesses cannot join global supply chains with weak strategies


Lacking initiatives and preparation, it has been challenging for Vietnam’s enterprises to join global supply chains, according to the Vietnam Confederation of Industry and Commerce (VCCI)’s latest study.

Vietnamese enterprises' position in the value chain and implication for multilateral cooperation is weak. Of 500 surveyed import-export companies in the manufacturing and processing industry, 53 percent said they did not set goals when joining the global value chain. Thus, they do not have a clear orientation for development. 

Only 10 percent of businesses built long-term plans to implement and 15 percent had long-term orientations and strategies. Some 65 percent did not make preparations when joining the global value chain.

Notably, Vietnamese businesses mostly focused on settling short-term, rather than long-term, issues such as building and training labor force, mastering technology, carrying out innovation, expanding network connections, and satisfying standards and increasing risk management. 

According to the study, with the economy’s openness and deep international integration, lack of initiative and preparations makes it difficult for Vietnamese businesses to grasp opportunities to enter the global value chain.

Pham Thanh Tung from the Ministry of Industry and Trade’s Industry Department said that most enterprises in the supporting industry admitted that they were unable to cope with changes in product R&D, and long-term vision for production strategies and management systems. 

However, when asked which support solutions they wanted, they mentioned tax incentives, support in administrative procedures and capital, not solutions to the problems they named. This poses a challenge to the design and implementation of policies for industrial development.

Vietnam is one of the largest production bases of Asia, which is a great opportunity for enterprises. However, few Vietnamese enterprises have joined global value chains, while enterprises which have joined the chains lack long-term development orientation, and are weak at capability and technology. 

Meanwhile, supporting industry programs have many shortcomings. The proportion of enterprises that can access preferences and support from state-initiated programs remains low. Only 17 percent of them said they can access one of the programs.

Senior expert Pham Chi Lan said that Vietnam is now at a turning point. It needs to choose either continuing to export products based on outsourcing and assembly which brings low added value, or join global value chains to obtain higher added value.