Domestic Market - Major Contributor to Business Development

10:06:05 AM | 6/5/2020

An Tien Industries Joint Stock Company, Quang Ninh Port Joint Stock Company, and Khai Anh - Binh Dinh Import Export Trading Co., Ltd secure top places in the Top 10 fastest-growing companies in Vietnam.

The next in the list consist of 577 Investment Corporation (NBB), Thuan Duc Joint Stock Company, Hawee Mechanical and Electrical Joint Stock Company, ANI Joint Stock Company, Digital NOVAON Group, Transimex Corporation, and ECOBA Vietnam Joint Stock Company. These are outstandingly growing companies in the FAST500 Ranking - the ranking list of 500 fastest-growing companies in Vietnam in 2020 released by Vietnam Report Joint Stock Company in collaboration with the VietNamNet Newspaper.

Five growth contributors

Among growth factors of enterprises in the last five years (2015-2019), “domestic and regional market growth” is the top factor (52.1%), followed by “new product line development” (47.9%), “existing market expansion” (45.8%), “new market segment development” (35.4%) and “availability of skilled labor with competitive costs” (25%). For three consecutive years, many FAST500 businesses said that the domestic and regional market was the main growth engine in addition to their efforts to expand their market and develop new product lines.

Besides the positive factors, market volatility caused by the Covid-19 pandemic, the rise of competitors, rising input costs, complicated administrative procedures, and uncertainty of the business environment are named five biggest challenges and barriers to FAST500 companies in the current context.

Supply and demand disruptions will continue globally until a Covid-19 vaccine is widely used (by mid-2021 at the earliest) but economic consequences will persist in the medium to long terms. The risk of a global crisis, comparable to the great recession in the 1930, is probable. The global economy and society will never return to its normal status as before the pandemic, with the emergence of new development perspectives, new trends and new economic rules.

Vietnam's economy is likely to be adversely affected by the pandemic. This is reflected by rapidly decelerating growth, stagnant production, closed services, a sharp increase in unemployment, business underperformance, and a strong income drop of vulnerable people, which are likely to cause social instability, especially commodity prices if not controlled well. In case the Covid-19 outbreak lasts long and does not disappear seasonally, these difficulties will be multiplied.

In general, FAST500 companies said they will focus on four strategic priorities to overcome the growth challenges during this time: Increasing sales/profits in current markets (79.2%); improving product quality and increasing productivity (66.7%), introducing and developing new products/services (41.7%), and cutting costs (39.6%).

As for human resources, due to the impact from the Covid-19 epidemic, many FAST500 businesses are choosing a strategic solution of automating certain functions and training employees to use data to streamline the adaptive workforce in the new context.

Improving administrative reform, infrastructure and legal environment

In many annual FAST500 business surveys, further improving administrative procedure reform, infrastructure and the legal environment is always “thorny” issues for both businesses and policymakers. In addition to the top three expectations above, effective support for key products, new products and interest rate cut are what companies expect to see in 2020. For businesses, these policy recommendations should be prioritized to support business performances and growth prospects of enterprises in the current period.

In addition, since 2018, improving the legal environment has also become one policy that concerns many businesses. According to many experts, improving the legal environment is the “key” to support businesses to successfully integrate and grasp opportunities generated by RCEP, CPTPP and EVFTA agreements. At the same time, it is important to further stabilize the foundation to achieve the goal of sustainable growth.

Probably, the Vietnamese business community is undergoing a transitional period with many opportunities and challenges from both domestic and foreign markets. At present, complicated developments of the Covid-19 pandemic have produced major impacts on business and investment of enterprises as well as economic growth as a whole.

In the context of economic volatility, with unpredictable opportunities and challenges in combination, the Government's support measures on loosening monetary and tax policies are expected to help businesses to get through hardships. On the other hand, this is both a challenge and an opportunity for them to renew themselves by restructuring the apparatus, actively seeking new markets and supplies, and reducing dependence on a single market to better shield passive external factors.

By Anh Mai, Vietnam Business Forum