Vietnamese Businesses: Navigating Challenges, Capitalizing on Opportunities, and Embracing New Trends

10:00:59 AM | 10/13/2023

Vietnamese businesses have demonstrated remarkable resilience in the face of the COVID-19 pandemic, unfavorable external environment, and internal economic issues. Despite these challenges, they have managed to overcome difficulties, seize opportunities, and keep up with new trends to not only survive but also create competitive advantages in both domestic and international markets. To learn more about this, our reporter has interviewed Dr. Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy (BCSI).

How do you evaluate the role and competitiveness of Vietnamese businesses today?

After nearly 40 years of Doi Moi (renovation), the Vietnamese entrepreneur force has grown steadily in both scale and quality to play a more significant role and make bigger contributions to the country’s socioeconomic development. Not only increasing rapidly in number, many Vietnamese enterprises and entrepreneurs have achieved breakthroughs in corporate governance, production and business to establish powerful private firms of the world-class and lead many key industries and fields such as agriculture, automobile manufacturing, aviation and information technology. Moreover, entrepreneurs support job creation, social security, hunger eradication, poverty reduction and economic competitiveness enhancement.

However, in general, the development of Vietnamese enterprises has not met the expectations. They are struggling to advance further and their competitiveness is low. There are too few companies with strong capacity, global status, and influential leadership. This reality is attributed to various factors such as the overall environment, their internal capacity (weak governance, finance, resources and technology) and cultural factors as well.

What solutions are required to improve their competitiveness to meet current demands?

This is a very challenging time. The COVID-19 pandemic, global political uncertainties and economic decline, along with unfavorable access to resources and financial and monetary tightening, are testing the caliber of entrepreneurs.

To overcome difficulties and improve competitiveness, Vietnamese companies need to proactively “defend” themselves by mastering risk management, cash flows and resources. They also need to strive to overcome difficulties to survive, seize opportunities and keep up with new trends.

Not only during COVID-19 but also in the present time, many companies have tried to closely monitor market developments, adapt flexibly to new contexts to create products and access the market. They have also reduced costs and especially changed internal governance methods and partner and customer interaction and connection methods. Remarkably, while addressing hardships, they have started to catch up with new trends.

Many companies that understand the value of green transformation and digital transformation have gradually developed new business models and new products. This is an inevitable trend as well as a market requirement.

However, companies do not separately address difficulties, capture opportunities and keep up with new trends but they must integrate all three factors simultaneously. This also poses many challenges, requiring their efforts to build a management foundation and develop human resources with better skills and management quality to enhance competitiveness.

Businesses need to accelerate digital transformation, apply scientific and technological innovations, and enhance human capital quality

Besides, the Government and other authorities play a crucial role. What is your opinion on this?

The government has introduced many direct business support solutions with such messages as “Enabling Government” and “Harmonized benefits, shared risks”. However, the issue is how to implement these policies more quickly, effectively, successfully and transparently.

This is also a demand from businesses and governmental agencies. In fact, to improve business competitiveness, Vietnam has made efforts to diversify markets, sign free trade agreements (FTAs) and promote human resource training. Additionally, the country has further improved the business investment environment and legal framework.

However, the market with new rules requires the government to have stronger institutional changes, especially those relating to innovation, digital economy and digital transformation. This is very challenging. For instance, digital economy alone requires changes and improvements in digital data and digital infrastructure. Or investment attraction also requires policy changes on green infrastructure, green energy and how to attract experts and talented people.

Vietnam is increasingly participating more deeply in the global supply chain. To leverage their advantages, what should Vietnamese businesses focus on?

In the development process where domestic reform is aligned with international integration, there are many signals that indicate the participation and gradual growth of Vietnamese businesses in global supply chains and value chains.

However, as known, the capacity and competitiveness of Vietnamese enterprises is currently quite low. They are mainly engaged in assembling and processing stages, with low added values. This is understandable for a developing country that mainly relies on inherent comparative advantages such as natural resources and human resources. The issue is not to prolong that process too much.

We talk a lot about productivity, quality, technology, Industry 4.0 and digital transformation but the core still lies in three following issues: First, the supply chain is very closely linked to trade, investment and movement of different resources. The government plays a vital role in creating a favorable environment for businesses. Vietnam has integrated deeply with the world’s leading partners and markets. This is an opportunity and Vietnamese businesses are encouraged to “learn how to play with people who are better or who are the best” to learn, improve competitiveness and gradually increase the value that they can create.

The way to develop each business individually and improve the competitiveness of the entire business community collectively is to utilize the solutions of the state, the social community and the businesses themselves effectively. 

Second, in a difficult and uncertain context, the risk of supply chain disruption is always imminent. Once again, risk management, diversification and market adaptation are very important.

Last but not least, every entrepreneur and every business need to have a timely plan to stay ahead of new trends and build their reputation and brand. Digital transformation, scientific and technological application, innovation and personnel quality need to be enhanced. And, the special focus is building culture - the corporate gene and the foundation to ensure their sustainable development.

Vietnam is certainly attractive to investors. That advantage is expressed through reform efforts, integration methods and FTA entries. This is business. By capturing opportunities, companies not only develop and enhance their brand and competitiveness but also help realize the aspiration for a green, powerful and prosperous Vietnam by 2045.

Thank you very much!

By Thu Ha, Vietnam Business Forum