Vinh Phuc Strengthens Business Connection

As a major industrial center of auto mechanics, motorcycles, and electronics in the North, Vinh Phuc province has enhanced its support for connection and linkage between its businesses and foreign direct investment (FDI) enterprises over the years. This has enabled enterprises in the province to access advanced and modern technology and participate deeply in the global supply chain.

Cosmos Technology Company Limited in Khai Quang Industrial Park

Vinh Phuc province currently has more than 400 active FDI enterprises. The COVID-19 pandemic has disrupted the supply chains of multinational corporations, leading many FDI enterprises to look for local suppliers to increase their participation in the domestic supply chain, raise the localization rate of products, and lower costs. This is a great opportunity for domestic direct investment (DDI) businesses in the province. However, the linkage between DDI and FDI enterprises has not developed as expected. The reason is that DDI enterprises have limited capacity and have not actively engaged in linkages. Few DDI enterprises have departments and personnel dedicated to searching and analyzing market information to find new customers and information about policies and local support programs. DDI enterprises also seldom participate in business associations and clubs or attend trade connection events; the rate of technological innovation in businesses in the period 2016-2020 was only 16.9%; 70% of businesses had average technology level.

Moreover, FDI enterprises had a low demand for additional suppliers. Investment in the manufacturing industry required large capital, knowledge, and experience in production and management, which were not the strengths of businesses in Vietnam in general and in Vinh Phuc province in particular. Therefore, the province’s businesses faced many challenges, especially in the early stages of participating in the supply chain when they had to adapt to stricter standards.

Recognizing the importance of building value chains, especially in industry and supporting industries, Vinh Phuc province recently intensified its activities to support linkages and connect provincial enterprises with FDI enterprises. The province issued documents specifying the government’s preferential and support policies in management and investment attraction to ensure FDI enterprises had the connections and technology transfer as well as create spillovers for domestic supporting industrial enterprises; adjusted and supplemented the province’s mechanisms and policies to encourage the development of supporting industries; and developed policies to create a start-up environment in the industrial sector.

The province also deployed many groups of support solutions to narrow the gap in qualifications between DDI and FDI enterprises as well as improve the innovation ability of DDI enterprises so that they could participate in the supply chain of FDI enterprises and move towards a global supply chain.

In addition, to remove difficulties for businesses, leaders of the province, departments, and branches regularly dialogued with businesses through programs such as “Q&A between businesses and the Government '' and “Biz Cafe '' programs.

With Vinh Phuc province’s efforts in connecting FDI enterprises with provincial enterprises, it is expected that the province’s enterprises will gradually participate in the supply chain of FDI enterprises and move towards the global supply chain, ensuring sustainable development of the province’s industry.

By Le Nam, Vietnam Business Forum