Strengthening Connectivity between Local and Foreign Businesses

10:15:16 AM | 4/1/2021

In addition to introducing mechanisms and policies and creating a fair business environment for enterprises, Vinh Phuc province also supports business connectivity by industry and by value chain; connects with large enterprises and FDI enterprises to improve technology and labor productivity of domestic enterprises in the locality.

Currently, Vinh Phuc has attracted 402 FDI projects with a total registered capital of US$5.76 billion, mainly engaged in industrial manufacturing, assembling and supporting industries. In particular, many investors from advanced countries and territories such as Japan, Italy and South Korea have gradually formed key industries and they need many vendors.

With better governance, technology, capital and market connection than domestic enterprises, FDI firms have always been a dynamic driving force of development and increasingly affirmed their leading role in the province's economic growth. However, in addition to economic goals, when calling for foreign investment, Vinh Phuc expects foreign investors to gradually transfer technology to their domestic partners. At the same time, it is expected that FDI enterprises will be the nucleus of connecting local domestic enterprises with global supply chains, enhancing the commodity value of Vietnam in general and Vinh Phuc in particular.

Initially, the province has supported and matched local businesses that have cooperation ties with some FDI enterprises in the province with FDI firms seeking suppliers of industrial components. However, this activity is still very limited. Reportedly, some domestic enterprises are cooperating with FDI firms, typically Cosmos Technology Co., Ltd, Vietnam Precision Industry Company Limited 1 (VPIC1) and Khai Quang Industrial Park. However, only a few companies can do this because FDI firms tend to import materials and inputs from their home countries or countries with lower prices. Moreover, local enterprises are still mainly small and medium in scale, limited in productivity, technology, experience, human resources and management are still weak.

In the coming time, Vinh Phuc will continue to support connecting local industrial vendors with large foreign-invested enterprises to facilitate the former to join the supply chains; gradually form regional industrial centers, encourage investment for automobile and motorbike parts manufacturing projects; attract FDI projects from multinational corporations and small and medium parts manufacturers from Japan, South Korea, Taiwan, Europe and the United States.

Last but not least, local enterprises need to reweigh their capabilities, identify their strengths and weaknesses, gather resources to meet customer requirements, especially in technology innovation, personnel improvement, and management capacity building. When local enterprises develop on par with FDI enterprises, the connectivity will be more favorable.

By Nguyet Tham, Vietnam Business Forum