Micro, small, and medium-sized enterprises (MSMEs) make up over 90 per cent of businesses in Vietnam, as well as in economies across the world. They have been hard hit by COVID-19, and there is a crucial need to focus on recovery efforts.
|Dr. Abel Alonso - Senior Program Manager for International Business RMIT University |
While Vietnam fared better than other countries regarding painful and ruinous lockdowns due to the swift and effective approaches taken from a tripartite effort from the government, the recent increase in contagions continue to challenge businesses and the community. Businesses involved in tourism-hospitality, for instance, heavily depend on visitors/tourists and other forms of leisure-related patronage; these businesses are extremely vulnerable to the impacts of the crisis.
The chain reaction caused by the crisis, coupled with aggravating factors (e.g., travel bans) and the long-term nature of the crisis might further threaten the long-term existence of numerous businesses. Businesses, especially MSMEs, depend but also have an impact on other members of supply chains. Therefore, their struggle or demise can have devastating effects on other businesses.
Recovering from an unprecedented crisis, and building a future entrepreneurial generation when the current prospects are so gloomy are challenges that most if not all businesses operating in the world have yet to figure out. I have recently conducted research on this topic with fellow RMIT lecturer Dr. Vu Thi Kim Oanh and, while it might sound cliché, our research demonstrates that businesses need to be much more entrepreneurial and innovative, and solve problems with what they have at hand. To achieve that, there are a number of possible paths that businesses might follow.
The first path is diversification. In our study, many businesses involved in the hospitality, tourism, or wine industry resorted to diversifying their business scope. For instance, deliveries or online sales were predominant ways of increasing revenue streams to maintain vital cash-flow. Learning different online platforms might become more pronounced in many companies’ future, first, because of the spread and adoption of smart phone technologies among their consumers, and second, because of potential distancing and other restrictions due the current or future health crises. In Vietnam’s coffee scene, initiatives have been implemented including offering online tours and coffee-making classes.
Related to diversification, at least a quarter of surveyed businesses in the research considered changing their business model through the above-described initiatives, while the same number vied to continue with their current model if proven adaptive (relying on traditional client groups, and also increasing online presence). The bottom line is that businesses will need to increase their level of engagement with customers/clients. This effort could enable them to gather key information regarding emerging demands for products and services, and with it, uncover new business opportunities.
Another crucial factor is upskilling. Despite the serious predicament businesses face, the current crisis should be utilised to continue gathering information, as well as increasing knowledge and business acumen – for example, learning online tools such as delivery applications and points of sale, or developing a webpage that could help businesses expand their reach, or through staff’s social media engagement. Here is where educational institutions and government could engage strongly, including through availability of upskilling workshops (e.g., English language or spreadsheet upskilling).
Overall, in the absence of vital financial and other resources, numerous MSMEs will be compelled to apply a “scaffolding approach” to their problem solving. Just like buildings are constructed one level at a time, businesses should focus on surviving day after day and building on strength after strength. For example, many of the surveyed businesses relied on their own savings to solve immediate cash-flow-related challenges. Others considered implementing in-house training using their own human resources who were themselves trained as facilitators and coaches.
Furthermore, even though there is only so much that governments can do to support financially or otherwise, it cannot be denied that policies are essential to avoid the financial haemorrhage caused by COVID-19. Such policies could be in the form of tax rebates or small subsidies that, especially for the smallest businesses, could go a long way.
Another problem identified during our study was the mental wellbeing of entrepreneurs, employees, and future generations of workers. Many individuals are suffering emotionally and psychologically due to having lost their income, or being unable to find jobs. This challenge could be partly addressed by governments providing counselling, or also by educational institutions providing business mentoring to small entrepreneurs. Clearly, there are limitations to these types of support; however, and again, a small gesture of support could go a long way.
While many business owners’ desire is to ‘get back to work’ immediately, the Vietnamese government is seeking a balancing act, where the impacts of the pandemic are minimised.