Vietnamese SMEs need more backing to enter supply chains: workshop

An exhibition to connect Vietnamese and US businesses was held on October 16. More linkages between the two sides are needed to increase Vietnamese businesses' contributions to major supply chains, experts said. - VNS Photo Viet Dung

Marie C. Damour, US consul general in HCM City, said SMEs are important to Viet Nam's economic growth, contributing over 45 per cent of its GDP and employing around 63 per cent of the population.

"However, relatively few Vietnamese SMEs participate in this country's large manufacturing supply chains. We believe that greater integration of SMEs into major supply chains can help generate high-quality jobs, drive economic development and help Viet Nam move up the manufacturing value ladder."

Ron Ashkin, project director of the United States Agency for International Development (USAID) Linkages for Small and Medium Enterprises programme, said only a few Vietnamese businesses are able to take part in global supply chains and the use of local content in Viet Nam is low by regional and global standards due to many reasons like low technology adoption, shortage of skilled workers, managers and limited finance.

Businesses seeking to link up with supply chains need to understand buyers' requirements, which could include global trends and individual buyers’ criteria and behavioural requirements, identify gaps between customers' needs and their own capabilities and upgrade themselves, he said.

Vietnamese SMEs need more training in various areas including foreign companies’ expectations, customer service and production-related issues such as ISO standards and lean manufacturing, he said.

The USAID Linkages for Small and Medium Enterprises project helps improve business relations between Vietnamese SMEs and businesses heading supply chains, improve the quality and quantity of linkages and enhance Vietnamese businesses' ability to partake in supply chains, he said.

Once an SME is connected to a potential buyer and understands the latter’s needs, it would have a clear incentive to upgrade, he added.

The workshops were held as part of the 2019 American Chamber of Commerce in Vietnam (AmCham) Supplier Day, an exhibition organised by AmCham Viet Nam, USAID and the Ministry of Planning and Investment to help connect Vietnamese businesses with multinationals.

Held annually for the last six years, it attracted over 100 businesses from various industries and around 1000 visitors this year.