Making the AEC work for Vietnamese small business

Though larger more sophisticated businesses have and are expected to continue to prosper in the new competitive environment, it is obvious to most all the experts that smaller businesses are now struggling in the new marketplace.

Given that 90% of all businesses in Vietnam are smallholders, the experts say, members of the public, private and social sectors have their jobs cut out for them to make the transition to the AEC a success.

One important first step is to increase small businesses understanding of the AEC and the opportunities it creates. Surveys have shown that the overwhelming number of small businesses (as many as seven out of 10) have little to no awareness or understanding of the AEC.

Only three out of 10 thought they fully understood how the AEC would affect their business operations.

Comprehending the 10 economies, each with its own set of laws and regulations, varying stages of economic development along with differences in business culture and social norms, poses one of the more troublesome aspects of the AEC for small businesses to cope with.

To succeed, these businesses must now recruit high calibre employees with skillsets capable of navigating the laws and regulations of each of the countries their employer plans to conduct operations or trade in.

They must also be able to bridge the wide and varied cultural divides, say the experts.

Most notably, employee recruitment comes to the forefront and requires a more diligent and thorough employee search by prospective small business employers. It also requires them to offer more attractive compensation packages.

The increased openness of the AEC marketplace puts more pressure on the country’s smallholders to innovate and improve employee productivity to remain competitive within the region, the experts underscore.

Most significantly, those with a desire to expand their footprint across the AEC will need to establish close business relationships with established foreign regional business partners in order to bridge cultural differences.

Members of the private and social sectors such as trade associations, colleges and universities have a more pivotal role to play in catalysing the process of fostering strong business networks within the AEC.

In addition, it will take small businesses pooling their limited resources in ventures that seek to maximize the use of those assets.  For example, local small businesses could and should form alliances with local food manufacturers and market their products in other AEC markets under a collective Vietnamese brand, they note.

This would ease the cost burden of attempting to sell their products in other AEC member countries for such things as marketing, selling, general and administrative expenses as well as other overhead costs.

The AEC, they say, requires academia to drive towards better training of the workforce for small businesses, which in turn directly bears on improving labour productivity. It also readily lends itself to advances in innovation that leads to enhanced quality of products from both cost and quality perspectives.

In terms of the law, they say, the AEC places greater emphasis on the government to put in place a regime that is well thought out and established in clarity in terms of both intellectual property protection and enforcement.

Vietnamese small businesses must now evolve and move from producing commodities on a large scale having tiny profit margins to smaller support industries focusing on manufacturing or production processes that add high value with large profit margins.

They must most of all—learn the importance of establishing good brand reputations that have the capability of expanding within and without Vietnam and position themselves for competition within the much larger AEC and global marketplaces.