Pham Ngoc Hung, Deputy Chairman of the HCM City Union of Business Associations, said production efficiency was key to competing in international markets as Vietnam opens up to the world.
Pham Ngoc Hung, deputy chairman of the HCM City Union of Business Associations (Source: VNA)
Vietnam’s productivity is only around 7 percent that of Singapore’s, 17 percent of Malaysia’s and 37 percent of Thailand’s, according to a 2016 report.
Up to 97 percent of businesses in Vietnam are small or medium sized, and many of them still use outdated technologies, causing their quality to suffer.
He said 70 percent of Vietnam’s exports are by FDI companies, admitting that there is a lack of trust in Vietnamese products due to perceived lower quality, and many firms choose not to do business with domestic suppliers.
This in turn deters domestic suppliers from investing heavily in upgrading their facilities.
Many small firms generally struggle to improve their technologies also because they do not have access to funding and market information and the drive to constantly update their technologies, he said.
Certain funding programmes are inaccessible to them due to complicated and lengthy procedures, he said.
According to Hung, the lack of a skilled workforce is also a problem, with many university graduates lacking practical experience.
The relatively poor protection of intellectual property rights deters businesses from spending resources on research since they are afraid their work could be stolen, he said.
Many small businesses suffer from poor market research and often make plans without considering their customer base.
Ly Truong Chien from TriTriGroup said to improve productivity Vietnam has to constantly keep abreast of the rapidly changing technology trends.
Businesses need to study market trends and embrace technology 4.0 and modern techniques, utilising, for instance, big data to get a better picture of their customers, make a close examination of every stage of production rather than just the end products, and focus on developing the talents of their employees, he said.
He stressed the importance of market research, urging businesses (especially SMEs) to know their own products and customer base to gain a foothold in the market.
But businesses should carefully examine their own situation and adopt technologies appropriately rather than blindly copy from other countries, he added.