Most Vietnam SMEs are not benefitting from export growth

Small businesses sidelined in VN's export boomDespite rapid export growth in recent years, the ratio of export business is falling at domestically-owned firms. FDI enterprises contributed to 61.4% of the total export revenues in 2013. However, most of these businesses are engaged in labor using imported raw materials and are less connected to domestic suppliers. In other words, most Vietnamese companies are not benefitting from export growth.

Small and medium-sized enterprises (SMEs) will find it hard to participate in international trade activities if trade support services aren’t improved to help them increase their competitiveness.

Trade promotion agencies should strengthen their support for SMEs by developing their marketing strategies and access to good information.
Due to their limited understanding of foreign markets and international trade issues, local SMEs have exercised limited participation in international trade. Local enterprises with limited market research skills have sought information from trade promotion agencies that either lack the capacity to help them or offer market information that is outdated or copied from unverified sources.
Products with high export potential include coffee, rubber, pepper, ceramic products, catfish and cassava, while those with medium export potential include vegetables and fruit, tea, cashew nuts, and textile products.
However, up to 90% of Vietnam’s coffee is exported as a cheap raw material. Vietnam should invest in improving the processing capacity at local firms to increase the products’ added-value.
Along with sugar cane, motorbikes and plastic products, rice is the commodity with lowest export potential.