VPE500_English

VPE500_English

500 largest Vietnamese private enterprises (VPE500) 10/08/2022 www.kas.de Why need to investigate Vietnam's 500 largest private enterprises (VPE500)? Vietnam’s 500 largest private enterprises (VPE500) report Vietnamese enterprises 2010 1000 firms % 3.28 1.17 1.8 54.9 1.48 45.1 269.2 96.2 48.1 17.9 163.9 61.0 State-owned 100% >50% Non-state Private LTDs JSC(with state share) 1.7 JSCs 55.5 FDI 7.1 100% 5.9 Joint venture 1.2 Total 279.3 2019 Annual 1000 change firms % (%) 2.2 0.32 -4.8 1.1 48.1 -6.2 1.1 51.9 -3.3 219.3 96.9 10.3 41.2 6.4 -1.7 47.6 73.5 12.6 550 112,44 ; 29,8% 1.2 129.3 18.8 16.1 2.7 668.5 0.2 20.0 2.8 85.7 14.3 100 -3.9 10.0 11.1 11.6 8.8 10.2 Large, 17,36 , 2,6% 2016, 239,88 , 63,5% Microenterprise, 449,03 , 67,2% 35 11,91 ; 3,2% Firm size (labour) 450 0.6 20.5 2.6 82.6 17.4 100 13,64 ; 3,6% Medium, 22,78 , 3,4% Small, 179,31 , 26,8% 29 28 350 26 24 23 250 150 50 -50 2010 2015 SOE 2016 FDI 2017 2018 Trung bình 2019 40 35 30 25 20 15 10 Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 VPE Vietnamese enterprises (cont.) 17,00 16,00 14,00 Employment (mill people) SOE FDI Income (VND Mill./month VPE 12,00 12,00 4,15 4,51 4,71 4,97 =32.7% 7,00 6,50 3,77 4,00 3,98 3,30 10,00 2,00 2,16 2010 8,00 10 6,00 4,00 5,98 =61.4% 7,71 8,57 8,81 8,98 9,08= 60.0% 9,59 7,24 6,72 5,95 2015 11,48 12,01 8,17 8,69 8,04 7,19 7,17 6,06 Average 2016 14,25 12,66 9,55 8,68 9,83 9,15 7,72 8,16 SOE VPE FDI 2017 2018 2019 Margin (%) Average SOE VPE FDI Vietnam’s 500 largest private enterprises (VPE500) 2,00 report 1,60 1,37 1,29 1,20 1,13 1,11 =7.3% 2017 2018 2019 0,00 2010 2015 2016 10/08/2022 2010 2015 2016 2017 2018 2019 Share of Private sector in Manufacturing(2019) Average 2,2 Average 61,3 36,5 Other manufact Furniture Other transport Vehicle Vehicle with engines Machinaries Electric Equipment Electronics, computers Metal products Metal Construction materials Rubber and Plastics Phamacy Chemical products Oil products Papers and products Wood processing Leather and products Garment Textile Beverage Food processing Labor share Other manufact Furniture Other transport Vehicle Vehicle with engines Machinaries Electric Equipment Electronics, computers Metal products Metal Construction materials Rubber and Plastics Phamacy Chemical products Oil products Papers and products Wood processing Leather and products Garment Textile Beverage Food processing 0% 20% SOE 40% VPE 60% FDI 80% 100% Báo cáo 500 doanh nghiệp tư nhân lớn Việt Nam (VPE500) 0% Revenue share 20% 40% SOE 60% VPE 80% FDI 100% Import and export of FDI Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2020 Roles of large enterprises Central role in the development policies implementation Return of scale and return of scope Potentials to going international markets Large proportion and engines of growth Vietnam’s 500 largest private Spillovers effects enterprises (VPE500) report 10/08/2022 International experience Support and promote the formation of large enterprises Taiwan - Issue industrial policies - Encourage the growth of large enterprises from dynamic SMEs; and prioritises technology enterprises - Create a technology and industrial park development programs to boost innovation and technological development of large enterprises; subsidy R&D costs; establish some large R&D institutes - Support switching to computer industry Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 Kinh nghiệm quốc tế China - The corporate group model has been piloted since 1991 - Provide large corporate group with incentives to access resources - Support in going beyond to global market (market, technological acquires) - Amend and supplement relevant legal institutions like regulations for the M&A market Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 Kinh nghiệm quốc tế South Korea • Supports existing companies rather than starting new ones; • Encourages large enterprises to export; provides them with subsidies to transit to export-oriented processing and manufacturing activities • Involving chaebols to industrialization strategy implementation Chaebol were also encouraged to collaborate with government to develop industrial strategies; the government provides capital support and market information to chaebols • Support chaebols to access the electronics industry in 1980s and acquiring foreign loan from international organizations • Issuing corporate group reform, directing them to concentrate core sector instead of multi-sectors business strategies Reduce economic concentration by encouraging large firms to collaborate with smaller ones Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 10 Contribution of VPE500 over the years (%) 18,0 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2,0 Vietnam’s 500 0,0 2016 2017 Lao động 2018 Tổng tài sản 2019 Doanh thu Trung bình largest private enterprises (VPE500) report 10/08/2022 24 Contribution of VPE500 by sector (2019) Enterprise proportion Labour Asset Revenue Agriculture, forestry, and fisheries Mining 0.19 4.5 17.4 20.8 0.05 4.9 16.2 23.4 Processing and Manufacturing Electricity and gas generation and distribution Water supply; waste treatment Construction 0.49 23.0 33.4 35.2 0.23 7.4 5.8 9.5 0.07 3.0 7.6 6.8 0.13 6.8 13.2 16.4 Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 25 Contribution of VPE500 in the processing and manufacturing sectors of private enterprises Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 26 Contribution of VPE500 in service sector (2019) Retail, wholesale Transportation, warehousing Accommodation, catering Information, communications Finance, bank, insurance Real estate business Science and technology Administration and support services Education and training Healthcare and social assistance # firms 86 17 21 Labour Asset Revenue 11.1 12.2 13.0 12.9 13.5 7.8 12.2 30.1 22.3 14.1 13.1 17.8 63.7 71.3 69.0 12.7 16.4 19.8 0.5 0.5 0.6 1.7 11.9 16.9 Vietnam’s 500 9.2 12.0 9.1 29.1 16.4 21.4 largest private enterprises (VPE500) report 10/08/2022 27 Labour productivity Labour productivity (VND Mill /person/year) 350 300 250 200 150 100 50 SOE FDI VPE500 VPE 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2,0 0,0 -2,0 -4,0 -6,0 -8,0 -10,0 15,4 Growth (%/year) 11,7 7,4 6,6 5,6 Employment -3,4 Asset SOE 5,4 4,6 Revenue Productivity FDI VPEs VPE500 The labor size of all groups declines, except for the VPE500 The scale of assets and revenues of the VPE500 expands quickly The labor productivity of VPEs is still the lowest, just equal to 47.9% of SOEs, 44.3% of FDI VPE500’s labor productivity growth rate does not outperform that of other private businesses VPE500 growth still depends more on growth in resources than productivity Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 28 Labour productivity by subsector Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 29 Labour productivity: Domestic compare to FDI Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 30 Financial performance of VPE500 ▪ VPE500 has better return than listed companies in general ▪ ROA and ROE of the VPE500 have tended to decrease in the last years, indicating a weakening in capital efficiency and profitability of the VPE500 listed in the stock market This is also a general trend of listed companies, which may be affected by the COVID-19 pandemic Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 31 COVID-19 resistance Labour change rate 2020/2019 (%) SOE VPE500 is not much more resilient than VPEs VPE500 in some service sectors benefit more during COVID19 (finance, bank, insurance, healthcare, real estate) Agriculture Mining Manufacturing Construction Water, waste treatment Electricity, gas Service business Education and training Real estate business Accom and catering Finance, bank, insurance Trade, vehicle repair Inform., communications Trans., warehousing Arts, entertainment Healthcare Total -5.17 -10.53 -3.01 -9.55 -0.15 -12.65 -1.75 12.48 3.26 -9.38 -3.42 -0.85 -7.04 -5.67 -0.59 -7.15 -5.25 FDI 1.21 2.46 -1.74 -3.76 -0.51 5.09 2.89 -3.87 -1.26 -14.62 12.14 7.26 0.32 9.77 -9.90 5.91 -0.69 VPEs 2.86 3.42 1.11 1.52 -0.73 1.29 1.56 9.59 2.93 -4.45 6.22 4.99 10.33 3.77 -2.94 5.92 3.59 VPE500 4.24 5.23 -13.96 1.12 2.01 -15.78 8.32 4.42 -28.60 12.58 5.64 4.94 -0.62 -8.10 11.17 5.11 General 0.14 -6.32 -1.17 0.58 -0.42 -10.23 1.51 5.77 2.01 -14.70 9.85 4.51 4.96 4.07 -5.38 5.74 0.80 Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 32 Technology and machinaries Indicator VPE500 employs more advanced technology than other VPEs: oThe lifetime of machinery and equipment is younger oHigh rate of automatic equipment The use of R&D investment for self-developed technology and equipment of VPE500 and VPEs is extremely low VPE500 has greater opportunity in digitalizing, accessing machinery, and benefiting from FDI than other private enterprises Years of usage until 2018 (average) Date of purchase 0-5 years 6-10 years > 10 years Types of equipment Manual tools Electrical tools Machines controlled manually Machines control automatically Source Purchase Supplied by other firms Self-develop Other Purchased from Domestic Firms in the same sector Firms in other sectors FDI firms in same sector FDI firms in other sectors Import From same sector From other sectors VPE500 VPE 7.5 39.7 35.3 25.0 1.5 1.5 69.1 27.9 96.1 2.0 1.6 0.3 59.7 4.5 40.3 3.0 11.9 8.1 36.6 32.7 30.7 1.1 5.5 84.5 8.0 96.9 1.8 1.2 0.1 87.1 11.0 65.1 5.3 5.3 40.3 17.9 22.4 12.9 5.2 7.8 Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 33 VPE500 interaction and influence on the remaining businesses Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 34 Links with suppliers and customers ▪ For supply linkages: VPEs have a narrower scope, focusing more on province and within region suppliers meanwhile, VPE500 are more national-wide and global ▪ For customer linkages: Both VPE and VPE500 have large clients are from private sector, however, VPE500s obtained more revenue share from FDI Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 35 Productivity and salary spillovers of VPE500 to VPEs • VPE500 in the same sector has adverse effects • The downstream VPE500 has a positive impact on upstream VPEs, while the mainstream VPE500 has a negative impact • The impact of competition brought by FDI firms on VPEs is about three times less than that by VPE500 • The positive effect of VPE500s is about 0.1 percentage points higher • The VEP500 affects salaries, but not greatly A 1% increase in the market share of VPE500 results in an increase in 0.15% in the salaries paid by VPE while the impact of FDI firms is about 0.04% 0,67 0,53 0,6 0,4 0,2 -0,2 -0,4 Cùng ngành -0,29 VPE nhà cung cấp FDI VPE khách hàng -0,32 -0,6 -0,64 -0,8 -1 Vietnam’s 500 -0,94 largest private enterprises (VPE500) report 10/08/2022 36 Conclusions and policy implications The fluctuation of VPE500 is quite large Concentration of VPE area is high Contribute to revenue and assets is particularly high in some capital-intensive industries Operation scale and scope of VPE500s is much wider than VPEs, potentials for going abroad There is no clear outstanding performance in labor productivity → VPE growth depends on expanding resources There is better connection with the FDI sector and other businesses The export rate is higher There are effects on productivity, but not large And negative impacts are still lingering The improvement of the business environment now focuses on lowering market entry costs > establishing more new businesses, rather than on growth and the formation of large groups Separate policies for large enterprises? Vietnam’s 500 largest private enterprises (VPE500) report 10/08/2022 37 THANK YOU! Title of the presentation in three lines 06/09/2018 38