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Tiêu đề Challenges In Internationalisation For Vietnam SME
Tác giả Đinh Nguyễn Bích Lê
Người hướng dẫn PGS.TS. Hoàng Đình Phi
Trường học Vietnam National University, Hanoi
Chuyên ngành Quản trị kinh doanh
Thể loại thesis
Năm xuất bản 2020
Thành phố Hà Nội
Định dạng
Số trang 79
Dung lượng 653,4 KB

Cấu trúc

  • CHAPTER 1: INTRODUCTION (11)
    • 1. Background and Problem Statement (11)
    • 2. Objectives of the Study (12)
    • 3. Scope of the Study (12)
    • 4. Thesis Structure (13)
  • CHAPTER 2: LITERATURE REVIEW (14)
    • 1. Conceptual Definitions of Internationalization (14)
    • 2. Internationalization and Competitiveness (14)
    • 3. Internationalization and Resource-based View to Create Competitiveness (16)
    • 4. The Role of Government in the Internationalization of SMEs (19)
    • 5. Government – Business Relations Models (20)
      • 5.1. Basic models of government-business relationship (21)
      • 5.2. Partnership Model of Organizing the Relationship between the (22)
    • 6. Summary (24)
  • CHAPTER 3: RESEARCH METHODOLOGY (13)
    • 1. Research Approach (25)
      • 1.1. Induction or Deduction (25)
      • 1.2. Qualitative and quantitative method (25)
    • 2. Research Strategy (26)
    • 3. Literature Research (27)
    • 4. Data Gathering (27)
      • 4.1. Primary data of the research (27)
      • 4.2. Secondary sources of data (28)
  • CHAPTER 4: FINDINGS AND DISCUSSION (25)
    • 1. Data Collection Description (29)
    • 2. Sample Description (30)
    • 3. Internationalization Process (31)
      • 3.1 Export activities (32)
      • 3.2. Export and Import organization (34)
      • 3.3 Partnerships (35)
      • 3.4 Partnership content (38)
    • 4. Export Information and Assistance (39)
      • 4.1 Utility provision (42)
      • 4.2 Transportation facilities (43)
      • 4.3 Export promotion network support (44)
    • 5. Policy and Institutional Environment (46)
      • 5.1 Inspection visits received by firms (48)
    • 6. Key Factors in Internationalization (49)
      • 6.1 Impact of Ownership (SOEs and Private SMEs on all other factors) (49)
      • 6.2 Impact of Industry on all other factors (52)
      • 6.3 Factors impact on export shares (55)
      • 6.4 Factors impact on International competitiveness (58)
      • 6.5 Impact of key factors on effectiveness after international cooperation (60)
    • 7. Summary (62)
  • CHAPTER 4: CONCLUSION AND RECOMMENDATIONS (29)
    • 1. Reforming the credit system and developing the capital market (64)
    • 2. Reforming the trade policies to assist export activities by SMEs (66)
    • 3. Reforming further the customs procedures (68)
    • 4. Recommendations on technology policies (70)
    • 5. Recommendations on the operation of the organizations supporting SMEs (70)
  • Appendix I (73)
  • Appendix II................................................................................................................ 66 (76)

Nội dung

INTRODUCTION

Background and Problem Statement

Small and Medium Enterprises (SMEs) in Vietnam are crucial to the country's industrialization and modernization efforts Recent economic reforms have significantly boosted the growth of SMEs, enhancing trade diversity and fostering internationalization There are compelling reasons for SMEs to pursue international markets, including access to larger markets for increased profits and cost-effective supplies for improved production efficiency While many motivations are market-related, the quality of management stands out as a critical factor Exporting enterprise managers tend to possess higher education levels and better foreign language skills compared to their non-exporting counterparts, demonstrating greater dynamism when entering international markets.

In Vietnam, the internationalization of small and medium-sized enterprises (SMEs) is hindered by several challenges, including limited market access and insufficient competencies (VCCI, 2017) Key barriers include a shortage of capital, outdated equipment and technology, poor product diversification, and a lack of skilled management Additionally, the absence of targeted policies from support institutions and the government to promote SME internationalization and enhance their competitive advantages further restricts their ability to integrate into global markets (VCCI, 2017).

Numerous studies by international and local organizations, including MPDF, UNDP, CIEM, VCCI, and the World Bank, have focused on SMEs; however, most have emphasized general policy recommendations rather than specific challenges, such as government support for export promotion This study aims to identify the obstacles faced by SMEs in international activities and propose strategic changes to address the critical question: “How can these challenges be overcome?”

SMEs in Vietnam achieve effectiveness when engaging in internationalization?”

Objectives of the Study

 To explore current export barriers of SMEs in comparing with those faced by state owned enterprises (“SOEs”);

 To examine support policies and activities such as export promotion activities from the government and professional association for SMEs;

 To explore solutions or strategies that SMEs (in general and by group such as PSMEs and SOEs) are using to resolve their barriers and the effectiveness of their strategies;

 To provide recommendation for both SMEs, Government and other related stakeholders

The research will inform a potential framework for government-business relations in Vietnam, guiding the government's strategy for internationalization to maximize competitive advantages for small and medium-sized enterprises (SMEs).

Scope of the Study

Content: The author focuses on the group of SME in the field of export of garment products

Timing: hard data collected from reports released during 2015-2018, soft data collected during 2019

Space: the study and surveys were conducted within Hanoi, Bac Ninh, Hai Phong.

Thesis Structure

 Chapter 4: Data Analysis and Finding Discussion

LITERATURE REVIEW

Conceptual Definitions of Internationalization

Internationalization is the process through which a company enhances its involvement in international operations, marked by measurable indicators such as export quotas, the number of foreign markets, foreign investment levels, and the presence of foreign subsidiaries (Meyer, 2016) This organic process encompasses a broad spectrum of cross-border business activities, including exports and the procurement of raw materials, components, machinery, and financial support from international institutions.

Small and medium enterprises (SMEs) face significant challenges compared to large enterprises, particularly in the domestic market Their management skills and technological capabilities are often limited, along with a restricted understanding of diverse cultures and institutional impacts Additionally, SMEs typically lack substantial assets, resources, and partnerships, both domestically and internationally Consequently, the competitive advantages of a firm are heavily influenced by the dynamics of the local business community and the specific industry in which it operates.

Internationalization and Competitiveness

Internationalization is crucial for enhancing competitiveness in an open economy, particularly for Vietnamese late followers who can leverage international technology imports and partnerships to upgrade their capabilities Relying solely on domestic savings is insufficient for financing essential investments in technology and human capital, making it vital to access international resources However, effectively tapping into these resources to gain competitiveness requires well-structured strategies at both the national and firm levels.

Cooperative partnerships between firms can enhance competitiveness by facilitating the transfer of scarce resources, benefiting all alliance partners While competition drives firms to improve, collaboration can also foster competitiveness and innovation (Porter, 2008) International linkages, characterized by voluntary agreements between firms, are designed to achieve competitive advantages for all partners involved (Das, 2008).

Establishing international linkages between firms enables the exchange of valuable resources that may be challenging to access domestically or acquire under favorable commercial conditions globally.

Cooperative arrangements among firms are primarily motivated by the potential for reduced transaction costs compared to other exchange methods Internationalization through strategic alliances can also be viewed from a resource-based perspective, where a firm's value is linked to its available resources The formation of international linkages is largely driven by the need for resource acquisition and integration between firms (Das, 2008; Faulkner, 2012) In these alliances, the focus extends beyond merely obtaining resources to include the retention of those resources, highlighting the significance of learning organizations for the effectiveness and longevity of strategic alliances (Faulkner, 2012) Additionally, insights from strategic behavior models, game theory, social relations, network theory, and power-dependency theory provide a deeper understanding of the dynamics and functionality of strategic alliances.

Cooperative ventures can adopt various strategies, including market development, research and development partnerships, international production sharing, and counter-trade alliances (Culpan 2011) These strategies can be tailored and combined based on the specific needs of the involved parties While large multinational corporations often form horizontal alliances, vertical cooperation typically occurs between producers and their sub-suppliers, which may involve firms of differing sizes, resources, and power dynamics.

Internationalization and Resource-based View to Create Competitiveness

Sustainable private sector development in Vietnam largely depends on the country's ability to establish international linkages, as highlighted by the literature on competitive advantage With a development strategy centered on an open economic regime, Vietnam is increasingly integrating into global markets through free trade and capital flows This regional integration is particularly relevant in the context of ASEAN/AFTA and the significant economic influence of China Additionally, the existing bilateral trade agreement with the USA positions Vietnam favorably for potential membership in the WTO These factors present critical challenges for Vietnamese firms as they strive to compete internationally and enhance their competitiveness.

To enhance the competencies of Vietnamese SMEs, which represent over 90% of the country's businesses (Ministry of Planning and Investment, 2017), government support is crucial in developing industry-specific strategies The government should categorize SMEs based on their resources and competencies to formulate targeted policies that boost international competitiveness This section discusses the resource-based theory and the firm's value chain activities as a framework for classifying the resources of these firms.

Firm Resources to be grouped

Procurement & Logistic & Production Marketing & Services

(self-constructed) FIRM RESOURCES AND INTERNATIONAL

In strategic management, understanding the sources of sustained competitive advantages is crucial for firms The prevailing theories indicate that companies achieve these advantages by leveraging their internal strengths to capitalize on environmental opportunities while mitigating external threats and addressing internal weaknesses (Hofer & Schendel, 1997) Recent research has increasingly concentrated on evaluating a firm's opportunities and threats within its competitive landscape Porter’s (2008) five forces model highlights the characteristics of a favorable industry, implying that greater opportunities exist alongside reduced threats.

Porter's model has faced criticism for overlooking the internal competencies and conditions that affect a firm's competitiveness Critics argue that an externally focused approach is insufficient for developing unique resources and sustainable competitive advantages (Grant, 2015; Barney, 2015) The Porter diamond is seen as emphasizing external factors while neglecting crucial internal resources that enhance competitiveness, a viewpoint strongly supported by the resource-based view of the firm (Foss, 2015).

The resource-based view (RBV) has recently gained prominence as a framework for understanding industrial organizations and their competitive strategies, emphasizing internal factors over external ones This perspective highlights the connection between a firm's internal characteristics and its performance, suggesting that competitive advantage cannot rely solely on external influences (Barney, 2015) RBV posits that the potential for value creation lies in the resources controlled by a firm, including processes, attributes, information, and knowledge, which enable the development and execution of strategies that enhance efficiency and effectiveness.

The resource-based view of firms posits that companies within the same industry may possess similar strategic resources, which are not easily transferable between firms This immobility allows these resources to be developed into a competitive advantage.

The Role of Government in the Internationalization of SMEs

Government policy plays a crucial role in enhancing competitiveness by shaping the conditions within the four facets of Porter's diamond model and their interactions In developing countries, where the private sector is often underdeveloped, it is vital for trade policies to actively seek market openings based on national competitive advantages rather than merely responding to political pressures Identifying effective programs and instruments that foster linkages between local enterprises and foreign partners is essential, as the strength of local-TNC linkages relies heavily on the technological and financial capabilities of local industries Additionally, the international competitiveness of local industries is influenced by the integration of industrial clusters and chains, making it important to recognize government initiatives that promote successful collaborations A thorough analysis of these programs must consider overall economic conditions, including macroeconomic stability and the openness of trade and investment regimes.

In Asia, regional experiences highlight the critical balance between the state's role and small and medium-sized enterprises (SMEs) for successful expansion in export-oriented strategies While the state's involvement is deemed essential, its approach varies significantly among export-oriented countries, particularly in the context of Vietnam.

Government – Business Relations Models

In this study, the concept of „businesses‟ or „business community‟ refers to all commercialized and profit-making oriented entities including either private firms or stated-owned enterprises (SOEs)

The term "government" encompasses policy and law-making agencies, as well as institutions that facilitate and implement these policies, alongside the public administrative apparatus This distinction is crucial as it seeks to separate State-Owned Enterprises (SOEs) from the policy-making and facilitation roles of the Vietnamese Government, a key focus of this research.

The relationship between government and business involves a degree of dependency or interdependency between these two entities This relationship can be analyzed structurally, focusing on its organization, or behaviorally, examining the interactions between the actors While both perspectives are important, the primary interest lies in the interactions and activities within the government-business framework It is through these actions and interactions that the relationship evolves, initiating a continuous learning process.

5.1 Basic models of government-business relationship

Over the years, numerous views on the nation state and the relationship between the government and the business community have been formulated

In today's vibrant world, the focus shifts from the debate of central planning versus market dominance to evaluating the advantages of various methods for managing and governing a market economy.

This study has identified five different models of the role of government in relation to the business community The models are summarized in the Table 2.1

Table 2.1: Roles and Models of Government in an Economy Type of government Public Authority

Division of labor between Government and private sector based on effectiveness and efficiency

Dialogue between Government and private sector, the dialog taking place within a network of public and private institution

The government represents unified political power and through policies, the government shapes or directs the action for the private business

The laissez-faire model, rooted in neoclassical economics, advocates for minimal government intervention in business affairs, emphasizing the importance of maximizing private autonomy In this framework, the government's primary responsibilities include ensuring the efficient functioning of both domestic and international markets, maintaining macroeconomic stability, and providing essential public goods.

In a mixed economy, the balance between public authorities and private entities is crucial, with efficiency as the key factor in delineating their roles This efficiency is closely tied to welfare considerations, highlighting the importance of government involvement in various economic models While the concept of a mixed economy is prevalent across many nations, there are numerous variations in its implementation.

In the central planning model, the government serves as the primary actor, taking on the roles of both activist and entrepreneur to manage economic functions This model operates under the assumption that preferences and resources are fully understood, dismissing the concept of bounded rationality Consequently, the private sector is significantly diminished, often facing hostility from the government, which perceives even small micro-enterprises as a threat to its control over the economy.

5.2 Partnership Model of Organizing the Relationship between the Government and Business

The partnership model is an institutional framework that facilitates collaboration between the government and the business sector, effectively managing diverse interests through dialogue, negotiation, and coordinated actions Key characteristics of this model include its focus on interaction and mutual benefit.

1 The principal actors are the private firms and their associations, the political bodies and the public agencies

2 The actors interact and through the interaction, intensive and often personal and long-term relations are developed

3 The relationship may be formalized by establishing specific institutions

4 The actors are not seen as unified decision makers but are characterized by a multi-center power structure

5 In its pure form, the partnership model is characterized by interdependence, trust, cooperation, and mutuality in the relations between government and business

6 Being political/economic institutions, the activities within the institutions aim at fulfilling ideological, strategic and practical objectives The activities comprise: Policy formulation activities; Campaigning activities; Discourse activities; Dialogue activities; and Implementation activities Some of those types of activities may be dealt with in specialized institutions, and at the same time, the same institutions may be in charge of more than one activity Those activities can be summarized as follows:

 Policy formulation The formulation and analysis of problems and the proposal of solutions

 Campaign activities The formulation and diffusion of the world views held by the institution in question

 Discourse activities Testing the rationale of policies and world views

 Dialogue/Negotiations Establish procedures/Terms of reference and discuss and formulate compromises

 Implementation activities Carry out, monitor, punish violators and reward compliers

A partnership model characterized by interdependence and mutual understanding between public and private sectors relies on effective information exchange, communication, dialogue, and negotiations This collaboration occurs within a network of personal and institutional relationships, fostering intensive and frequent interactions between organizations or overlapping entities created by both sectors.

RESEARCH METHODOLOGY

Research Approach

The research approach involves either inductive or deductive reasoning for drawing conclusions, alongside qualitative and/or quantitative methods for data investigation This article will outline various research approaches and provide justifications for the selected methodologies.

There are two primary approaches to drawing research conclusions: induction and deduction (Wiedersheim-Paul & Ericksson, 2009) The inductive approach involves gathering generalizable data through observation, leading to the formation of theories (Ericksson & Wiedersheim-Paul, 2015) In my thesis, I adopted a deductive approach, starting from established theories and models related to the export development process These theories have undergone empirical testing to verify their alignment with reality This approach was chosen due to the abundance of existing theories in the field, primarily based on the experiences of large enterprises.

Qualitative research methods are used to gain a deeper understanding of specific problems rather than to generalize findings (Lekvall & Wahlbin, 2013) This approach offers flexibility, allowing researchers to address weaknesses, refine formulations, and incorporate missing questions However, a notable limitation is the difficulty in comparing data across different subjects (Holme & Solvang, 2015) Typically, qualitative studies are conducted through case studies or surveys with a limited number of research subjects (Lasvall & Wahlbin, 2011).

The quantitative method offers a broad perspective on research, typically utilizing large-scale questionnaires with closed-ended questions that require limited resources This approach allows for the collection of data that can be quantified and expressed in numerical terms The main objective of employing this methodology is to generalize the findings In my research, I adopted the quantitative approach to gain a deeper understanding of various phenomena associated with SMEs and their internationalization processes.

Research Strategy

Yin (2012) identifies five key research strategies: case studies, experiments, surveys, histories, and archival information analysis Below, a figure illustrates the relevant contexts for each of these research strategies.

Table 3.1: Relevant situations for different research strategies

Requires control over behavioral events?

Experiment HOW, WHY YES YES

WHO, WHAT, WHERE, HOW MANY, HOW MUCH

WHO, WHAT, WHERE, HOW MANY, HOW MUCH

History HOW, WHY NO NO

Case study HOW, WHY NO YES

For my research strategy, I opted for a survey approach, utilizing a well-designed questionnaire to gather essential information According to Yin (2012), case study strategies are most suitable when questions focus on WHO, WHAT, HOW MUCH, and HOW MANY My investigation centers on the research problem, “How can SMEs in Vietnam achieve effectiveness in internationalization?” This inquiry is structured into four main sections, comprising a total of 31 research questions.

Literature Research

Having defined the research area, I started to search for relevant literature The keywords used when searching the databases were

“international business”, “export”, “internationalization process”, “SME”,

“SMF”, “small and medium business”, “small and medium enterprises”,

International trade plays a crucial role in shaping business opportunities in Vietnam By leveraging insights from international marketing research studies, businesses can effectively navigate the dynamic landscape of trade in Vietnam Understanding the nuances of international trade can significantly enhance market reach and drive growth for companies operating in this vibrant economy.

FINDINGS AND DISCUSSION

Data Collection Description

A survey was conducted involving 60 questionnaires distributed to small and medium enterprises (SMEs) across various industries, each with a capital not exceeding VND 10 billion and a workforce of no more than 300 employees All selected enterprises actively engage in international business, generating at least 10% of their revenue from foreign-related activities The study aimed to gather comprehensive insights, focusing exclusively on manufacturing companies with export activities, without imposing restrictions on the types of companies interviewed.

The questionnaire, structured into four key sections focusing on internationalization—company profile, internationalization process, export promotion and assistance, and government relations—was distributed to managers overseeing international business activities After screening for consistency, responses from 50 companies met the criteria for comprehensiveness, while ten were discarded due to incomplete or improperly answered surveys.

Ten additional companies were directly interviewed to enhance the diversity and comprehensiveness of the collected data Attached is the questionnaire featuring open-ended questions designed to gather more insights regarding company feedback and suggestions Furthermore, interviews with the SMEs Supporting Center (Vietnam Chamber of Commerce and Industry) and VIETRADE (Ministry of Industry and Trade) provided valuable information on their current activities and future plans to support SMEs.

Sample Description

The 50 companies in the survey represent both private and public ownership: 20 enterprises (40%) being partly state owned and 30 private (100%) enterprises (60%) most of which are private limited enterprises While it is important to learn about private firms involvement, the study nevertheless included SOEs in order to have a comparative aspect such as to see whether there is any bias against PSMEs relative to SOEs The percentage of private enterprises is bigger than the SOEs‟ ones

Firm size based on capital employed is shown in Table 4.1

Table 4.1: Register capital and economic sector

Under VND1 billion (US$66,000) 11 (100%) 11 (100%) From VND1-VND5 billion

(US$66,000-US$330,000) 14 (53.8%) 12 (46.2%) 26 (100%) From VND5-VND10 billion

State-Owned Enterprises (SOEs) typically possess a larger capital size compared to private companies, primarily because many private firms are newly established and still in the early stages of investment Small companies are defined as those with registered capital under VND1 billion (approximately US$66,000), while medium-sized companies have capital ranging from VND1 billion to VND10 million (around US$660,000) Notably, 22% of the companies in the sample are classified as small, and there are no small companies among the SOEs The distribution of the interviewed firms by industry is detailed in Table 4.2.

Textile and Garment Footwares and Leathers Handicraf ts

Food Processing Wooden Processing Chemistry

Industry in which f irm operate

Others: carton packages, electronic accessories, boilers, etc

Garment, leather, and agro/forest-based productions are the predominant sectors, while engineering, electronics, and metal-based production are nearly non-existent, with only a few categorized under "others." According to data from VCCI, it is evident that the majority of SMEs are engaged in light industries, primarily focusing on textile and food processing.

Internationalization Process

From the other results, we can see the overall picture of internationalization process of SMEs

Most of the interviewed enterprises primarily engage in international business through exporting activities This trend can be attributed to the limited number of recent strategic alliances, as earlier restrictions on private firms participating in international trade and the predominance of foreign direct investment (FDI) in collaboration with large state-owned enterprises have shaped the landscape.

Companies are motivated to engage in international markets primarily to increase profits, driven by government incentives and low domestic demand Additionally, they seek access to new technologies that enhance productivity and respond to competitive pressures within their home markets.

Table 4.3: Export motives of the SMEs

Export moti ves vs industry

Industry in which f irm operate

Textile and Garment Footwares and Leathers Handicraf ts

Food Processing Wooden Processing Chemist ry Others Total

Export motiv e of the company is increasing prof it

Export motiv e of the company is accessing t o f oreign technology

Export motiv e of the company is gov ernment incentiv es

Export motiv e of the company is low domestic demand

Export motiv e of the company is domestic competition

The survey results reveal that profit is the primary export motive for SMEs, with a mean score of 4.30, as shown in Table 4.3 Notably, 63% of respondents identified increased profit as their most significant motivation, particularly among private companies, which accounted for 57% of this group This emphasis on profit is the highest agreement rate across various industries In the food processing sector, all enterprises indicated that increasing profit is their top priority, achieving the highest mean score of 5 The textile and garment industries also prioritize profit, followed closely by technology Conversely, companies in the handicrafts sector show minimal engagement with government incentive policies or technology upgrades.

Government export incentives appear to be unappealing, as indicated by all ratings falling below 3, with the chemical industry being the sole exception The domestic demand for textiles, footwear, and handicrafts remains low, prompting businesses in these sectors to explore foreign markets for growth opportunities.

The export share is a crucial indicator of SMEs' engagement in international trade, with the highest export turnover in 2002 seen in the Textile, Garment, and Handicrafts industries, accounting for 61%-80% of their sales Over the past three years, the overall export share has risen, starting from at least 21% of total sales and averaging over 41%, with a mean of 3.06 In contrast, Chemical enterprises report lower export revenues, ranging from 21% to 40% Private SMEs outperform state-owned enterprises (SOEs) in export earnings, with 80% of the top 20% of enterprises generating 81%-100% of their revenue from exports being private SMEs, indicating a stronger involvement of private companies in foreign trade compared to SOEs.

A significant 78% of SMEs engage in foreign trade activities through dedicated export-import departments, although 72.2% of private companies lack such specialized divisions Typically, these international business functions are managed by directors or vice directors While there is a noticeable improvement in organizational structure among companies, private enterprises are still in the process of development Furthermore, medium-sized enterprises are more likely to have export departments compared to smaller ones.

Does your firm have specialized export-import dept

Does y our fi rm have s pec i al iz ed export -i mport dept yes n o

From VND1-VND5 billion (US$66,000-US$330,000) (26)

From VND5-VND10 billion (US$330,000-US$660,000) (13)

Not all companies engaged in exporting participate equally in partnerships, which can occur at various levels of the vertical value chain These partnerships may involve collaboration with both foreign suppliers and buyers Often, the relationship with the foreign buyer extends beyond sales, encompassing the supply of materials and inputs necessary for production.

This article explores the countries to which SMEs export and their primary export channels, providing insights into the extent of their international activities Additionally, it examines partnership dynamics to assess the level of engagement SMEs have in the process of internationalization.

Most import ant export countries?

Easte rn Eu ro pe Asi an

Many companies engage in multiple foreign partnerships, with private limited firms averaging slightly more partnerships than state-owned enterprises (SOEs) Asian countries are the primary export markets for SMEs, accounting for 50% of exports, followed by Eastern Europe at 28% and the EU at 18% The USA remains a nascent market for SMEs, with only two companies exporting there; however, most products, excluding textiles and garments, can enter the US market In the leather and footwear sectors, 100% of SMEs export to Europe, with 66.7% targeting Eastern Europe and 33.3% the EU Conversely, handicrafts are exported 33.3% to Eastern Europe and 66.7% to the EU, highlighting the cultural competitive advantage of these products in Western markets The data indicates that SMEs typically diversify their export destinations, a strategy informed by past market failures in SNG and Eastern Europe Overall, while SOEs have slightly more EU partners, the differences between SOEs and private companies are minimal.

Which export channel the enterprises chose most frequently can help us to see to which degree those enterprises are doing international business

Main export channel is foreign importer Mean Std Deviation

Main export channel is agent 76 43

Main export channel is abroad representative office

Main export channel is sub contractor 08 27

Main export channel is entrusted company 04 20

The primary export channels for Vietnamese SMEs are foreign importers and agents, with 76% of SMEs opting for direct exports to importers, while 26% utilize agents The use of entrusted companies is minimal, indicating that many SMEs now engage in direct export and import activities independently, rather than relying on large trading firms as in the past This trend highlights the increasing dynamism of these enterprises in seeking out direct foreign clients.

Su ppo rt fro m par tner s

Support from suppliers and importers plays a crucial role in market information, training, technology, and capital Suppliers provide essential market insights and technological training, while importers contribute by offering valuable market data, training, and financial support This collaboration enhances the overall efficiency and competitiveness of businesses in the market.

Support f rom supplier is capital/credit

Partnerships with foreign suppliers and importers primarily focus on information exchange, while training and technical support are secondary Notably, over half of the companies engage solely in commercial transactions, lacking deeper relationships beyond basic buying and selling activities.

The content of the relations to foreign buyers are shown in Table 4.8

Supports from partners vs industries

Industry in which f irm operate

Textile and Garment Footwares and Leathers Handicraf ts

Food Processing Wooden Processing Chemist ry Others Total

Support f rom importer is capital/credit

Support f rom importer is market inf ormat ion

Support f rom importer is training and technology

Support f rom supplier is capital/credit

Support f rom supplier is market inf ormat ion

Support f rom supplier is training and technology

A significant two-thirds of companies report receiving no assistance from importers, while an overwhelming 84.0% receive no support from foreign suppliers This indicates a passive stance from both foreign buyers and suppliers regarding the support of local companies in their export marketing initiatives.

Export Information and Assistance

The inquiries in these sectors primarily focus on assessing the level of assistance and support that small and medium-sized enterprises (SMEs) receive from infrastructure, existing export promotion networks, and their relationships with government and public services.

In today's globalized economy, E-Commerce has emerged as an essential tool for facilitating international business transactions This article examines how small and medium-sized enterprises (SMEs) utilize E-Commerce to enhance their international operations, with insights gathered through a comprehensive questionnaire on their usage and strategies.

Figure 4.3 shows that about 70% of the companies develop their import

E-Commerce plays a crucial role in export activities, revealing disparities in accessibility between small and medium enterprises (SMEs) While state-owned enterprises (SOEs) and private small and medium enterprises (PSMEs) show similar ownership shares, medium-sized companies are twice as likely to engage in intensive E-Commerce use compared to their smaller counterparts This trend suggests that a firm's level of E-Commerce utilization may serve as an indicator of its internationalization, highlighting that as businesses grow, they increasingly leverage E-Commerce for their operations.

A significant number of firms indicate that their primary motivation for engaging in E-Commerce is to obtain market information and identify trading partners This reflects a positive shift in SMEs' willingness to seek collaboration, contrasting with previous perceptions of their reluctance to partner with new, particularly international, entities Experience may have highlighted the benefits of both narrow cooperation and broader internationalization, enhancing their chances of survival in a competitive global market Additionally, there is a strong demand among SMEs for market insights and potential partners, suggesting that government support, particularly through export promotion networks, could greatly benefit these businesses.

Table 4.13: Reasons for not using E-Commerce

Reason for not using E-Commerce is high cost 14 Reason for not using E-Commerce is helpless 10 Reason for not using E-Commerce is lacking internet using skills

The phenomenon of a "high share of E-Commerce usage but low intensity of engagement" can be attributed to two key factors Firstly, the high costs associated with E-Commerce deter many small and medium-sized enterprises (SMEs), particularly smaller businesses, from fully embracing this platform This reluctance is understandable, as Vietnam continues to face relatively high E-Commerce charges, making it a significant barrier for widespread adoption.

Many SMEs remain unaware of the advantages that E-Commerce can offer, leading to a lack of necessary knowledge to effectively leverage its benefits A survey revealed that 25.5% of firms do not utilize E-Commerce, with 42.9% citing a lack of knowledge on how to exploit its benefits Additionally, 14.3% of these firms attribute their non-participation to high operating costs and ineffective usage Consequently, this lack of awareness and knowledge accounts for over half of the firms without E-Commerce access.

Number of times of power cuts 41 12.8

Number of times of water interruption 46 11.5

Number of firms having generators 50 10(20%)

Number of firms having wells 50 15(30%)

A recent survey indicates that firms experience an average of 13 power cuts per year (1.35 monthly) and 11 water supply interruptions annually (0.91 monthly) However, the financial impact of these disruptions remains unquantified due to a lack of data The study suggests that utility supply cuts, caused by inadequate infrastructure or shortages, affect all firms in a given area indiscriminately Nevertheless, the level of loss varies by firm type; for instance, agro-processing firms may incur greater losses from water supply cuts compared to handicrafts, while textile and garment firms might be more adversely affected by power outages Notably, firms that invest in electricity generators or wells demonstrate a proactive approach to mitigating the risks associated with unreliable public utility services.

According to Table 4.14, 20% of firms have their own power generators, while 30% maintain private wells In Hanoi and surrounding areas, there is a continued need for improvement in securing stable utility services from the public sector.

Transportation facilities play a crucial role in the operations of SMEs, and significant government investment in recent decades has dramatically improved Vietnam's transport infrastructure This enhancement has alleviated operational challenges for SMEs, as evidenced by data presented in Table 4.15.

From VND1-VND5 billion (US$66,000-330,000) (26)

From VND5-VND10 billion (US$330,000-US$660,000) (13)

Table 4.15 reveals that, on average, companies across various ownership types do not view public transportation facilities as barriers to export Analysis by firm size indicates similar results, with a mean score of 1.86; however, small companies perceive it as a minor challenge Overall, the majority of companies express comfort with the availability of public transportation facilities.

Vietnamese SMEs, including state-owned enterprises (SOEs) and private firms, heavily rely on support from public and private export promotion networks during their internationalization process SOEs, having been isolated from global markets during the central planning era, and newly established private enterprises, which lack extensive international business experience, particularly benefit from this assistance Table 4.16 illustrates the ways in which SMEs receive support from various export promotion organizations.

Main so urce of expo rt pr omoti on

Sourc e of ex port promotion inf orm ation f rom f or eign c lients Sourc e of ex port promotion inf orm ation f rom gov ernment, orgnazat ion

Sourc e of ex port promotion inf orm ation f rom Internet Sourc e of ex port promotion inf orm ation f rom f or eign embas s y Valid N (list wis e)

Source of export promoti on i nformation vs Economic sectors

Source of export promotion inf ormat ion f rom Internet

Source of export promotion inf ormat ion f rom gov ernment, orgnazat ion

Source of export promotion inf ormat ion f rom f oreign client s

Source of export promotion inf ormat ion f rom f oreign embassy

The data indicates that foreign clients are the primary source of information for SMEs, with PSMEs relying more heavily on them than SOEs Specifically, 74.3% of PSMEs obtain information from the Internet, compared to just 25.7% of SOEs, while PSMEs also benefit more from export promotion organizations (52.7% vs 47%), customers (62.9% vs 37.1%), and foreign embassies (57% vs 43%) However, when assessing the importance of support received, PSMEs prioritize foreign client support, whereas SOEs find government and export support organizations most crucial This trend may stem from PSMEs being newer entities that, lacking direct government support, are compelled to actively seek out opportunities for business expansion.

Despite Vietnam having a robust export promotion network, it is not the primary source of market information for PSMEs Instead, all SMEs rely on customers as their main source of market insights.

Within the export promotion network, the survey shows that different export promotion institutions have different effectiveness in supporting the SMEs

Su ppo rt fro m expo rt pro moti on n etwor k

No support Support f rom VCCI Support f rom Viettrade Support f rom Local export prom ot ion cent ers Suport f rom other non-gov erm ent al business association Valid N (listwise)

According to Table 4.17, VCCI is recognized as the primary support source within the export promotion network, contrary to Vietrade (MOIT), which is expected to take on this role This indicates that entities like professional associations, product associations, and private export promotion organizations have a limited influence in this sector.

Many enterprises acknowledge receiving support from export promotion organizations, but the key question remains regarding the effectiveness of this assistance This effectiveness is illustrated by how firms secured their initial export orders: 36.7% received their first order from a foreign customer visiting the company directly, 10.2% from participation in fairs and exhibitions, 14.3% through the firm's overseas outlets, and 20.4% via support from VCCI and MOIT.

Policy and Institutional Environment

Numb er o f per mits by capi tal size

Regist ered capital Under 1 billion VND From 1-5 billion VND From 5-10 billion VND Total

On average, businesses in Vietnam require about two permits to operate, though this number can significantly vary based on the specific nature of their operations This average offers a general perspective on the complexity of business regulation procedures in the country The recent introduction of the new Enterprise Law has further impacted these regulatory processes.

2000, a number of unnecessary procedures or permits has been removed

The policy and institutional environment significantly influences business development, with ongoing unofficial expenses for operations persisting despite legal reforms and anti-corruption efforts Incorporating environmental issues into business assessments is both intriguing and beneficial; however, the reliability of the data gathered remains unverified, raising concerns about its accuracy.

Unofficial fees for export procedures

Unoffi ci al fees for ex port proc edures yes n o

A significant 70 percent of firms, or 35 out of 50, reported incurring unofficial expenses to obtain mandatory export procedure permissions in Vietnam, highlighting a potentially detrimental aspect of the country's business environment For further details, please refer to Table 4.19.

The disparity in unofficial expense payments between small and medium-sized enterprises (SMEs) in Vietnam highlights a significant issue, with only 38.5% of small firms incurring these costs compared to nearly double that percentage for medium-sized firms This suggests that the policy environment may still favor small enterprises over their medium-sized counterparts, indicating potential discrimination against medium-sized businesses.

5.1 Inspection visits received by firms

Number of visiti ng times of inspectors and polices Regi stered capital

Regist ered capit al Under 1 billion VND From 1-5 billion VND From 5-10 billion VND Total

Number of v isiting times of tax inpectors

Number of v isiting times of market inpectors

Number of v isiting times of polices

Number of v isiting times of other inspection

In a recent survey, companies reported the number of inspection visits conducted by various government authorities over the past year, aimed at monitoring operations such as accounts, pollution, and hygiene Table 4.20 presents a summary of these inspection visits for firms in 2002, categorized by capital size The data reveals a clear trend: as the size of the firm increases, so does the frequency of inspection visits, with the exception of the smallest category, which included only two firms.

Key Factors in Internationalization

6.1 Impact of Ownership (SOEs and Private SMEs on all other factors)

When conducting statistical analyses, the assumption of equal variances is crucial for accurate results This principle ensures that the variability within different groups being compared is consistent, which enhances the reliability of the findings Adhering to the equal variances assumption allows researchers to apply various statistical tests effectively, ultimately leading to more valid conclusions.

Export motiv e of the company is domestic competition

Does the f irm hav e a generator?

Source of export promot ion inf ormat ion f rom I nt ernet

Source of export promot ion inf ormat ion f rom gov ernment, orgnazat ion

Support f rom supplier is capital/ credit

Support f rom supplier is market inf ormat ion

Support f rom VCCI t df Sig (2-tailed)

Std Error Dif f erence t-test f or Equality of Means

In the internationalization process, State-Owned Enterprises (SOEs) and Private Small and Medium Enterprises (PSMEs) exhibit few significant differences, primarily influenced by ownership factors However, SOEs benefit substantially more from government incentives and support from export promotion networks than PSMEs, highlighting a disparity in resources available for international expansion.

It is obviously that SOEs always have a larger capital size than PSMEs and in most of the cases are medium enterprises rather than small ones

All companies, regardless of their sector, prioritize increased profit as the primary motivation for internationalization However, there is a notable disparity in domestic competition between State-Owned Enterprises (SOEs) and Private Small and Medium Enterprises (PSMEs), with SOEs experiencing greater competition in their home markets (mean scores of 4.2 for SOEs versus 3.4 for PSMEs) This disparity compels SOEs to explore foreign markets for their products, highlighting the agility and market responsiveness of PSMEs Furthermore, SOEs must consider the challenges of international competition when expanding, especially if they lack a strong foothold domestically The inherent flexibility of PSMEs stems from their need to independently manage their profits and losses, underscoring their dynamic approach to market demands.

There is a notable correlation between sector type and E-commerce expenditures, with State-Owned Enterprises (SOEs) typically investing nearly VND 100 million compared to less than VND 50 million by Private Small and Medium Enterprises (PSMEs) This indicates that many SMEs within the state sector operate more professionally and allocate more resources to their business activities The disparity in spending can also be attributed to the larger capital size of SOEs, which generally leads to higher expenses and investments Furthermore, SOEs are more likely to invest in backup power solutions, such as generators, with a greater proportion owning them compared to PSMEs Many PSMEs cite the high cost of generators, approximately VND 200 million, as a significant barrier to their investment in such equipment.

Despite spending more on E-Commerce than PSMEs, State-Owned Enterprises (SOEs) receive less valuable information for export promotion, with PSMEs benefiting from 74.3% effective information This discrepancy prompts SOEs to reconsider the efficiency of their E-Commerce investments, especially given the high costs involved Additionally, SOEs benefit from greater government support and export promotion networks, which they prioritize as key information sources In contrast, PSMEs largely find government export support information to be too general, rendering it less useful, as they often possess similar knowledge from alternative sources.

While examining the support provided to SMEs beyond just export information from networks, it becomes evident that organizations like VIETRADE and VCCI offer greater assistance to state-owned enterprises (SOEs) than to private small and medium enterprises (PSMEs) This disparity prompts the need to establish a level playing field for all SMEs and foster collaboration among them to enhance their international competitiveness The upcoming chapter will delve deeper into the government-business relationship, incorporating insights from direct interviews with both SMEs and export promotion organizations.

Support from suppliers significantly differs between State-Owned Enterprises (SOEs) and Private Small and Medium Enterprises (PSMEs), with SOEs receiving more capital assistance (51.3% for SOEs compared to 48.7% for PSMEs, with means of 3.03 and 3.74, respectively) Interviews indicate that suppliers often lack trust in private companies, limiting PSMEs to primarily receiving market information rather than substantial support Furthermore, PSMEs face challenges in accessing essential resources such as technology and training, highlighting the need for stronger, more collaborative relationships with suppliers.

Su ppo rt fro m supp lier s by sector s

Support f rom supplier is capital/ credit

Support f rom supplier is market inf ormat ion

6.2 Impact of Industry on all other factors

Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total

Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total

Export Barriers due t o unf air com pet it ion

Export Barriers due t o low price in import market

Purpose of using internet is searching general market inf ormation

Reason f or not using internet is helpf ulness

Reason f or not using internet is lacking int ernet skill

Export motiv e of the company is gov ernment incentiv es

Squares df Mean Square F Sig.

There is a notable disparity in international competitiveness across various industries, with SMEs generally exhibiting low competitiveness in the global market, averaging a score of 2.9 However, certain sectors, such as handicrafts, report a strong competitive edge, as all interviewed SMEs in this field assert their high standing against foreign rivals In contrast, the textile and garment sector surprisingly ranks lower, with an average score of 2.4, despite being recognized as a key export strength for Vietnam This raises concerns about the effectiveness of government support and policies in bolstering this industry.

The analysis of export barriers reveals significant challenges faced by various industries, particularly in the Textile, Garment, Footwear, and Leather sectors, where unfair competition poses a major obstacle Additionally, the Food Processing and Chemistry industries struggle to remain profitable, often being pushed out of the market due to low export prices While Vietnam traditionally leverages low labor costs as a competitive advantage, this situation suggests potential exploitation of workers Consequently, without the benefit of low labor costs, these industries find it difficult to compete on price In contrast, the handicraft sector shows promise, as Vietnamese handicrafts are highly regarded and face minimal unfair competition, providing a positive outlook amidst the challenges faced by other industries.

Exp or t bar rier d ue to unfai rco mpetiti on b y Ind ustr y

Mean Mean Mean Mean Mean Mean Mean Mean

Industry in which f irm operate

Textile and Garment Footwares and Leathers Handicraf ts

Food Processing Wooden Processing Chemistry

Export Barriers due to unf air competition

Export Barriers due to low price in import market

The disparity in government incentives across industries reveals a surprising trend, particularly in the Textile and Garment sector, which, despite receiving significant support as a key export driver, struggles with low international competitiveness and various unfair barriers This raises critical questions about potential distortions between government policies and their actual implementation, particularly concerning effective support for SMEs Additionally, it is essential to explore whether SMEs are aware of these challenges, as this awareness may be influenced by the trade promotion network's role in facilitating government incentive policies.

According to SMEs in the handicrafts industry, government incentives provide minimal benefits, and these businesses often overlook their value despite achieving significant success in international markets While the handicrafts sector appears thriving with a substantial export share, the actual revenue generated from exports does not reflect a marked difference, raising questions about the industry's true earning potential.

Gover nment incent ives by in dust ry

Export motiv e of the company is gov ernment incentiv es

Industry in which f irm operate

Textile and Gar ment Footwares and Leathers Handicraf ts

6.3 Factors impact on export shares

St d Error of the Estimate

Table 4.26: Correlation between export shares and other key factors

R 2 International competitiveness 0.005 0.389 0.152 0.134 Effectiveness after cooperation 0.305 0.148 0.022 0.002 Import and Export department 0.010 0.359 0.129 0.14 Export barrier due to low price of export products

Export barrier due to unfair 0.004 - 0.402 0.162 0.144 competition Content of partnership is direct selling

No support from supplier 0.005 - 0.391 0.153 0.135 Support from importer is capital 0.003 0.414 0.171 0.154

Export share is a crucial indicator of SMEs' performance in internationalization and their engagement in global trade A strong positive correlation exists between international competitiveness and export share, with a Beta of 0.389, indicating that greater competitiveness leads to increased export revenue and share, accounting for 15% of the export share variation This highlights the significance of international competitiveness in boosting export turnover Although there is a positive correlation between cooperation effectiveness and export share, it is not strong or significant Additionally, having a dedicated export and import department positively influences export share, with a Beta of 0.359 and R² of 0.129, suggesting that companies with these departments are more likely to enhance their export revenues.

Low prices significantly contribute to the decline in export revenues and share, particularly in the Vietnamese textile and garment sector A clear negative correlation exists between low import market prices and export share; as prices decrease, export share diminishes This issue is exacerbated by the weaker purchasing power of Vietnamese textiles in markets like Japan, leading to an average price drop of approximately 15%, further reducing export share Additionally, unfair competition in the international market adversely affects small and medium-sized enterprises (SMEs), resulting in even lower export shares as they struggle against inequitable competition.

The analysis reveals a negative correlation between the lack of support from suppliers and export share (Beta= -0.391), indicating that reduced supplier assistance leads to diminished exports Conversely, a positive correlation exists between the quality of partnerships and export performance (Beta=0.03), suggesting that stronger partnerships enhance direct sales and increase export revenue Thus, fostering supplier support and cultivating effective partnerships are crucial for boosting SMEs' export capabilities.

Support from VCCI has a positive correlation with the export share of SMEs, indicated by a Beta value of 0.284 Although only 8.4% of the competitiveness factors are influenced by VCCI support, it still demonstrates a notable impact on the export performance of small and medium-sized enterprises.

6.4 Factors impact on International competitiveness

Table 4.27: Correlation between International competitiveness and other key factors (Regression)

St d Error of the Estimate

Export motive is increasing profit

Export motive is government incentives

Main export channel is entrusted company

Export barrier due to low price of export products

Export barrier due to unfair competition

Export barrier due to high quality demand

No support from importer 0.005 - 0.391 0.153 0.135 Support from importer is capital 0.003 0.414 0.171 0.154

CONCLUSION AND RECOMMENDATIONS

Reforming the credit system and developing the capital market

To support the internationalization of SMEs, reforming the commercial banking system is crucial This reform should concentrate on key areas to enhance access to financial resources and improve banking services tailored for small and medium enterprises.

 The Government should abolish the ceilings on interest rates and leave it for banks at their discretion to define in accordance to the specific conditions in markets;

Banks are accountable for their business operations and should propose regulations to ensure the security of deposits and loans Additionally, they hold rights regarding the ownership and sale of mortgaged and pledged assets.

To prevent abuse and fraudulent activities in credit transactions, it is essential to establish a comprehensive national registration system for managing mortgages, pledges, leases of assets, and other financial instruments.

 The foreign banks are allowed to expand their business scope in Vietnam; and

 The banking supervision must be intensified with the help of a banking association so that unnecessary risks hidden in each bank are reduced as much as possible

The government must prioritize support for SMEs by creating financial assistance funds sourced from the state budget or other avenues These funds should serve various purposes, including lending, interest payment support, and guarantees Implementing a pilot program for revolving credit could pave the way for broader application, ensuring SMEs have better access to necessary capital resources.

The establishment of venture capital in Vietnam is essential to support investors with innovative business ideas who lack sufficient funding By studying and implementing effective venture capital models, we can empower entrepreneurs and stimulate economic growth in the region.

Reforming the trade policies to assist export activities by SMEs

To effectively adapt to the evolving demands of economic integration, further reforms in trade policies are essential, building upon existing changes Future reform measures should prioritize key areas that align with these new requirements.

To enhance fairness in trade practices, it is essential to further reduce the list of banned or conditionally tradable items Clear and specific trade conditions must be established to prevent discrimination in the issuance of export or import permits, ensuring that state-owned enterprises (SOEs) do not receive preferential treatment over non-state enterprises.

 As an economy dominated by the agricultural production with more than 70% rural population, Vietnam should not subsidize the export of agricultural products as the developed countries do;

 The food security policy needs to be reconsidered to propose the measures for liberalizing rice exports;

 The tariff measures should replace quotas (in case of automobiles) and the existing regime that is used “to balance some major goods” (in the case of steel, cement, etc.);

To enhance the export and import activities of SMEs, the elimination of the "trade intermediary" mechanism for certain goods is essential Instead, trade intermediaries can be effectively managed through a voluntary Trade Association, allowing for greater participation and collaboration among stakeholders.

 Decisive measures need to be applied to approach gradually to a complete system of export and import auction (for garments and automobiles)

Reforming the foreign exchange control

Foreign exchange control poses significant challenges for businesses engaged in export and import activities in Vietnam Strict regulations mandate that enterprises sell a substantial portion of their foreign exchange to banks, creating tough operational conditions To address these issues, it is essential for the State Bank to reform foreign exchange control policies in the coming years to better accommodate the foreign exchange needs of businesses.

Establishing the information system to support the export activities

Access to market information is crucial for enhancing export activities, yet dedicated information centers for enterprises remain absent Small and medium-sized enterprises (SMEs) face significant challenges in obtaining data on foreign markets and regulatory frameworks Additionally, Vietnam's trade promotion agencies abroad are currently underperforming in delivering essential information regarding market conditions and trade policies in these regions.

Supporting enterprises in the access to international markets

Supporting measures are essential for enterprises to access international markets, as they facilitate the search for and expansion into new markets for their products Government support is crucial for SMEs to participate in international trade fairs and exhibitions, which can be challenging without such assistance Currently, the Government has partially financed participation in these events through various projects, but there is a need to broaden the scope and methods of support For instance, if enterprises secure contracts for new products or markets, the Government should consider providing additional financial assistance by offering a proportional income tax deduction based on their expenses related to international trade fairs and exhibitions.

Supporting SMEs to access to E-commerce/BIG data

E-commerce/BIG data is one of the modern trading instruments that gradually break both the spatial and timing concepts in the international trade

Access to E-commerce and BIG data enables enterprises in remote and mountainous areas to explore international markets, helping them overcome challenges related to market size and location for their products In the future, government support is essential for these enterprises and professional associations to access E-commerce/BIG data and establish web pages for product advertising Additionally, the government should implement suitable tax policies to foster a fair competitive environment for trading enterprises.

Reforming further the customs procedures

Despite significant efforts in recent years, customs procedures continue to pose major challenges for businesses While there have been fundamental renovations to these processes, further improvements are necessary to enhance efficiency and address ongoing complaints from enterprises.

To streamline customs declaration processes, it is essential to simplify procedures by allowing directors or vice-directors to authorize customs officials to sign customs forms This approach alleviates the burden of responsibility for the accuracy of these statements from enterprises.

Proper consideration of penalty clauses is essential for importers and exporters to avoid fines due to miscalculated tax payments Frequent changes and unclear specifications in tax regulations can lead to these miscalculations, making the application of tax codes challenging As a result, many businesses have faced penalties for these errors, highlighting the importance of accurate tax calculations.

To streamline the customs process, the customs declaration, verification, and tax calculation should be expedited by allowing exporters and importers to handle their own tax calculations Customs officers would then focus on verifying the accuracy of these declarations and the corresponding goods, rather than repeating the tax calculation, which consumes valuable time This approach minimizes formalities, enabling customs officers to determine tax payments more efficiently after verifying the goods.

 Declaration form needs to be studied to apply for various items in the same cargo;

To streamline the import process for businesses, a comprehensive study of the single declaration is essential for applying multiple shipments of the same item This approach allows enterprises to efficiently import large quantities of goods over an extended period.

To enhance the verification process of exported goods, it is essential to reduce the time required for clearance and integrate border crossings, enabling businesses to expedite their declarations In addition to addressing issues directly related to customs offices, improving customs procedures through strategic measures is crucial for streamlining operations.

 Amending the system of tax codes in accordance with the internationally harmonized system to prevent the arbitrariness in using the customs codes;

To enhance efficiency, customs offices are undergoing a gradual modernization of their equipment, while a network is being established to connect these offices with tax agencies This initiative aims to streamline the tax reimbursement process for businesses, facilitating quicker and more effective transactions.

 Liberalizing trade, implementing the programs on the tariff reduction to restrict the pressure of smuggling on the economy as a whole and on the customs offices in particular.

Recommendations on technology policies

The government should prioritize renovating investment-oriented policies by focusing on technical and social infrastructure projects while minimizing funding for business-oriented initiatives Research projects must align with market demand, and pilot measures should be implemented to partially finance research on competitive new products, but only after their introduction to the market.

To enhance the quality of training courses and better align them with labor market demands, a collaborative approach between the Government and enterprises is essential Training centers should focus on providing theoretical knowledge, while enterprises should take charge of practical skill development Funding for these training initiatives can be sourced from the Government budget, as well as contributions from enterprises and trainees Additionally, stricter regulation of prices and quality for monopolized products, such as electricity and telecommunications, is necessary to ensure affordable access to new technologies and information for businesses.

Recommendations on the operation of the organizations supporting SMEs

To understand the role of non-government organizations (NGOs), it is essential to first define the Government's role in the economy In the future, the Government should minimize its interventions, concentrating on critical functions such as education and national defense, while delegating other responsibilities to NGOs A legal framework should be established to support the operation of these organizations The Government must also encourage the formation of associations or centers among enterprises to foster voluntary collaboration Funding for these initiatives can be sourced from support funds for small and medium-sized enterprises (SMEs) Additionally, the Government should implement measures that enable these organizations to disseminate information about regulatory documents and policies, allowing for valuable feedback from enterprises that can enhance the decision-making process.

Non-government organizations typically operate on a non-profit basis, adhering to the principle of utilizing only the funds contributed to them Therefore, it is essential for the government to grant these organizations preferential treatment in areas such as taxation and financing.

In recent years, occupational villages have experienced significant growth, and to sustain this trend, the Government must encourage the formation of occupational associations and develop small industrial zones within these villages Additionally, it is essential for the Government to support research initiatives, offer technical and market insights, and provide partial funding for technological innovation and environmental protection efforts.

Effective promotion of SME internationalization requires comprehensive government support, including coordinated policy measures, a favorable tax regime, and financial assistance These elements are interdependent and must be implemented simultaneously for maximum impact To ensure a successful future for SMEs, a large-scale reform encompassing all recommendations outlined in this paper is essential However, the specifics of such reforms are beyond the scope of this article and should be the focus of future research on SMEs.

When comparing Small and Medium Enterprises (SMEs) and State-Owned Enterprises (SOEs), it's essential to recognize that these two categories are not entirely distinct; there can be overlap, as some SMEs may also function as state-owned entities This complexity allows for a nuanced comparative analysis, highlighting the unique characteristics and operational dynamics that both types of firms exhibit within the broader economic landscape.

- The article focuses on analyzing the export aspect instead of other relationships and variables.

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4 SMEs in Asian Developing Countries, Tulus Tahi Hamonangan Tambunan

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Kokusai Kyōryoku Jigyōdan, Trường đại học kinh tế quốc dân Hà Nội

8 SME và chiến lược trong thời kỳ hội nhập, Phan Đình Mạnh (3/2017)

9 Mekong Project Development Facility (2015) Private Sector Discussions – The emerging private sector and the industrialization of Vietnam

10 Mekong Project Development Facility (2016) Private Sector Discussions – Business in Vietnam

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12 Mallea, J (2017) Internationalization of higher education and the professions Paris: OECD

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15 Bentley, John “Current Problems with Transparency of Laws in Vietnam and Recommended Solutions” Government of Vietnam – UNDP Project VIE/99/001, Strengthening the Legal Capacity in Vietnam – phase

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In recent years, small and medium enterprises (SMEs) have significantly contributed to national development, yet their potential remains underutilized To enhance the international competitiveness of SMEs, particularly in export activities, we are conducting research on their internationalization We kindly request your participation in providing information through the following questions.

1.1 Present form of ownership State own enterprises

1.2 Registered capital Less than VND1 billion From 1 to less than VND5 billion From VND5 billion to VND10 billion 1.3 Number of permanent employees

100 to 300 1.4 Main business activities of the company 1.5 How the company evaluate its competitiveness compared with others in the domestic market?

Very high High Low Very low 1.6 Does the company have the export department?

2.1 When did you get your first export order (year) ;

2.2 Which countries do you export to? ;

2.3 How did you get the first export order?

A foreign buyer came to our factory

We participated in an exhibition in Vietnam or abroad During a sales trip abroad

We were introduced to a foreign company by the Ministry , the Chamber of Commerce etc

Any other way (please, describe) _

2.4 What was your primary motivation for starting exports?

Most important Not at all

To get access to foreign technology 1 2 3 4 5 Because of export promotion by 1 2 3 4 5 the Government

Due to low demand in Vietnam 1 2 3 4 5 Due to stiff competition in Vietnam 1 2 3 4 5

2.5 Country and Export channel which the company chooses to export products?

As sub-contractors to foreign firms Abroad representative offices

3.1 What sources of information are the most used and useful for your company?

Most important Not at all

Foreign embassies in Vietnam 1 2 3 4 5 3.2 Which of the following organizations and institutions have you had some export assistance from:

VIETRADE (Ministry of Trade) Local export promotion centers in cities or provinces Vietnam‟s Chamber of Commerce and Industry (VCCI) Non-governmental business associations

3.3 What kind of support do you frequently get from foreign suppliers:

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