LINKING WITH FOREIGN INVESTED ENTERPRISES TO PROMOTE VIETNAM’S SMEs’ PARTICIPATION IN GLOBAL SUPPLY CHAINS

MINISTRY OF EDUCATION AND TRAINING - SUMMARY OF PH.D THESIS LINKING WITH FOREIGN INVESTED ENTERPRISES TO PROMOTE VIETNAM’S SMEs’ PARTICIPATION IN GLOBAL SUPPLY CHAINS MAJOR: INTERNATIONAL ECONOMICS Code: 9310106 NGUYEN THI MINH THU Hà Nội, 2021 The thesis is completed at: Foreign Trade University Science instructor: Assoc Prof, Dr Nguyen Thi Tuong Anh Assoc Prof, Dr Nguyen Thi Thuy Vinh Reviewer 1: Reviewer 2: Reviewer 3: The research will be protected in front of the council meeting at LIST OF PUBLICATIONS Nguyen Thi Minh Thu, Nguyen Thi Tuong Anh, Nguyen Thi Thuy Vinh, Pham Huong Giang (2021), “Foreign Direct Investment - Small and Medium Enterprises Linkages and Global Value Chain Participation: Evidence from Vietnam”, Journal of Asian Finance, Economics and Business Vol No (2021) 1217–1230 Scopus SciMago CiteScore2019 (0.5), SJR2019 (Q3; 0.192), and SNIP2019 (1.219) scores Nguyen Thi Minh Thu (2020), “Doanh nghiệp nhỏ vừa Việt Nam chuỗi cung ứng toàn cầu ngành cơng nghiệp điện tử”, Tạp chí Kinh tế dự báo Số 24 tháng 8/2020 ISSN 0866-7120 Nguyen Thi Minh Thu, Nguyen Thu Giang (2020) “Ảnh hưởng môi trường kinh doanh, khả tiếp cận tài trình độ cơng nghệ tới tham gia doanh nghiệp nhỏ vừa Việt Nam chuỗi cung ứng toàn cầu”, Hội thảo quốc gia “Tác động FTA hệ tới thương mại đầu tư Việt Nam” Tháng 6/2020 Nguyen Thi Minh Thu, Leader of the project “Determinants of SMEs’ participation into the electronics global value chain”, completed in December 2019 Nguyen Thi Minh Thu (2019), “Nhân tố ảnh hưởng tới tham gia doanh nghiệp nhỏ vừa Việt Nam chuỗi giá trị tồn cầu”, Tạp chí Tài Chính Số 715 kỳ tháng 10/2019 ISSN 2615-8973 Nguyen Thi Minh Thu, Nguyen Thu Giang (2019), “Integration into global value chains of Vietnam’s SMEs: Evidence from firm’s sales structure”, Hội thảo quốc tế “Development of Private and Public sectors in Vietnam and Japan” Tháng 11/2019 Nguyen Thi Tuong Anh, Pham Thi My Hanh, Nguyen Thi Minh Thu (2019), “Kinh tế giới: tăng trưởng thấp, bất ổn cao”, Tạp chí Tài 2/2019 Nguyen Thi Tuong Anh, Pham Thi My Hanh, Nguyen Thi Minh Thu (2018) “Kinh tế giới 2017 triển vọng năm 2018”, Tạp chí Tài 2/2018 Nguyen Thi Tuong Anh, Pham Thi My Hanh, Nguyen Thi Minh Thu (2017) “Linkages to global production network for Vietnam: evidence from determinants in firm’s export”, The Sixth International Conference on Entrepreneurship and Business Management (ICEBM 2017) INTRODUCTION Rationale of the research Advances in science and technology, especially information and communication technology (ICT) and transport technology, have paved the way for the development of global supply chains with the production fragmentation, in which stages can be are undertaken by a variety of actors based in different corners around the world (Jones & Kierzowski, 1990) The tight linkages between enterprises along the supply chain can facilitate the flows of inputs, production, and distribution of goods and services, thus improving the operational efficiency of enterprises in the chain Through linkages with other partners, especially with foreign-invested enterprises (FIEs) who are affiliates of multinational companies, SMEs can diversify their customer base, and at the same time have opportunities to expand domestic and foreign markets Linkage is also an important channel to help SMEs transfer knowledge and technology, learn more management experience from partners, thereby improving product quality standards and competitiveness of an enterprise Linkage also helps SMEs to share risks with partners, thereby improving the credit rating with commercial banks, credit institutions, thereby making it easy to access financing (Jenkins et al., 2007, UNCTAD 2001, OECD 2005, OECD 2013, WB 2017) However, not all SMEs can participate in such linkages Therefore, strengthening FIEsSMEs linkages to promote SMEs’ participation in the global supply chain has been a top priority of Governments as well as international organizations Farole and Winkler (2014) indicate that 33% of domestic firms in Ghana and 42% in Chile started to export directly after becoming suppliers to FIEs In other words, linking with FIEs is not only an indirect channel of participation but also helps to promote direct participation in the global supply chain of enterprises Although the Government has been providing many incentives to foreign investors, the linkages between the FDI sector and domestic enterprises, especially SMEs are relatively weak (OECD, 2021) Therefore, it is of concern that whether linkages with FIEs bring positive effects to SMEs in the host country, creating a premise for development and contributing to the promotion of activities participating directly in the global supply chain of these enterprises At the same time, if these linkages are proven to have a positive impact, how can SMEs strengthen their competitiveness to join such partnership? Stemming from practical problems and research gaps, the topic "Linking with foreigninvested enterprises to promote Vietnam’s SMEs’ participation in global supply chains” is chosen Research objectives and research questions 2.1 Research objectives The specific objectives of the thesis are: First, to examine the impact of FIEs-SMEs linkages on SMEs’ participation in global supply chains; Second, to identify determinants of FIEs-SMEs linkages and recommend solutions to strengthen the linkages between SMEs and FDI enterprises to promote the participation of SMEs in the global supply chain 2.2 Research question To achieve the proposed research objectives, the thesis aims to answer research questions as follows: (1) Does participating in the association with FIEs positively affect the ability of Vietnamese SMEs to directly participate in the global supply chain? (2) What solutions can strengthen the linkages between SMEs and FIEs to promote participation in the global supply chain of Vietnamese SMEs? Object and scope of the research 3.1 Research subject The thesis studies FIEs-SMEs linkages and their effects on SMEs’ participation in the global supply chain 3.2 Scope of the study The thesis focuses on analyzing the linkages and participation in the global supply chain of manufacturing SMEs in Vietnam using data from the General Statistics Office (GSO) in the period 2012-2018 Research process, methodology and data 4.1 Research Process The author finds that the deduction approach is appropriate for the thesis The author has built research hypotheses and conducted the testing of these hypotheses through quantitative research methods with the following steps: Step 1: Identify the research problem, purpose, and questions Step 2: Systematize the theoretical background and literature review on global supply chains and business linkages between SMEs and FIEs, based on which research gap is identified and research hypotheses are proposed Step 3: Study the characteristics of SMEs and FIEs in Vietnam and assess the status of linkages between them Step 4: Collect and process secondary data from the General Statistics Office's annual enterprise survey in the period 2012-2018 Step 5: Analyze the differences in characteristics between FDI-linked and non-linked SMEs; assess the effects of linkages with FDI enterprises on the participation of Vietnamese SMEs in the global supply chain; and study factors affecting SMEs’ ability to be linked with FIEs Step 6: Propose solutions to strengthen linkages with FIEs, thereby promoting the participation of Vietnam’s SMEs in the global supply chain 4.2 Research Methodology The quantitative method is suitable for the research objectives that the thesis sets out Specifically, with the first research question, to identify and evaluate the effects of the linkage with FDI enterprises on the participation of the global supply chain of Vietnamese SMEs, the author uses a multiple logit regression model, which is presented in detail in chapter of the thesis With the second question, based on literature review, the author proposes a research model with a logit regression method on the effects of factors on the ability of SMEs to become associated partners of FIEs 4.3 Data source The thesis uses panel data from the enterprise survey conducted annually by the General Statistics Office in the period 2012-2018 to collect firms’ general information as well as information on firms’ input and output structure, import and export activities Based on this data set, the author can identify the linkages between domestic SMEs and FIEs and the participation of SMEs in global supply chains Besides, information on institutional quality is retrieved from the PCI Provincial Competitiveness Index dataset surveyed annually by VCCI and USAID Information on labor quality at the provincial level is obtained from the General Statistics Office, ensuring the reliability of the data used in the analysis Significance of the research The thesis has made some contributions as follows: Firstly, the thesis has outlined the current status of the operations of SMEs, FDI enterprises in Vietnam, the linkage between these two business blocks, the participation in the global supply chain of SMEs Second, the research results of the empirical model of the thesis based on SME research in the manufacturing industry in the period 2012-2018 show a positive effect of business linkages on the participation into global supply chain of businesses Third, the thesis has built up a quantitative model of factors affecting the ability of SMEs to participate in association with FDI enterprises Fourth, based on empirical results, the thesis proposes a number of solutions for policymakers as well as firms to encouage the formation of FIEs-SMEs linkages hence promoting SMEs’ participation in global supply chains The structure of the research The thesis includes main chapters, as follows: Chapter 1: Theoretical background on linkages with foreign- invested enterprises and the participation in the global supply chain of SMEs Chapter 2: Literature review Chapter 3: The current situation of linkages with foreign- invested enterprises and the participation in the global supply chain of Vietnam’s small and medium enterprises Chapter 4: Empirical analysis of linkages with foreign-invested enterprises to promote direct participation in global supply chains of Vietnamese SMEs Chapter 5: Solutions to strengthen linkages with foreign- invested enterprises to promote participation in the global supply chain of Vietnam’s SMEs CHAPTER 1: THEORETICAL BACKGROUND ON LINKAGES WITH FOREIGNINVESTED ENTERPRISES AND THE PARTICIPATION IN THE GLOBAL SUPPLY CHAIN OF SMES 1.1 Theoretical basis for the linkage between SMEs and FDI enterprises 1.1.1 Definition Currently, although there is not yet a unified definition, business linkages can be understood as commercial relationships which are mutually beneficial for profit-oriented firms (Grierson et al 1997) Business linkages can be seen as a positive consequence of a market economy when firms seek ways to increase production business efficiency Linkages can be either formal or informal, depending on the resources, relationships, status, goals and qualifications of the partners The maintenance of linkages depends on both internal and external factors However, even though each partner has its own motives, the members in the association will also aim to increase the quality of products and services, improve labor productivity, and enhance the ability to negotiate 1.1.2 Forms of association between small and medium enterprises and foreign direct investment enterprises Formally, linkages between SMEs and FIEs can be categorized as follows: With regards to production process, linkages can be either horizontal linkages or vertical linkages First, horizontal linkages are cooperation between businesses in the same industry These linkages help businesses achieve economies of scale, thereby reducing costs and improving operational efficiency Cross-linking also provides opportunities for skills and technology sharing among businesses, minimizing marketing costs (Schulenburg 2006, p 5) Vertical linkages are the cooperation between enterprises at different stages of the production process in order to bring a product to the end consumer (Schulenburg 2006, p 6) Enterprises through vertical linkages can create effective channels for information exchange, cut storage costs and enhance customer satisfaction Enterprises can jointly set standards for product quality as well as environmental and social standards At the same time, businesses can also work together to improve the quality of existing products or develop new products With regards to legal status, business linkages can be (i) sub-contracting, (ii) franchising or (iii) linkage arrangement (Grierson et al 1997) 1.1.3 Benefits of linkage between SMEs and FDI enterprises For SMEs, joining business linkages is a good opportunity for their growth (Jenkins et al., 2007, UNCTAD 2001, OECD 2005, OECD 2013, WB 2017) First, joining the association helps SMEs to diversify the customer structure and at the same time have opportunities to expand domestic and foreign markets Second, SMEs enjoy the opportunity to improve their capacities thanks to knowledge transfer from partners Third, SMEs can improve product quality standards hence competitiveness of thier businesses Fourth, through linkages, SMEs can share risks with partners thanks to the sharing of resources in manufacturing business For the economy, business linkages stimulates economic activity and promotes local economic development At the same time, the business association can create more jobs and increase production for the economy The linkages can promote the improvement of the domestic business environment and institutional quality as well as the formation and development of business development services for SMEs Apart from that, linkages can help improve the quality of domestic products, boost exports and encourage production to replace imported inputs As a result, the national payment balance can be improved in a positive direction 1.2 Theoretical basis for business participation in global supply chains 1.2.1 Global Supply Chain Basics 1.2.1.1 Supply chain concept Basically a supply chain consists of upstream / downstream linkages between businesses at different stages of the production process in order to achieve the goal of increasing efficiency and cutting costs cost of the entire production system (Christopher, 1992) Such a supply chain is a network of many businesses and performs the three most basic activities of supplying inputs, manufacturing, and distribution A concept quite close to the supply chain is the value chain, which is defined as a chain that includes all activities from the first to the last to create value for consumers In general, the supply chain approach aims to look at the interconnections between the activities in the chain in order to increase the efficiency of resources, minimize costs, while the value chain approach is interested in maximizing the value added created by chain actors (Feller et al., 2006) 1.2.1.2 The estbalishment and development of global supply chains The ongoing globalization also makes supply chains to go beyond the borders of a country or territory to reach a global scale The concept of the Global supply chain (GSC) is an extension of the traditional supply chain when chain operations are not only conducted by businesses in the same country but also done by enterprises in many countries (Jones et al., 2019) In terms of world economic history, the first Industrial Revolution with the introduction of steam engines helped significantly reduce transport and trade transaction costs, creating a premise for international trade (Bairoch, 1990; Baldwin, 2013) Along with the trend of globalization and the development of information and transport technology, developing countries have also started to participate and assert their position in global supply chains Production instructions are communicated, and parts and semi-finished products can be shipped quickly and at low cost As a result, many low-skilled labor-intensive production stages, especially assembly, have been transferred from developed countries to developing countries, which are known for their comparative advantage cheap labor 1.2.2 Theories about the global supply chain participation of businesses 1.2.2.1 New "New" trade theory Melitz (2003) built a theoretical model to analyze the productivity of enterprises engaged in export activities The author argues that only high-productivity firms can achieve a profit enough to cover large fixed costs of export activities Helpman et al (2004) expanded Melitz's research model (2003) with the analysis of productivity problems of exporting firms compared to firms doing overseas production through FDI projects Helpman et al (2004) are also based on the idea that only highly productive firms can afford the large fixed costs of overseas production 1.2.2.2 Theory of the differentiation of the production process The theory of Jones and Kierzkowski (1990, 2000) emphasizes the benefits of international trade due to the economies of scale that the differentiation of production brings At the same time, with the development of science and technology, especially in the fields of information communication, transportation and financial services, it has significantly reduced costs while improving the quality and speed of services international connection service The garment industry is a prime example of the positive effects of cost reduction while increasing the quality of connected services on manufacturing process internationalization This sets the stage for the development of global production and supply chains networks, and also provides opportunities for independent small businesses to participate in these chains (Jones & Kierzkowski, 2000) 1.2.3 Classification of SME participation in the global supply chain At the firm level, most studies are based on statistics on firms’ trading status to determine how enterprises participate in the global supply chain Specifically, according to Dollar et al (2016), production activities of enterprises can be divided into four main groups: (1) using domestic inputs to produce for the domestic market (D2P); (2) using domestic products to produce for export markets (D2E); (3) using imported inputs to produce for the domestic market (I2P); (4) using imported inputs to produce for the export market (I2E) Lopez-Gonzalez (2017) focuses on the analysis of SMEs classifying global supply chain activities into two areas: (1) direct participation through commercial linkages (activities) and (2) indirect participation through links with FDI enterprises (through buying inputs and selling outputs to FDI enterprises) The thesis is based on the views of Dollar et al (2016) and Lopez-Gonzalez (2017) to analyze the activities of SMEs in the global supply chain First, direct participation in the global supply chain of SMEs are reflected through the activities of importing inputs and exporting outputs Second, linkages with FDI enterprises are an indirect channel to help SMEs integrate into global supply chains, through which they can enjoy opportunities to connect with foreign partners 1.2.4 Benefits of the global supply chain participation Forward participation in the global supply chain through the export of output gives SMEs the opportunity to specialize in their core competence As a result, they can cut costs and enhance operational efficiency What is more, when participating as a member of the supply chain, firms 10 to link In addition, the World Bank (2017) has only focused on reverse linkages, not considering the factors affecting downward links when SMEs play the role of customers of FDI enterprises 2.4 Research gap The author finds that there are some research gaps as follows: First, most studies on the effects of the FDI sector on domestic enterprises follow the spillover effect approach with , therefore not focus on research on supply chain linkages at the firm level and have not focused on The object is the SMEs Second, studies rarely consider the effects of forward linkages between domestic customers and FDI enterprises Third, there are no empirical studies aimed at examining the direct effects of FDI linkages on supply chain participation in both output exports and input imports at the enterprise level Fourth, only a few studies analyze from the perspective of domestic enterprises, and have not focused on the target group of SMEs In this thesis, the PhD student aims to fill the literature gap on the effects of supply chain linkages with FDI enterprises at the enterprise level (both backward and downlink) on activities of direct participation in the supply chain SMEs in Vietnam in terms of both input imports and output exports In addition, the thesis studies the decisive factors to the ability of SMEs to participate in association with FDI enterprises, providing empirical evidence as the basis for proposing solutions to strengthen linkages and promote the join the global supply chain of Vietnamese SMEs 2.4 Research framework and research hypotheses 2.4.1 Research model of the effects of linking with foreign direct investment enterprises on the global supply chain participation of Vietnamese SMEs The author proposes the following research framework to examine the linkage effects on SMEs' direct global supply chain participation In addition to the main explanatory variable, the association activities of enterprises, the graduate student also controls the effects of enterprise characteristics, provincial and sectoral environmental characteristics The main hypotheses to be tested in this study include: Hypothesis 1: Enterprises with vertical linkages in general with FDI enterprises are more likely to participate in the global supply chain Hypothesis 2: Enterprises having backward linkages with FDI enterprises are more likely to join the global supply chain Hypothesis 3: Enterprises with downward links with FDI enterprises are more likely to participate in the global supply chain 2.4.2 Research model of factors affecting the ability of small and medium-sized enterprises to associate with foreign direct investment enterprises The author proposes a research framework to consider the effects of groups of factors, including: (i) characteristics of SMEs, (ii) technological and skill gap between enterprises and 11 FDI enterprises in the same industry, (iii) province level characteristics, (iv) industry-level characteristics The research hypothesis of this model includes: (1) Characteristics of SMEs Hypothesis 4a: The age of enterprises affects the association between SMEs and FDI enterprises Hypothesis 4b: Labor size has a positive effect on the association between SMEs and FDI enterprises Hypothesis 4c: Equity level has a positive effect on the linkage between SMEs and FDI enterprises Hypothesis 4d: The debt ratio (reflecting the ability of enterprises to access finance) has a positive effect on the association between SMEs and FDI enterprises Hypothesis 4e: State ownership affects the association between SMEs and FDI enterprises Hypothesis 4f: Setting up a production base in an industrial park has a positive effect on the link between SMEs and FDI enterprises Hypothesis 4g: Product innovation has a positive effect on the association between SMEs and FDI firms (2) The technological and skill gap between SMEs and FDI enterprises Hypothesis 5a: The technological gap between SMEs and FDI firms has a negative impact on the link between SMEs and FDI firms Hypothesis 5b: The labor skills gap between SMEs and FDI enterprises negatively affects the link between SMEs and FDI firms (3) Province level characteristics Hypothesis 6: Provincial institutional environment (PCI) quality has a positive influence on the linkages between SMEs and FDI enterprises (4) Industry-level characteristics Hypothesis 7: Industry concentration affects the link between SMEs and FDI enterprises CHAPTER 3: THE CURRENT SITUATION OF LINKAGES WITH FOREIGN INVESTED ENTERPRISES AND THE PARTICIPATION IN THE GLOBAL SUPPLY CHAIN OF VIETNAM’S SMALL AND MEDIUM ENTERPRISES 3.1 Overview of Small and Medium Enterprises and Foreign Direct Investment Enterprises 3.1.1 Small and medium enterprise overview In recent years, thanks to the Government’s strategy to develop a multi-sector economy with socialism orientation, the business environment has been significantly improved, creating favorable conditions for businesses to grow The paperwork of business registration has become more friendly and less time consuming As a result, the number of established businesses has increased rapidly As a matter of fact, the number of operating enterprises with business results of the whole country as of December 31, 2018 reached more than 610 thousand enterprises On average, the number of enterprises in the period 2016-2018 in operation increased by nearly 50% 12 compared to that of the period 2011-2015 The SMEs sector still accounts for the majoirity of businesses As of December 31, 2018, the SME sector had a total of 593,629 enterprises, accounting for more than 97.2% of enterprises 3.1.2 Overview of Foreign Direct Investment in Vietnam The results of attracting FDI into Vietnam is considered to be particularly good with the annual FDI inflow continuously increasing over the years Since Vietnam implemented the Doi Moi strategy in 1986 and enacted the Law on Foreign Investment in 1987, Vietnam's early environment has improved Economic and political stability and abundant and cheap labor have helped Vietnam attract more and more foreign investors (AmCham, 2019; EIU, 2019) FDI inflows into Vietnam are also assessed as relatively impressive compared to other countries in the region and in the world Even in 2016, Vietnam was the second highest FDI attraction country in the ASEAN region, after Singapore (Ministry of Planning and Investment & WB, 2018) According to the General Statistics Office, the total registered foreign investment capital in 2020 is estimated at 28.5 billion USD, down 25% compared to 2019 Despite the decline, but this result is according to the assessment of A representative from the Foreign Investment Agency is acceptable, especially in the context of the world economy being heavily affected by the Covid19 epidemic with a sharp decline in investment activities and an increase in growth negative growth in some economies in the world (Thuy Hien, 2020) In particular, with its success in epidemic control, Vietnam is being considered by foreign investors to be an attractive destination The concrete evidence is that, as of January 20, 2021, although the total registered capital has decreased, the realized capital of FDI projects has reached US $ 1.51 billion, recorded an increase of 4, 1% over the same period in 2020 (Thuy Hien, 2021) 3.2 Overview of linkage between Vietnamese SMEs and FDI enterprises 3.2.1 Linkage Status It is generally agreed that the linkage between FDI enterprises and domestic enterprises in general and SMEs in particular in Vietnam is relatively lax, small in quantity and weak in quality (OECD, 2021) The report by VCCI and USAID (2019) on provincial competitiveness in Vietnam also showed that in the period 2010-2019, the proportion of FDI enterprises using domestic enterprises inputs had changed follow a positive trend In terms of the downward linkage between FDI enterprises and domestic firms, when FDI enterprises act as input suppliers, it can be seen that in recent years, the proportion of FDI firms with private customers has tended to increase, from 29.1% in 2010 to 67.5% in 2019 In addition, based on GSO survey data on manufacturing enterprises in the 2012-2018 period, the NCS found that medium-sized enterprises ranked first in the proportion of enterprises supplying inputs to FDI enterprises in the period of 2012 -2018, while micro enterprises show a modest percentage of firms may have signed contracts to supply FDI enterprises Meanwhile, the 13 smaller firms, the less they use inputs from FDI firms This partly reflects the limited potential of SMEs, making it difficult for them to purchase inputs provided by FDI enterprises The SMEs-FIEs linkages in Vietnam are also relatively modest compared to other countries in the region Statistics in Vietnam in 2015 only 67.6% of FDI enterprises use domestic inputs (but can also be simple inputs such as packaging, labels), while this rate is in China , Malaysia or Thailand are above 95%, even this figure in Malaysia is up to 99.9% 3.2.3 General evaluation The limitations of the linkages between SMEs and FDI enterprises, according to many studies, are due to the two sides of the business sector and the institutional and policy environment, as follows: First, in terms of SMEs, as mentioned above, the small scale makes it difficult for SMEs to access resources, technology, and at the same time, limited in management and human resources Second, in terms of FDI enterprises, these enterprises are often not subject to the control of mandatory sanctions using domestic inputs, often using existing suppliers from Korea and Japan There is a tendency to have less association with domestic suppliers, especially SMEs Third, Vietnam's institutional environment and the role of the Government in creating and promoting linkages also reveal many limitations, negatively affecting the motivation of FDI enterprises (WB 2017) 3.3 Overview of SMEs’ pariticpation in global supply chains The openess to trade and favourable investment policies of Vietnam have created significant changes in the competitiveness of export products However, most Vietnamese enterprises have been participating in the simplest stages of the supply chain with low technology Becoming a hub for assembling end products, the added value created by Vietnamese enterprises in general, and SMEs in particular is very limited (Truong Chi Binh, 2020; WB, 2016) Based on GSO data on manufacturing enterprises in Vietnam in the period 2012-2018, the author finds that while the proportion of large enterprises exporting fluctuates around 80%, that of micro firms is less than 10%, and of small sized businesses is less than 30% Although the sector of medium sized enterprises demonstrates a better export rate, but only below 60% of them can directly export their ouput The exporting SMEs are not only modest in terms of number, but also limited in terms of the value According to the General Statistics Office and Vietnam Customs (cited by the Government Office 2019), in 2017, the SME sector's contribution to export value was below 27% Such low contribution of Vietnamese SMEs in exports can be explained by their litmited competitiveness in the upstream sectors of the global supply chain (Lopez-Gonzalez and partner, 2019) Statistics in the period 2012-2018 show that the proportion of micro enterprises importing is less than 10% This figure in the area of small-scale enterprises is also not better when only about 20% of small-scale enterprises have import activities for production inputs The medium 14 and large enterprises sector has improved recently when as of 2018, 49% of medium and 66% of large enterprises used imported inputs This can be a disadvantage for SMEs when they have little opportunity to access input sources at international standards, leading to relatively low competitiveness of products compared to large enterprises as well as other Enterprises in the region and in the world According to Dr Truong Thi Chi Binh - Chairman of Vietnam Association of Supporting Industry (2020), there are several reasons for the limited participation of Vietnamese enterprises in general, and SMEs in particular in chains global supply Firstly, Vietnamese businesses have not yet met the appropriate standards for production management as well as product quality Second, Vietnamese enterprises often have lean production processes, high production costs, and it is difficult to offer competitive prices according to customers' expectations Third, with a small scale, lack of capital resources and management skills, Vietnamese SMEs can satisfy large orders with high complexity Fourth, the commercial capacity of Vietnamese SMEs is assessed to be quite limited and faces many difficulties in understanding and connecting with foreign partners Fifth, the innovation capacity of businesses is also weak, failing to grasp the trends in the international market in terms of technology, products as well as input sources In addition to the causes of the internal capacity of enterprises, one of the main barriers to activities participating in the global supply chain, especially the export activities of enterprises, is the regulations and procedures administrative as well as export support services and trade finance accessibility Road and railway infrastructure systems still have many weaknesses as well as lack of support from authorities to help businesses meet international standards, making it difficult for businesses to participate in the global supply chain CHAPTER 4: EMPIRICAL ANALYSIS OF LINKAGES WITH FOREIGN INVESTED ENTERPRISES TO PROMOTE DIRECT PARTICIPATION IN GLOBAL SUPPLY CHAINS OF VIETNAM’S SMES 4.1 Effects of linkages with foreign direct investment enterprises on the global supply chain participation of Vietnamese SMEs 4.1.1 Research model 4.1.1.1 Estimation Equations In this chapter, the graduate student builds a model of qualitative analysis to evaluate the effects of linkage with FDI enterprises on SME's global supply chain participation Based on an overview of the research situation, the equation to estimate the chain participation of firm i at time t ( ) is built as follows: The dependent variables and explanatory variables of the estimation equation are measured specifically according to Table 4.1 15 Table 4.1: Dependent and Independent Variables Variable Meaning Measure Dependent variable TGC Participation in TGCi = if the firm only uses domestic global supply chain inputs to produce for domestic market of a firm (D2P) TGCi=1 if the firm only uses domestic input to produce for export market (D2E); TGCi =2 if the firm uses imported inputs to produce for the domestic market (I2P); TGCi = if the firm uses imported inputs to produce for the export market (I2E) Independent Variables SMEs-FIEs linkages forFDI Forward linkage Dummy variable, equal if the firm supplies inputs to FDI enterprises, otherwise backFDI Backward linkage Dummy variable, equal if the firm buys inputs from FDI enterprises, otherwise FDIlink Vertical linkage Dummy variable, equal if the firm buys inputs from or supplies inputs to FDI enterprises, otherwise SMEs’ characteristics firmage The firm’s age Number of years in operation Lnlabor Employment Logarithm of number of workers Kintensity Capital intensity Logarithm of fixed assets per worker Debt-to-total asset The firm’s debt divided by total asset ratio lnTFP Total factor Logarithm of Total Factor Productivity, productivity estimated using Levinsohn & Petrin (2003) method Stateowned State ownership Dummy variable, equals if the firm is state-owned, otherwise Iz Industrial Zone Dummy variable, equal if firm established its factory in industrial zone, otherwise newproduct Innovation Dummy variable, equal if firm introduces new products, otherwise Province level characteristics PCI Provincial To proxy for quality of local governance Competitiveness Index Skilled_labor ProvinciaTrained Percentage of trained labour force at 15 labour force years of age and above Industry level characteristics HHI Industry HHI, indicating concentration concentration/competition of industry at VSIC 2007 2-digit level Source of data GSO Enterprise Census (questionaire 1Am) GSO Enterprise Census (questionaire 1Am) GSO Enterprise Census (questionaire 1Am) GSO Enterprise Census (questionaire 1Am) GSO Enterprise Census (questionaire 1A) GSO Enterprise Census (questionaire 1A) GSO Enterprise Census (questionaire 1A) Debtratio GSO Enterprise Census (questionaire 1A) GSO Enterprise Census (questionaire 1A) GSO Enterprise Census (questionaire 1A) GSO Enterprise Census (questionaire 1Am) VCCI and USAID annual report on PCI GSO website GSO Enterprise Census (questionaire 1A) 16 4.1.1.2 Estimation method The multinomial logit regression model is an appropriate estimation method to evaluate the ability of enterprises to perform one of these forms Generally, according to the polynomial logit regression model, the probability for DN i to perform mode j is determined as follows: Thus, if the regression coefficient of mode j is greater than 0, it means that the enterprise tends to adopt mode j more than mode 0, which means that the enterprise is capable of participating in the supply chain in the mode of j is higher than not participating in the global supply chain On the contrary, if the regression coefficient value is less than 0, enterprises are less likely to participate in the global supply chain with mode j 4.1.2 Research data The proportion of enterprises using domestic inputs for production for export markets (D2E) also tends to decrease over the years, while the proportion of groups that import inputs to serve both domestic and export markets import (I2P, I2E) all had a marked increase Statistics exhibits that there is a difference in the correlation between the linkage and the direct participation in the global supply chain (exporting output and / or importing inputs) between the micro, small and medium- sized groups In terms of backward linkages as domestic enterprises provide inputs to FDI enterprises, statistics on import and export activities of enterprises show that most micro enterprises not participate in import and export activities in the global supply chain application, whether or not there is a linkage with FDI enterprises This is reasonable as micro enterprises have limited absorptive capacity, even the FDI enterprises they associate with are not leading enterprises, so the benefits of learning unclear In the group of small and medium enterprises, when becoming a supplier to FDI enterprises, these enterprises also showed a tendency to join a larger chain At the same time, the author also considers correalation between forward linkages (when enterprises use inputs provided by FDI enterprises) and directly participation in the global supply chain of enterprises Similar to the results from backward linkages, micro enterprises, whether they are linked or not, often have less direct activities linked to the global supply chain Enterprises of small and medium scale tend to import higher inputs when buying inputs from FDI enterprises The T-test results show that firms participating in the global supply chain have relatively different characteristics from businesses that have not yet joined the chain 4.1.3 Analysis of regression results The multinomial logit regression model uses the D2P form (enterprises not participate in the global supply chain) as the base for comparison The results show that most of the variables 17 in the model have statistically significant effects on the participation of enterprises in the global supply chain The group of variables reflecting the links of SMEs with FDI enterprises shows a positive effect on their participation in global supply chains, especially in the form of chain participation by importing inputs for production domestic market (I2P) and imported inputs to produce export goods (I2E) Specifically, model studies the effects of vertical linkage in general on the trend of joining the chain of enterprises in different forms The results show that SMEs associated with FDI enterprises tend to join the chain in two forms of I2P and I2E higher Model considers the effects of each type of link separately (backlink and downlink) The results show that the backlinks (when SMEs act as input suppliers to FDI enterprises) are confirmed to have a statistically significant positive effect on the trend of implementing I2P and I2E forms of SMEs At the same time, the downward linkage (using FDI enterprises' inputs) also tends to promote participation in the global supply chain in the form of a higher I2E In addition, the characteristics of enterprises such as size of labor, level of capital equipment, TFP have also shown a statistically significant positive effect on the participation of SMEs in the global supply chain In addition, the fact that enterprises set up their production bases in industrial zones also increases the likelihood of enterprises participating in the SME supply chain Not only that, the estimation results show that the debt-index ratio reflects the higher the ability of enterprises to access external financial sources, the more likely they are to join the chain SOEs have also been shown to be less likely to join the global supply chain At the same time, the fact that businesses innovate through introducing new products also helps them to join the chain Provincial characteristics, such as the PCI Provincial Competitiveness Index, are positively related to the chain participation of SMEs The proportion of trained workers over 15 years old at the provincial level was also found to have a positive effect on SME participation in the chain 4.2 Determinants of SMEs' ability to associate with foreign-invested enterprises 4.2.1 Research model 4.2.1.1 Estimation Equations In this part, the author aims to explain the second research question about factors affecting the association of SMEs with FDI enterprises Based on the research of Dao Hoang Tuan et al (2021) in which the linkage status of the previous year can affect the association next year, besides the explanatory variables as per proposed research framework in chapter 2, the researcher also considers the effect of the lag value of linkage variable on the linkage activities of the SMEs Specifically, the estimation equation is built as follows: 4.2.1.2 Estimation method 18 As the dependent variable is binary, logit regression is a suitable estimation method, helping to evaluate the ability of enterprises to associate with FDI enterprises According to this method, the probability for enterprise i to link with FDI enterprise is determined as follows: Thus, if the regression coefficient of a variable has a value greater than 0, that variable has a positive impact on the ability of SMEs to become associated partners with FDI enterprises On the contrary, if the regression coefficient values are less than 0, that factor has a negative effect on the ability of enterprises to associate with FDI enterprises 4.2.2 Research data The T-test results show that affiliated enterprises are enterprises that often have higher competitiveness with a larger scale, have a higher level of capital equipment, implying the importance of economies of scale of the enterprise At the same time, the difference in access to finance and innovation capacity, and location of production facilities (inside and outside the industrial park) between the two groups of affiliated and non-affiliated businesses also shows that enterprises need has the potential and ability to access good resources in order to meet the rigorous standards of FDI partners 4.2.3 Analysis of regression results The estimated results show that the labor skill and technology gap between SMEs and FDI enterprises in the same industry has a negative impact on the ability of enterprises to link This means, the smaller the gap, the greater the possibility that SMEs are chosen to become partners of FDI enterprises In addition, factors such as size of labor, level of capital equipment are confirmed to have positive effects on the ability of SMEs to link with FDI entities In other words, the larger the size of the enterprise and the higher the level of capital equipment per employee, the more likely the firm associates with FDI enterprises Enterprises that set up production and business bases in industrial zones also showed a higher possibility of joining in with FDI enterprises At the same time, innovation activities have also been shown to have a positive effect on the ability of enterprises to link The regression coefficient of the PCI is positive, which means that the good quality of the institutional environment is a factor that helps promote the linkage activities with FDI partners of SMEs In addition, to check the robustness of the research results, the PhD student uses the Pooled OLS regression model to control the fixed effects of the year, at the sectoral and economic zone level to consider the effects of groups of factors on to the rate of output that firms sell to FDI customers The regression results show consistency with the results of the logit model Specifically, the age of the firm is inversely related to the proportion of products that firms sell to partners in the FDI sector Factors such as size of labor and capital equipment have been shown to have a positive effect on this rate At the same time, the fact that enterprises set up production bases in industrial zones also helps increase the rate of output that enterprises sell to FDI 19 enterprises In contrast, the fact that enterprises are owned by the state can reduce this rate In this model, there is no statistically significant effect of innovation activities and the PCI on the proportion of firms selling their output to the FDI sector However, the concentration of the industry shows a negative influence on the proportion of outputs sold to FDI enterprises These results will be discussed in detail in the next section of the chapter CHAPTER 5: SOLUTIONS TO STRENGTHEN LINKAGES WITH FOREIGNINVESTED ENTERPRISES TO PROMOTE PARTICIPATION IN GLOBAL SUPPLY CHAINS OF VIETNAM’S SMES 5.1 The Government’s orientation to develop business linkages between small and medium sized enterprises and foreign invested enterprises Resolution No 103 / NQ-CP, issued on August 29, 2013, shows the Government's orientation to improve the efficiency of FDI attraction and the goal of strengthening linkages between FDI enterprises foreign and domestic enterprises Specifically, according to this resolution, FDI is considered to have positive effects on the Vietnamese economy, contributing to economic restructuring, and promoting institutional environmental reform in a positive direction At the same time, the Government also stated that it is necessary to strengthen measures to "encourage, facilitate and strengthen the linkage between foreign invested enterprises and with domestic enterprises" 5.2 Some solutions for strengthening linkages with foreign invested enterprises, promoting participation in the global supply chain of small and medium sized enterprises in Vietnam The research results presented in chapter show that, despite the fact that the current level of association and participation in the global supply chain of SMEs is still relatively modest, but linking with FDI enterprises can help to promote SMEs' ability to participate in global supply chains, thereby actively contributing to enhancing business performance The thesis also suggest that the propensity that the participation of SMEs in the global supply chain is also influenced by the size characteristics, financial access, innovation capacity of enterprises as well as the institutional policy environment and quality of labor resources and business environment Based on the research results of the thesis, the PhD student proposes some solutions as follows: 5.2.1 Recommendations for the Government 5.2.1.1 Enhance the effectiveness of joint development assistance programs According to the results of the quantitative analysis model (Table 4.9, 4.10, 4.11), the linkages with FDI enterprises have been shown to have a positive impact on the ability of SMEs to participate in the global supply chain Through partnerships, SMEs can learn from their partners, enhance their competitiveness and increase opportunities to connect with international suppliers and customers At the same time, the results of a quantitative analysis of factors affecting SMEs linkage (table 4.14) also shows the importance of governments at all levels in promoting linkages between SMEs and FDI enterprises Therefore, in order to strengthen the linkage to promote the participation of SMEs in global supply chains, first of all attention should 20 be paid to the effectiveness of SME support programs in general and development assistance programs link in particular The linkage development policies need to develop a mechanism to support standard domestic enterprises to become suppliers to FDI enterprises as well as directly participate in international trade The success of joint development programs is therefore dependent on a clear private sector development goal, the effectiveness of public private partnerships, as well as a clear definition of roles and responsibilities and extent commitments of the subjects participating in the program In addition, trade promotion activities can be implemented in the form of organizing fairs and exhibitions, helping to connect businesses with customers, suppliers and supporting service providers business At the same time, the Government should continue to promote support for SMEs to build and develop brands, provide consultancy and legal support for enterprises to register their trademarks at home and abroad It can be seen that the current National Brand program has relatively clear criteria for selecting enterprises, but most of the enterprises participating in this program are large enterprises or subsidiaries of large corporations such as Hoa Phat, Gelex, BRG Therefore, in the coming time, there should be specific support and guidance specifically for SMEs so that they also have the opportunity to link with FDI partners and foreign customers and suppliers 5.2.1.2 Support access to finance for small and medium enterprises Although there is no statistically significant evidence on the impact of SMEs' linkages, the regression model results (table 4.9) also show that the It is one of the decisive factors to participating in the global supply chain of SMEs In order to increase SMEs' access to finance, a comprehensive policy mechanism from the State Bank is required State banks can take measures to support SMEs in accessing credit such as guarantee programs using IT application loan approval systems to minimize risks for commercial banks, thereby encouraging These banks participate in lending activities to SMEs Another measure that can be applied is to encourage linkages between commercial banks and business development service providers Business development service providers can undertake document checks, ensuring the quality of customers borrowing loans to commercial banks Business development service providers can also support business operations, providing essential services such as accounting and business planning, thereby improving business efficiency and creditworthiness of SMEs, while minimizing risks for lenders 5.2.1.3 Encourage innovation activities of businesses Quantitative analysis has shown that firms with innovative product activities have a higher chance of joining the global supply chain Therefore, there should be measures to encourage businesses to promote innovation activities to catch up with tastes and meet quality standards of partners Decree 94/2020 / ND-CP, which has come into effect from October 5, 2020, has provided many incentives for businesses and individuals operating at the National Innovation Center 21 Accordingly, individuals and businesses doing creative startups will be given incentives in access to credit, bids, proposals, as well as receive support in administrative procedures, contact investment, use the facilities of the Center, and especially enjoy the highest tax incentives However, the Center has not mentioned clearly the criteria for selecting individuals and businesses to participate in activities at the Center Therefore, the first thing to is to build a transparent and open selection mechanism so that selected individuals and businesses are worthy subjects to receive the support and incentives from the Government, from there have contributed to the nation's scientific and technological innovation In addition, a skill development program for businesses should set out training objectives, output standards and reports on the results achieved The government also needs to learn about the wishes of businesses, thereby providing business management training programs in line with business development strategies Building an industry capacity upgrading program is also an effective measure to develop enterprises' capacities 5.2.1.4 Increase quality and encourage the use of infrastructure in industrial zones The issue that should be given priority is not only to improve the quality of infrastructure in the industrial park, but also to consider the transportation infrastructure so that businesses can realize the benefits from industrial parks Not only tax incentives or investment in the short term, but also a long-term nature when helping businesses optimize operations Industrial zones should be built on the basis of reference to international standards in order to attract domestic and foreign enterprises At the same time, in addition to improving the quality of infrastructure of industrial zones, it is necessary to improve the quality of management, cut administrative procedures to cut costs and enhance operational efficiency for Enterprises, thereby encouraging businesses in general and SMEs to set up production facilities in industrial zones 5.2.1.5 Improve institutional quality and business environment Improving institutional quality, creating a healthy and fair competitive business environment can create a solid momentum for SMEs to participate in global supply chains It is necessary to step up and strictly implement legal enforcement measures so that foreign-owned enterprises can really feel secure about intellectual property rights when transferring technology and production processes to partners in Vietnam country At the same time, the government needs to increase the consistency in enforcing the law to avoid disputes occurring and the loss of the business The Government also needs to improve customs regulations and procedures, facilitate the quick, convenient and low cost of import and export activities of enterprises In addition, it is necessary to promote the "one-stop-shop" government platform to avoid the need for enterprises to repeatedly declare the same information in the forms of different agencies, thereby saving time and costs for businesses The government also needs to continue to reform the VAT refund process, as well as the issue of tax exemption for materials that are outsourced for the production of goods for export - an issue that businesses are quite concerned about today Because in Kocham's opinion at the Vietnam Business Forum 2019, this tax 22 exemption will create conditions for SMEs in the development assistance industry, thereby boosting exports and creating momentum for economic growth Not only that, experiences from Malaysia and Singapore show that it is possible to promote linkages through tax incentives Therefore, in the coming time, the Government may also consider some tax incentives to encourage foreign investors to actively cooperate as well as support domestic SMEs to develop to meet the standards of becoming partners of FDI enterprises 5.2.1.6 Improving the quality of human resources In this study, the quality of human resources has been confirmed to have a positive impact on SME linkages and global supply chain participation To improve the quality of human resources, first of all, it is necessary to focus on reforming the education system In parallel with the public system's efforts, it is necessary to increase the participation of the private sector as well as the consultation of learners and recruitment agencies so that appropriate training programs can be developed labor market requirements Along with that, it is necessary to promote career-oriented activities for students from high school and expand many forms of training so that learners have more choices, thereby increasing access to education and development are skilled workers In addition, it is necessary to improve the quality of teachers through training, and at the same time encourage teachers to learn professional skills such as developing online courses to suit the current socio-economic context uncertainties brought about by disease (such as Covid 19) Furthermore, it is necessary to strengthen the quality accreditation of educational institutions according to domestic and foreign accreditation organizations in order to bring Vietnam's education quality up to international standards, thereby improving the quality human resources, positively contributing to the efficiency of the economy and the development of businesses 5.2.1 Some recommendations for business The government's support cannot be effective without the efforts of businesses Some proposals for enterprises are drawn as follows: Firstly, the quantitative research results of the thesis also show factors such as the size and level of capital equipment that can help promote the ability to link with FDI enterprises and the participation in the supply chain of SMEs Therefore, businesses need to pay attention to the development of scale and facilities, through which foreign-invested enterprises can trust to place orders Second, SMEs need to proactively learn about their partners, grasp technology and how to manage and operate FDI enterprises, besides investing in equipment, factories, improving working conditions, and applying them ISO standards Enterprises can take the initiative and balance their investment budgets for research and development activities in accordance with the needs and tastes of customers 23 Third, the establishment of production facilities in industrial zones is also a factor that can help increase opportunities for SMEs to connect Enterprises can also consider building production facilities in industrial zones in accordance with their financial conditions Fourth, narrowing the gap in productivity and labor qualifications of SMEs and FDI enterprises is proven to have a positive impact on the ability of SMEs to link Therefore, besides investing in facilities, businesses also need to focus on investment in human resources Fifth, SMEs need to coordinate with state agencies to increase the effectiveness of support programs Specifically, in order for the Government's support policies to be effective, the provision of accurate survey data by enterprises is essential, creating conditions for Associations to have accurate statistical sources from there, relevant agencies and agencies have basis to plan future plans, especially policies to support the development of domestic enterprises in the condition of international economic integration Sixth, research from other countries shows that, in order to increase the ability to connect with FDI enterprises, not only need support from the Government but also SMEs themselves need to actively participate in fairs and exhibitions product exhibition to promote images and expand opportunities to connect with domestic and foreign businesses CONCLUSION Vietnam is known as the most open economy in the world, and has been actively participating in bilateral and multilateral free trade agreements Foreign investors in recent years tend to increase investment into Vietnam, although FDI activities in the world have tended to slow down since 2016 The dynamic development of the region The private sector, the outstanding performance of the FDI sector in the export sector, and the Government's efforts to improve the business and investment environment have made Vietnam one of the developing countries development has a high growth rate Even in the context of the world economy being negatively affected by the Covid 19 epidemic, Vietnam can still achieve a growth rate of about 2.8%, while many economies around the world will see a growth rate negative growth in 2020 However, it is clear that, given the limitations due to the size and access to resources, the participation of Vietnamese SMEs in global supply chains remains very limited In addition, the contribution of the FDI sector, although increasing in recent years, is still not commensurate with the incentives that central and local governments are giving to this area Therefore, in order to take advantage of the strengths of technology and knowledge of the FDI sector to develop domestic enterprises in general and SMEs in particular, promote linkages between the two enterprises, creating a premise for SMEs to participate global supply chains become imperative Stemming from this practical problem, the thesis has studied the current state of SME linkages and global supply chain participation, and at the same time built a regression model to estimate the effects associated with FDI enterprises on the ability of enterprises to join the global supply chain, and the model to analyze the factors affecting the ability of SMEs to link with FDI enterprises 24 The thesis systematizes the theoretical background on the global supply chain participation and business linkages of enterprises On that basis, the author has clarified the viewpoint and defined the form of participating in the global supply chain as well as the business association at the enterprise level At the same time, on the basis of an overview of the research situation related to the thesis, the author identifies research gaps and proposes research models to solve research questions in the following chapters Besides, the thesis analyzes the current state of linkages between SMEs and FDI enterprises, the current participation of SMEs in the global supply chain In general, the linkage between SMEs and FDI enterprises, although improved, is still relatively lax, revealing many shortcomings According to statistics, SMEs also participate in the global supply chain at a modest level in both quantity and quality In this chapter, in addition to analyzing some typical supply chains, the NCS also gave comments, assessments and explanations for the causes of limited participation in global supply chains and links SMEs Results of multinomial logit regression model and multivariate probit model to consider the effects of linkages and other factors on the ability of enterprises to join the global supply chain with different forms of enterprises (export only) import, import only, or both export and import) Thus, joining the association can help promote a company's decision to join the global supply chain Specifically, vertical linkages can promote businesses to increase participation through the chain in the forms of I2P (importing inputs for domestic production) and I2E (importing inputs for export) The author also found statistically significant evidence on the effect of backlinks on the ability of enterprises to implement forms of I2P and I2E Meanwhile, enterprises participating in the downward association showed a higher tendency to implement forms of I2E At the same time, the research model of factors affecting SMEs' ability to join the association also shows that the characteristics of enterprises such as the size of the labor force, the level of capital equipment, have a positive impact on the join business association Enterprises doing product innovation activities also help businesses promote association activities Besides, enterprises that set up production bases in industrial zones also tend to participate more strongly in the links SMEs with smaller technology gap compared to FDI enterprises are also more likely to participate in the association The results of the quantitative research model are the basis for the postgraduate to make policy suggestions in chapter Accordingly, the postgraduate has proposed solutions to enhance the ability to participate in association and promote activities participate in the global supply chain of SMEs Some proposals for businesses are also given so that businesses can improve their capacity and promote activities to connect with FDI enterprises as well as foreign partners ... direct participation in global supply chains of Vietnamese SMEs Chapter 5: Solutions to strengthen linkages with foreign- invested enterprises to promote participation in the global supply chain... effects of linkages with foreign- invested enterprises on SME participation in the global supply chain According to Mathews (1999), when establishing the linkage with FDI enterprises, domestic enterprises. .. ENTERPRISES TO PROMOTE DIRECT PARTICIPATION IN GLOBAL SUPPLY CHAINS OF VIETNAM’S SMES 4.1 Effects of linkages with foreign direct investment enterprises on the global supply chain participation