Summary
Extent of Company Profile Affecting Capacity Development of Local Suppliers
The Canon Vietnam managers, managers of suppliers and their employees perceived that the profile of the Canon Vietnam has affected the capacity development of local suppliers in which both agree with a total average weighted mean of 3.36that this result indicates that company culture, organizational structure, operational scale, operation duration at the local level and the increasing number of local suppliers have influenced capacity development of local suppliers through the application of the ‘Kyosei’
philosophy or working together for the common good. Canon Vietnam fosters relationships with international companies and other suppliers through a functional organizational structure. Their expanding local operation has empowered the local suppliers to produce quality and competitive products that are delivered on time with the right volume. This study began with the success of Canon Subsidiary in an emerging market (Vietnam). For more than 10 years, Canon Vietnam has been adjusting their local development strategy especially to be able to build a network of local suppliers. The network of local suppliers of Canon is considered strong and sustainable with a long-term business commitment in Vietnam pledged by Canon. Subsidiaries of Canon play a significant role in the development of these local suppliers and vice
versa, that is the improvement of local supplier network helping Canon Vietnam to increase competitiveness against its rivals.
The progress of suppliers will bring the development of Vietnam industry and at the same time increase the attraction of domestic business environment so that we can attract more foreign investors.
Extent of Autonomy Affecting the Capacity Development of Local Suppliers
Managers and staff of both Canon and suppliers perceived that autonomy affects the capacity development of local suppliers obtaining a total average weighted mean of 4.25. This indicates that the managers and suppliers agree that research and development, financial management, marketing strategy, production strategy, production process and selection of suppliers have affected the capacity development of local suppliers.
Extent of Knowledge Transfer Affecting the Capacity Development of Local Suppliers
Managers and employees of Canon Vietnam and local suppliers perceived that absorptive capacity, responsiveness and hands-on approach have affected the capacity development program of local suppliers with a total average weighted mean of 4.14 or Agree. This result is to attain the desired quality and quantity of products that is competitive in the local and international market as well as to ensure quality supplies to meet the product requirements of Canon Vietnam.
Extent of Competitive Advantage Affecting the Capacity Development of Local Suppliers
Both managers and employees of Canon and suppliers completely agree with a total average weighted mean of 4.41 implying that competitive advantage along with production capacity, capacity design and renewing, technology of production, qualifications of management and price policy shall be integrated in the capacity development to attain maximum production of highly competitive electronics products to meet local and international market demands.
Extent of Government Policies Affecting the Capacity Development of Local Suppliers
Mean difference of both managers and employees of Canon Vietnam and local Suppliers is .41 which means both agree that government assistance in terms of protection of domestic production, priority to electronics Industry, central management unit, set up standards of quality and components and reducing gap between policies and implementation have affected their capability development. The industrial policy of the Government of Vietnam played an important role in the development of the electronics industry in Vietnam. However, localization limits has little impact on the operation of Canon Vietnam because the company not only complies with this requirement, but also exceeds the rate.
Extent of Factors Affecting the Capacity Development of Local Suppliers Canon Vietnam managers, electronics suppliers and their employees perceive that the 5 factors have agreed that the capacity development of local
suppliers has a total average weighted mean of 4.01. The null hypothesis is accepted stating that there is no significant difference in their perceptions ; hence, both respondents agree that autonomy, knowledge transfer strategies, competitive advantage and government assistance have affected the capacity development of local electronics suppliers. This is an indication that the Canon strategy has improved the local suppliers to be more competitive.
Furthermore, managers obtained a higher mean that implying that they were updated on the company profile because they exercised their functions on planning and business forecasting based on the trends in the electronics industry.
Conclusions
Based on the foregoing findings, the following conclusions were drawn:
Canon Vietnam managers, managers of suppliers, canon Vietnam employees and employees of suppliers completely agree (4.41) that all the factors such as company profile, autonomy, knowledge transfer strategies, competitive advantage and government policies have an effect on capacity development of local suppliers.
Canon Vietnam has a good company profile having operated for more than 10 years with tremendous local expansion and operating within the philosophy of working together for the common good, “Kyosei”.It has also fostered relationships with other local and international companies and even developed local suppliers. With the localization law, Canon Vietnam continues to expand in order to cater to the needs of its clients. A well-defined and
functional organizational structure is needed to implement the planned program for quality and quantity outputs.
The exercise of autonomy in marketing strategy, research &
development, selection of suppliers, sophisticated production process, production strategy, and financial management has brought a network of local suppliers.
The knowledge transfer strategies of Canon Vietnam have brought tremendous improvement in the capacity development of local suppliers.
Hands-on approach is well-appreciated allowing the local suppliers enough exposure to new knowledge and renewed capabilities. On the other hand, absorptive capacity and responsiveness have been enhanced through the development of general knowledge and tacit knowledge.
Change of the environment has brought changes on consumer preferences, new practices, new product technology transfer, and increasing production capacity for global brand influence competitive advantage.
Industrial policy of the government of Vietnam has played a vital role in capacity development of local suppliers like localization law, protection of domestic production through the use of non-tariff tools and import licenses, government priority to electronics industry through incentives and development of competitive local product and efficiency of management through the establishment of central management unit.
Secondary data show that Canon Vietnam has been established more than 10 years and has scaled up production 4 times. In this development process, Canon Vietnam has been adjusting their local development strategy, especially building a network of local suppliers. The network of local suppliers
of Canon is considered strong and sustainable with long-term business commitment in Vietnam.
Subsidiary of Canon plays a significant role in the development of these local suppliers and the local supplier network helps Canon Vietnam to increase competitiveness against its business competitors.
In a broader view, localization laws of Vietnam have brought an increasing trend of Canon Vietnam expansion not only in the domestic scene but also in the foreign markets. The capacity development among local suppliers has led major change in the production capacity and high technology production process.
Finally, the Pearson Coefficient and Stepwise Regression Analysis were employed in determining the relationship among the variables.
Based on the results of R2 there was a significant relationship between the independent variables such as company profile, autonomy, knowledge transfer, competitive advantage and government policies on capacity development of local suppliers.
Recommendations
Based on the findings of the study the following are recommended:
Profile of Canon Vietnam
There is a need to assert the business interdependence among suppliers and canon subsidiary in application of the “Kyosei” philosophy to improve the company culture of the local suppliers. Initiative of local suppliers is needed in selecting and creating linkages with other enterprises .The domestic suppliers should strengthen joint ventures with foreign investors.
These companies need to diversify cooperation and linkages with foreign investors, and especially the Japanese who possess high technical qualifications and experience in this field to supply components, products and methods of management and cultural values suitable with the Vietnamese, and also be experienced in technology and production management transfer.
A unified and focused capacity development program shall be formulated for local suppliers.
Autonomy
In the production of better quality products there is need to strengthen Research and development the capacity of the local suppliers through the continuous R & D support of Canon in discovering new ideas and techniques.
It is imperative that the focus of the suppliers on high technology production, it is difficult to create a link across production activities and trading with local companies because the technology gap is too large. To fill these gaps we have to attract other foreign companies whose technological expertise is of the intermediate level.
It is further recommended that Canon Vietnam shall focus on capacity development and financial management among the local suppliers
Knowledge Transfer Strategies
Responsiveness among the local suppliers needs to be enhanced from Canon Vietnam through the hands-on approach and improvement of their tacit knowledge, training and improving the quality of human resources. The process of knowledge transfer also shows that the quality of human resources is a matter of concern for local businesses.
These companies need to pay attention in training a skilled workforce and fostering professional qualifications for staff, technical experts to enhance brain levels of products, promoting links between schools and businesses.
Under the limited conditions of training in the country, businesses should launch policies to train staff overseas in conjunction with market research activities for a long run.
Competitive Advantage
Production capacity and product design shall be considered for capacity development among the local suppliers. There should be commitment between the manufacturer and the assembler on providing adequate consultation, use of equipment and techniques so that the suppliers could be confident about utilizing their capital to be more competitive.
Government Policies
Reducing the gap between policies and implementation of the numerous government industrial policies supporting the local suppliers through the establishment of an operational Central Management Headquarters. Establish a focal point for the management and development of Suppliers Industries to plan, implement and manage the capacity development of local suppliers. Tax and tariff reduction to unify businesses whose domestic purchasing ratio is high and to attract satellite companies to establish business in Vietnam.
Reinforcement of the involvement and participation of the business community to improve the development of industrial support policy including
the participation of enterprises in planning and improving existing industrial policies.
Reduction of the Gap between policy and policy implementation.
Developing support industry is the main factor promoting the competitiveness of enterprises and reduce the number of foreign electronic movement to another country.
The backwardness in the management of system tax has caused a negative impact on the production of companies. The serious issue arises during the execution policy of leasing rather than this system. Smuggling is also a very serious problem that the government cannot fully solve.
The inefficient implementation of administrative procedures is costly because there are many issues related to corruption, unofficial costs, labor management, social stability and infrastructure. The electric supply is not stable making enterprise costs even more prohibitive. From the lessons of countries such as Indonesia or Thailand, it is necessary to take action and launch the severe sanctions on the wrong implementation of the policy. There should also be awareness training for civil staff about the contribution of enterprise systems in national socio-economy as well as roles and responsibilities of the Government, namely civil staff in supporting, consulting businesses to gain improvement.
Recommendations for Businesses
Changing Perception of the Managers and Staff of Local Suppliers
According to the study results, there is no significant difference in the perception of managers and employees in Canon VN compared to managers
and employees of local suppliers. To improve the capacity of local providers, managers and employees of supplying businesses it is necessary to change perceptions about the following aspects:
Product Specialization Among local suppliers
The local businesses have often been operating with packaged style from tip to toe. Therefore, they hardly have the concept of Supplier Industries.
Because of that full-service production, their productivity is not high. As a matter of fact they need a lot of capital investment and their efficiency are forced to be spread out and low, reducing the competitiveness of the suppliers. Meanwhile, the production under the direction of specialization, together with the development of the Supplier Industries, allow companies to invest more efficiently, more competitive in product quality and price. Besides, they can be more active in the purchasing raw materials, components, and accessories inputs for production. Businesses need to be aware of this and companies operating in the Supplier Industries should choose to participate in only one manufacturing field.
Compliance With International Standards
Suppliers should commit to comply with the international standards of quality, safety, environmental protection, intellectual property, participating in global value chain, specializing processes requiring high technical and mobilizing other inputs from outside.
The standards can be research applied as follows:
+/ IEEE: Criteria of Institute of Electrical and Electronics Engineers - IEEE is an international organization of scientists, educators, experts and
engineers in various fields. Nowadays, IEEE has 39 associations with members from over 150 countries. It has issued nearly 900 criteria and over 400 ones are being drawn up in the fields of Electricity, Electronics, Control, Communications, Informatics, Energy devices and so on.
+/ EIA: Electronic Industries Alliance - EIA is the alliance of four commercial organizations, which are Electrical Component Association (ECA), Governmental Electrics and Informatics Association (GEIA), Joint Electron Device Engineering Council (JEDEC) and Telecommunication Informatics Association (TIA). EIA is the association of electronics and hi-tech companies for market development and improving competitiveness in America through domestic and international policies.
Electronic Industries shall be active in product selection and search of potential market.
A seeming paradox is taking place in Vietnam. Foreign companies often struggle to find a supplier with standardized products to support their operation rather than providers proactively contact with customers. To develop effective Supplier Industries, managers and employees in Vietnam need to change the mindset in the direction of activeness in learning and marketing. Vietnam businesses ought to be more active in choosing what to produce as well as searching customers and market for their outputs.
Granting that the majority of Vietnam enterprises are small and medium, to actively contact customers without any additional costs for finding partners, the increased use of electronic trade is needed. This activity aims to promote and introduce their products not only to a group of customers and the oriented market, but also by which, the demanding customers themselves can
contact to buy enterprises’ products. This brings the development strategy of each enterprise a long-term high efficiency.
Initiative in Selecting and Creating Linkages with Other Enterprises Research results also showed that Profile and Autonomy of the subsidiaries affected the construction and development of the long-term cooperative and efficient relationship of the businesses. Therefore, the domestic suppliers should strengthen joint ventures with foreign investors.
These companies need to diversify cooperation and linkages with foreign investors, and especially Japanese, which has high technical qualifications and experience in this field to supply components, products and methods of management and cultural values suitable with the Vietnamese, and also be experienced in technology and producing management, transfer.
General trend of the world today is the more detailed international labor division. Therefore, only when diversifying joint ventures and investment cooperation can the new Vietnamese firms become a link in the global production chain. So far we only focus on joint ventures through capital contributions, processing simple products. It is the time for us to seriously consider ventures of strategic partnerships, satellite companies, copyright transference and trademark.
The development of Supplier Industries is diverse and leveled; the Vietnamese businesses alone cannot cover all expectations. Vietnam needs to attract more foreign investments in a number of technology levels and companies with high technology production. In addition, investments in manufacturing electronics have to face unexpected risks. In many cases, companies invest money, effort and time on purchasing producing chains,
new equipment and facilities to produce accessories, but the assembler do not willing to buy. Thus, there should be commitment between the manufacturer and the assembler on providing adequate consultation, complementary utilization of equipment and knowledge transfer of techniques to allow confidence in the use of their capital.
To form a mutually beneficial relationship (Win - Win), initially, the production of the important details, which requires high, processing techniques in Vietnam, will be undertaken by foreign-owned companies. After that, in the future, this job will be transferred to Vietnamese companies.
Regarding the relatively easy processing details, Vietnam enterprises can be immediately in charge. This will support Vietnam enterprises to develop their technical skills, ready for technology transfer from foreign-invested enterprises. We should carry out the localization and distribution as stated above. For both Vietnamese businesses and enterprises with foreign capital to be developed, cooperation (cohesion, technology sharing) is extremely important and forming relationships of mutual benefit (Win - Win) will bring about sustainable development.
Like all other countries in the region, foreign-invested enterprises specializing in the production of components will be the main force in the SI in Vietnam in these times. In the next 10 years, besides the target of providing for large corporations, local businesses in Vietnam should think of focusing on supply for FDI components manufacturers system, to begin participating in the assembly of value component groups and gradually learn to transfer technology.
Training and Improving the Quality of Human Resources
The process of knowledge transfer also shows the quality of human resources as a big concern for local businesses. These companies need to pay attention to training a skilled workforce and fostering professional qualifications for staff, technical experts to enhance brain levels of products, and promote links between schools and businesses. Under the limited conditions of training in the country, businesses should launch policies to train staff overseas in conjunction with market research activities in the long run.
However, it should be noted that the training of human resources spreads in all sectors as well as developing manufacturing all components and materials for products may lead to inefficient use of time and resources.
The Vietnamese enterprises should choose selective approaches and focus on the training of human resources, training investment in areas that are lacking and weak in production management, quality management, and basic technical skills.
Establishing Association of Local Electronic Supply
There should be business associations of electronic domestic supply or a truly free organization of businesses in the field of electronic domestic supply, which are gathered, conducted and held by enterprises themselves.
The association will operate for the benefit of the companies, be a conduit between the companies, interacting and supporting each other to improve the ability of production technology. Government is not the organizer in this association, but only supports the lifting of regulations or barriers to the formation and operation of these business associations.