How Can Vietnam’s Small Enterprises Enter the Global Supply Chain?
Vietnam is a strategic global partner of major economies and a member of multiple multilateral and bilateral trade agreements, providing small and medium-sized enterprises (SMEs) with significant opportunities to deepen their participation in global production and trade chains.
Leveraging FDI for Joint Ventures & Partnerships
According to the General Statistics Office (GSO) and the Department of Industry (Ministry of Industry and Trade), Vietnam has approximately 5,000 enterprises in the supporting industries sector, including:
- 100 enterprises acting as direct suppliers for multinational corporations.
- Around 700 enterprises serving as Tier 2 and Tier 3 suppliers.
However, 98% of Vietnam’s 900,000 businesses are small and medium-sized, making it difficult to integrate deeply into global supply chains.
Dr. Nguyễn Bích Lâm, former Director General of the GSO, emphasized that Vietnam lacks large-scale enterprises that can compete on a global scale. He pointed out that Vietsovpetro—a successful joint venture between Vietnam and Russian FDI in the oil and gas sector—played a pivotal role in elevating Vietnam’s global standing. However, similar joint venture models have not been widely replicated.
“Vietnam’s FDI attraction policies should include mandatory conditions requiring foreign investors to collaborate with domestic firms in joint investment, production, and development projects. This will enable Vietnamese companies to integrate deeper into global supply chains,” Dr. Lâm suggested.
Vietnamese Suppliers Still Lack Global Brand Recognition
According to Ms. Đỗ Thị Thúy Hương, Vice Chairwoman of the Vietnam Association for Supporting Industries (VASI), many Vietnamese companies possess capabilities comparable to foreign direct investment (FDI) firms.
Currently, Vietnam’s electronics, processing, and manufacturing industries have around 300 companies that have secured stable positions in global supply chains. Several Vietnamese suppliers have become Tier 1 providers for multinational giants such as Samsung, Canon, and Panasonic.
However, Vietnamese companies lack globally recognized brands at the top of the supply chain. To further penetrate global markets, businesses must:
- Identify opportunities and challenges proactively.
- Leverage government support policies and international organizations.
- Enhance production capabilities and expertise.
Digital Transformation & Sustainable Development: Essential for Global Trade
Ms. Bùi Thị Việt Lâm, Vietnam Country Representative of the US-ASEAN Business Council (USABC), highlighted key global trends shaping the future:
- Green economy.
- Digital economy.
- Supply chain digitalization.
“The digital economy presents an enormous opportunity for Vietnamese businesses to access the global market via e-commerce. Companies that capitalize on this opportunity will significantly enhance their competitiveness,” Ms. Lâm emphasized.
Green Transition: A Crucial Factor for Global Market Access
Professor Nguyễn Đình Thọ, Director of the Institute for Strategy and Policy on Natural Resources and Environment (Ministry of Natural Resources and Environment – MONRE), stressed that sustainable development is now a mandatory requirement for companies looking to integrate into the global trade ecosystem.
A clear example is Vietnam’s textile and garment industry, which lost $5 billion in export orders to Bangladesh because major importing markets required products to be manufactured in eco-friendly factories.
Vietnam is a major textile exporter, yet only 60 factories meet the required green production standards. In contrast, Bangladesh has over 300 certified green factories.
“If Vietnamese enterprises fail to transition in time, they risk exclusion from global supply chains and severe financial losses,” Prof. Thọ warned.
Additionally, global regulatory frameworks increasingly focus on sustainability, reshaping trade and investment patterns worldwide.
The Risk of Exclusion from Global Trade
Failure to comply with sustainability regulations could result in abrupt export disruptions, causing businesses to be immediately eliminated from international markets.
Prof. Thọ emphasized that companies looking to integrate into global supply chains must prepare sustainability reports in accordance with international standards, such as:
- International Financial Reporting Standards (IFRS).
- Global Reporting Initiative (GRI).
- Task Force on Climate-Related Financial Disclosures (TCFD).
These reporting frameworks ensure corporate transparency, compliance, and competitiveness in international trade.
Conclusion: The Path for Vietnamese SMEs to Go Global
Despite their small size, Vietnamese enterprises have significant opportunities to participate in global supply chains by:
- Forming strategic joint ventures with FDI enterprises.
- Embracing digital transformation & e-commerce.
- Meeting international sustainability standards.
With proactive government policies, corporate adaptability, and industry collaboration, Vietnam’s small and medium-sized businesses can successfully integrate into global trade and manufacturing networks, paving the way for long-term economic growth.