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Small and medium enterprises prepare for FTA

Bringing great opportunities along with great challenges, the FTA is providing small and medium enterprises (SMEs) with the options: they have to innovate the administration and link to exist and develop or they will be left behind.


Need for the innovation in theadministrative activities

Many experts and even SMEs themselves said that, until now, the lack of fund or access to the market are not the decisive disadvantages but the shortage ofthe business administration in a series of areas such as human resource management, market management, marketing administration, financial management, technology management ... is the biggest disadvantage of SMEs.

Mr. Nguyen Ngoc Tuan, Director of the East AsiaLaw Firm and Vice Chairman of the Provincial Export and Import Associationsaid, the current biggest disadvantage of SMEs was the business administration. "Businesses need to recognize the opportunity in this context to improve the capacity to meet market demand in the new situation. There is no other way, the key is to innovate the business administration. This helps enterprises reduce costs, improve production capacity, sales, lower product cost, bring the best quality of service", Tuan said.

Tuan affirmed, in reality of the production business, the ability of management on the workforce, marketing, finance, technology ... always decide the survival and development of the enterprises.

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With more specific analysis, Mr. Pham Duc Binh, Chairman of Provincial Young Young Businessmen Association said that the current biggest difficulty of SMEs is weak internal resources and weak business administration. "In the business administration of SMEs at present, the admistration of costs and cash flow is the weakest. Many small businesses know how to do business but don’t know how to manage cash flow. Therefore, when they expand their scale, they often meet difficulties even the bankruptcy", Mr. Binh said. According to him, to the business leaders, the management of the cash flow is not a simple job. To understand the daily cash flow and use it logically, efficiently ... they need to be trainned about the financial knowledge. In fact, in many cases, the enterprises simply speed up cash flow to change losses into profits. Currently, the majority of SMEs do not have the financial specialists working separately from the Accounting Department.Most of themhold more than one position. Capacities and the importance of the finance department have not yet fully met mission requirements. Without effective cash flow management, the enterprises will be resulted in financial imbalances, don’t pay debts on time, and have inability to pay ... To manage cash flow better, the enterprises need to do at least  simple work such as building internal spending rules, salary and rewarding regulations...

According to Mr. Pham The Linh, Director of The Linh Co.,Ltd, it is better for the enterprises to prepare for the strong economic integration in the future since now. They should changetheir mind to make products with quality, prestige and keep the trust of consumers. So, enterprises need to boldly invest in advanced technology because if they like cheap, outdated technology, they would do more harm than good. Besides, the enterprises’ leaders should pay more attention to equipping all knowledge of modern business, especially business administration... Understanding the importance of this issue, The Linh Co.,Ltd did not hesitate to spend billions to hire consultants on strategyin 2012; on the production in 2014; on market development and training of human resources in 2015.

"As a result, The Linh Co.,Ltd has madequalified products with the lowest cost and the highest efficiency andproductivity. Market share of companyis also increasingly being expanded”, Mr. Linh shared.

Linking to exist

The SMEs must link to exist in the current context. Because of many disadvantages, SMEs have very little chance in the business environment with the competence of big foreign enterprises with both potential and experience in the future.

Mr. Dang Van Diem, Director Thong quan Co., Ltd (specializing in logistics) and Deputy Chairman of Provincial Young Businessmen Association said the current logistics enterprises were facing numerous difficulties. Retail operation and weak internal forces make theirbusiness become weak. "With the signing of the coming FTA, there will be more big foreign enterprises in this field.If Vietnamese logistics companies do not link to form a system, enhance the competitiveness of service, they will die or only do processing for other large employers", Mr. diem presented.

According to Mr. Pham Duc Binh, when the TPP is signed, the most difficulty still belongs to Agricultural sector, particularly the livestock. With small production scale along with the import from seed to food and most of the other raw and auxiliary materials... the livestock sector has little chance to compete on quality and price with countries in the region and around the world. To operate effectively and stably when joining TPP, the livestock sector of the country in general and of Dong Nai in particular stand joining TPPshould "go on their own feet."

"Farmers and businesses in this sector need to change the previous ways“everyman for himself”. " Accordingly, they need to create links among farmers through the cooperative model or between farmers and businesses tocreate a self-supply from seed to food, veterinary drugs and slaughter, market ... in order to reduce costs, lower product cost, improve competitiveness with foreign meat products", Mr. Binh said.

Having the same point above, the Director of Department of Agriculture - Rural Development Mr.  Pham Minh Dao said that regarding WTO, both farmers and businesses in this area need to see Small retail businesses can not exist. "In the trend of market integration, the farmers need to link together to form homogeneous products and link with businesses to creata linkingchain supplying the livestock products with high quality, cheapcostfor product competitiveness", Mr. Dao confirmed.

According to Mr. Dao, the State should have synchronous policies from the Central Government to Local Authorities in livestock development sothat the livestock sector can access the world economy. Dong Nai has proposed Ministry of Agriculture - Rural Development to issue the associatepolicies in livestock and fishery sectors, as only linking may help them exist and operate stably.

Business administrative team need new vision

According to the Deputy Chairman of Dong Nai Provincial People’s Committee Mr. Nguyen Phu Cuong, the State and local governments actively support businesses to participate in the integration. However, all the protective measures of domestic enterprises in competitive relations with foreign enterprises, the orientation to provide information orthe promotion programs linking businesses to the market are effective, temporary, short-term methods. To lead the enterprises to participate in the integration stably, business administrative team should have a new vision, new aspirations, new capabilities, new values. Accordingly, the Industry Associations,Council, SMEs operating in the same field, after identifying the key export product and its target market, need to review resources, actively implement“the linking of production and marketisation" in order to maximize internal resources and meet the requirements, conditions for participation in TPP markets towards sustainability.

"The local enterprises that want to take advantage of opportunities brought by TPP, should constantly improve the quality and competitiveness of export goods, increase the localization ratio of the raw materials, promote the investment in supporting industry, invest in raw material growing areas, developthe collaborative relationships with foreign manufacturers with advanced technology, pay attention to the human resource training to meet the needs of market development", Deputy Chairman of DongNai Provincial People’s Committee Mr. Nguyen Phu Cuong affirmed.

Phuong Linh


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