Vietnamese businesses are said to be weak in management skills, competitive capacity, human resources training, technological knowledge and solidarity.
Vietnam has more than 400,000 businesses, 95 percent of them being small and medium-sized, not to mention a large number of extremely small businesses in the unofficial economic sectors.
Over the past few years, under the impact of the global economic downturn, many domestic businesses had to declare themselves bankrupt or suspend operations after suffering great losses and failing to pay high interest rates on bank loans.
Starting up business with amounts of capital available
Judging from the real situation in the country, former Deputy Prime Minister Vu Khoan says Vietnam is a small production nation without a business foundation in history. Those engaging in the market even include cadres, ex-servicemen, or small traders.
According to a survey on more than 63,000 businesses across the country, 43.3 percent of business leaders have education qualifications lower than the secondary school level. The number of employers having master's degrees account for only 2.99 percent. Most employers and managers of private enterprises have yet to be trained professionally in socioeconomics, culture, laws as well as business administration skills, especially in the context of the country’s international integration.
These limitations can be seen clearly in their improper implementation of regulations on tax payment, personnel work, financial management, product quality, and industrial property.
Not a few businesses bite the dust as their operations are only based on available capital and personal experience without a strategic vision for long-term development.
Pro. Dr. Do Duc Binh from the National Economics University says Vietnam is in dire need of high-quality human resources and highly professional business managers. The role of business management and ownership is not clarified, so an executive director can also function as the employer, Binh notes.
According to Employment Consultancy Company VietnamWorks, Vietnam can meet only 30-40 percent of the demand for high-quality human resources.
Dr. Bui Thanh from the Ho Chi Minh National Academy of Politics and Public Administration underscores the need to sharpen the competitiveness of human resources in improving the quality of products and services.
He notes that the number of Vietnamese highly skilled workers made up only 36.4 percent of the total workforce in 2009.
In comparison with other countries, the quality of Vietnam’s human resources is still low but the number of untrained workers involved in the processing industry, hotel and restaurant services, tourism and agriculture is very high.
No more advantage of low-cost labour
Vietnam’s advantage over other countries is its abundant cheap workforce, but this is becoming less attractive than before. In recent times, it has kept falling down the scale of the Global Competitiveness Index (GCI) in terms of high-quality workers.
Vietnamese businesses are based on low-cost labour to attract investment in labour intensive sectors such as garments and textiles, leather & footwear, seafood processing and electronic assembly industry. However, this competitive advantage will hold no attraction once the country is moving closer to the Global Value Chain without any negative signs of unstable growth and social instability.
In regard to the renewal of technology in production, Pro.Dr Do Duc Binh says that most Vietnamese business are using technologies which are outdated for two or three generations by international standards. In his view, the continual use of old technologies will only make domestic businesses less competitive in the long-run.
Vietnam is a major exporter of agricultural products but half of its processing businesses are still using obsolete technologies.
As a matter of fact, Vietnamese private businesses are finding themselves in a difficult position to compete with foreign partners, even in the domestic market, let alone in the global market. Weak competitiveness makes it impossible for them to provide high-quality products and services at reasonable prices and to improve their advertisement and marketing, trademark building, and distribution networks.
No doubt, most of them are now in limbo except some operating on a small scale.