ISSN : 2288-4645(Online)
DOI : http://dx.doi.org/10.13106/jafeb.2018.vol5.no1.43
Technology Management and Challenges of Vietnamese Enterprises in the International Market
Abstract
JEL Classification Codes: O14; O31; O33; L26.
초록
1. Introduction
2. Theoretical Basis
2.1. Enterprises
2.2. The Role of Technology and Innovation in the Development of Enterprises
2.2.1. The concept of technology
advanced technology into production through the application of scientific research results to production or the application of a technology. Finished from one enterprise to another. It is a technology purchase and an education and training process for the use of acquired technology (Le & Ngo, 2008). Although there are many approaches to technology transfer, there are two following basic contents: (1) There are two parties involved: the transferee and the transferor. Objects are new technologies. (2) Transfer is not just the delivery of tangible assets; it also includes intangibles such as management, education, training of the laborers to capture, use the imported technology proficiently and even adapt, improve its technology.
Technology transfer can take two forms: vertical transfer and horizontal transfer. Longitudinal technology transfer is the result of scientific research (which has been completed in the trial production stage, not just in the laboratory) into production. Horizontal technology transfer is the transfer of a piece of technology (from which only well-established products are marketed) from place to place, from one country to another, from one to another enterprises (Le & Ngo, 2008). The objects, as well as the mode of technology transfer are also very plentiful, which can be expressed in many forms: (1) license; (2) production cooperation; (3) technology transfer with basic investment; (4) trade clearing; (5) consulting services; (6) import the technology talent. In addition, technology transfer is carried out at various levels depending on the level of the transferee and the intentions of the parties such as: (1) knowledge transfer; (2) give the key; (3) product delivery; (4) transfer the market.
Therefore, in order to get technological advances, besides the need for businesses to invest and improve internally, they can receive the transfers from outside. These are two basic activities that contribute to the competitiveness of the technology that businesses always need to pay attention to invest in improving their competitiveness, especially in an open economy today.
3.The Status of Technology Management in Vietnamese Enterprises
3.1. Overview of the Development of Vietnamese Enterprises
By December 31, 2014, Vietnam has more than 402 thousand active enterprises, increasing more than 1.4 times from 2010. On average, this year the number of enterprises increased by 9.5% (General Statistics Office, 2016). According to the type of enterprises, there has been a gradual shift towards reducing the share of state-owned enterprises and increasing the share of non-state and foreign-invested enterprises (FDI), as shown in Figure 1 and Table 1.
Source: General Statistics Office (2016), Business results of Vietnamese enterprises in the period 2010-2014 (page 9)
Figure 1. The number and growth rate of Vietnamese enterprises in the period 2010-2014
About the capital scale of enterprises, mainly small and medium enterprises, with the proportion of enterprises with the capital of under 50 billion VND or more, accounting for 93.8% by 2010 and falling to 92.9% by 2014 (General Statistics Office, 2016). Enterprises with a capital of more than VND 50 billion occupied a small proportion, in which the types of state-owned enterprises and FDI enterprises occupied a high proportion (Table 2).
Table 1. Number of enterprises in Vietnam for the period 2009-2014
Table 2. Scales of Vietnamese enterprises by source of capital
Table 3. Scales of Vietnamese enterprises by labors
On the scale of labor, mainly under 50 employees (accounting for 90.9% in 2010 and up to 92.4% in 2014); Remarkably, SOEs and FDI often have a large scale of employment (over 200 people); manufacturing and service industries with over 200 employees occupy a small proportion to use the following table (Table 3)
3.2. The State of Technology Management in Vietnamese Enterprises
According to the General Statistics Office (2016) survey on the obstacles to business operation of enterprises, the criterion of machinery and equipment is considered as the obstacles ranked second and third only after the financial problem. The figure shows that technology as well as operation of Vietnamese enterprises are problems that enterprises are facing (Figure 2).
Source: CIEM, DOE, GSO (2014). Firm – level competitiveness and technology in Vietnam evidence from a survey in 2013. Hanoi, Vietnam: Finance Publishing (page 18)
Figure 2. Obstacles to business activities of Vietnamese enterprises
3.2.1. Regarding technology transfer
According to CIEM survey, the origin of technology transfer of enterprises is mainly from domestic enterprises, not from foreign enterprises, as shown in the following table (Table 4).
Table 4. Main technology source
Source: CIEM, DOE, GSO (2014). Firm – level competitiveness and technology in Vietnam evidence from a survey in 2013. Hanoi, Vietnam: Finance Publishing. (page 23)
This data table shows that among the surveyed enterprises, the main source of technology supply is from domestic and other enterprises, which shows a low degree of internal spreading. In addition to the technology level of Vietnamese enterprises, they are often lower than foreign ones, so the restrictions on technology transfer from foreign firms will likely affect the technology level of the Vietnamese enterprises.
In addition, in the form of technology transfer, enterprises also give the most important assessment of the type of transfer attached to the equipment. In addition, enterprises also pay attention to the role of new employees in the process of technology transfer of their units. The surveyed enterprises assessed the level of transfer with the equipment at 4.2/5 followed by the newly recruited labor force at the level of 3.88/5. This shows the level of high expectations of enterprises in terms of labor qualification, especially quality labor (Figure 3).
Source: CIEM, DOE, GSO (2014). Firm – level competitiveness and technology in Vietnam evidence from a survey in 2013. Hanoi, Vietnam: Finance Publishing. (page 21)
Figure 3. Assessment of technology transfer channel by scales of enterprise
3.2.2. About technological innovation
This is an important activity to help enterprises to improve their research capacity. Based on available resources, enterprises can invest in research, improvement and development of technologies that are not yet available in the market. In the CIEM’s survey, among the 8,010 surveyed enterprises, only 514 enterprises (accounting for 6.4%) invested in some form of research and development. Among these activities, enterprises rated only 4% of these activities as new ones to the world, while 53.2% rated as new ones to the market, while 42.9% considered that the product research as new ones to the enterprise. Thus, the level of technological innovation of Vietnamese enterprises has mostly stopped at the level of technological innovation available in the product or market, investing in innovation to create innovative activities, or the radical renovation is still being limited, shown in the following figure (Figure 4).
Source: CIEM, DOE, GSO (2014). Firm – level competitiveness and technology in Vietnam evidence from a survey in 2013. Hanoi, Vietnam: Finance Publishing. (page 41)
Figure 4. The novelty of innovative research products in Vietnamese enterprises
Meanwhile, the forms of innovation that enterprises perform mainly only at the research level (with the enterprises that conducted the research). While the level of implementation of both research and innovation activities of enterprises only accounts for a very small proportion of about 1%. Up to 90% of enterprises do not perform these activities (Figure 5).
Source: CIEM, DOE, GSO (2014). Firm – level competitiveness and technology in Vietnam evidence from a survey in 2013. Hanoi, Vietnam: Finance Publishing. (page 44)
Figure 5. Percentage of enterprises implementing technology research and innovation in Vietnam.
4.Technology Management Challenges of Vietnamese Enterprises in AEC countries
To illustrate the competitiveness of Vietnamese enterprises in comparison with several AEC countries, the authors used data on WEF's Global Competitiveness Index (Schwab, 2016), shown in the following table (Table 5).
Among the AEC countries, the index of competitiveness related to technology and innovation of Vietnam is only in medium rate. Vietnam is slightly larger than several other countries such as Cambodia, Laos, East Timor, Myanmar, in the group close to the Philippines but far away from Singapore, Malaysia, Thailand and Indonesia (in this report Brunei does not have enough data to evaluate). In this report, the criteria related to Vietnam's science and technology are almost alarming at the enterprise level, typical of the following criteria:
Table 5. Global Competitiveness Index of Vietnam's Technology Compared to Several AEC Countries
Source: Schwab (2016), The Global Competitiveness Report 2015-2016.
Firstly, the availability of technology in Vietnamese enterprises was only 4 points, ranking 112th in 140 countries, lower than that of Laos and Cambodia. This shows that the application of technology at the enterprise level is still very limited, we almost still use the backward technology.
Secondly, the acquisition of technology at the enterprise level of Vietnam was 3.9 points, ranking 121st in the world. At AEC only was more than Myanmar and East Timor. This shows that the technology barrier for Vietnamese enterprises is huge and our acquisition capacity derives from the quality of human resources and the available technological resources are not good enough to able to apply the new technology.
Thirdly, Vietnam's capacity for improvement is only 3.8 points, ranking 81st in the world, just above East Timor, Cambodia and Myanmar.
In addition, other indicators of Vietnam such as (1) the quality of scientific organizations; (2) level of investment in R & D; (3) cooperation between enterprises and universities, research organizations; (4) the level of availability of scientists and engineers; (5) The number of inventions, patents and usefulness of Vietnam in relation to other countries in the region are still limited. Our scores on these criteria are average, with almost no superiority to correlation, while high quality human resources have not yet met the enterprises’ needs and technological premises. Therefore, it is necessary to put Vietnamese enterprises in correlative relations with enterprises and corporations in the same region in front of many challenges and difficulties
5.The Technology Management and Limitations of Vietnamese Enterprises
It can be said that Vietnam's entry into the world market, in the immediate future AEC will face a lot of competition, in which the technology factor is becoming a huge barrier to the development, directly affects the competitiveness of enterprises. Main causes of major limitations are:
Firstly, Vietnamese enterprises are mainly small (in terms of capital and labor), low labor productivity (handicraft production), limited technology (compared to other countries in the region and the world - in 2014 is 50.84 million VND/ per person, much lower than other countries in the region such as Thailand, Malaysia ...). In addition, investment in technology of enterprises is limited. This comes from the enterprises’ financial problems that have many difficulties; Equity capital is limited to access to high technology; while the accessing with Government incentives is very limited. In addition, businesses are facing many risks when investing in new technology, so they are also very cautious when mobilizing venture capital for this activity (Figure 6 & 7).
Source: CIEM, DOE, GSO (2014). Firm – level competitiveness and technology in Vietnam evidence from a survey in 2013. Hanoi, Vietnam: Finance Publishing. (pp.46-47)
Figure 6. Reasons to improve technology instead of buying technology
Source: CIEM, DOE, GSO (2014). Firm – level competitiveness and technology in Vietnam evidence from a survey in 2013. Hanoi, Vietnam: Finance Publishing. (pp.46-47).
Figure 7. Mobilizing capital for technological innovation
Secondly, the elements outside the business. The average annual bankruptcy rate in Vietnam is high, accounting for 60% of the total number of new enterprises. This shows that Vietnamese enterprises are not oriented towards sustainable development and also show difficulties from (1) competition from competitors in international integration process, (2) Domestic businesses are facing many difficulties. The percentage of bankruptcy enterprises is shown in the table below (Table 6).
Table 6. Number and percentage of bankruptcy enterprises compared to newly registered enterprises
Source: Ministry of Planning and Investment (2015) and Bao (2015)
Among the components of the GCI, our institution rated at 3.7 / 7; infrastructure rated at 3.8 / 7 and the development of financial markets also rated 3.7 / 7. These are very difficult constraints, inhibiting the development of enterprises. In addition, the ease of doing business index provided by the World Bank (2016) highlighted the difficulties in doing business in Vietnam: the start-up of business (ranked 119/189), the protection of investors (ranked 122/189), tax (ranked 168/189); international trade (ranked 99/189); bankruptcy proceedings (ranked 123/189). The administrative and managerial difficulties have reduced the competitiveness of the economy which made the business of Vietnamese enterprises meet many difficulties. In addition, although Vietnam has made great efforts in institutional reforms on innovation and technology transfer, it is still slow and not synchronous, which does not create conditions for enterprises to access the capital, finance, greatly influencing the development of the business.
6. Recommendations and Conclusions
After more than 30 years of reform performance and the international competition is more and more serious, Vietnamese enterprises are under a lot of pressure in the process of international economic integration from developed countries. Although the development of enterprises has improved in recent years, however, as an emerging market, the majority of Vietnamese enterprises are still being limited in comparison with foreign firms. In terms of scale, technology, access to capital; particularly technological factor that becomes a major barrier to the development of enterprises, because now that it becomes a common market in the region, we will have to compete with very strong corporations from top countries such as Singapore, Malaysia, Thailand etc.
These enterprises are not only strong in financial potential but also very strong in terms of technological ability and creativity. In this stage, technology as well as creativity is a decisive factor in the market's ability to develop. Therefore, in order not to be weak in the process of the globalization, the regionalization that is going on very strong as now, Vietnamese enterprises need to overcome this barrier to create strengths, to compete with other enterprises in the same region. To do this, according to the authors, a number of solutions and recommendations proposed to enterprises and management agencies as follows:
For the enterprises. It is important to focus on the enterprises’ sustainable development, not just the wave of start-ups that are happening nowadays. In order to achieve sustainable development, enterprises must emerge from the technological potential, the scientific basis, the advancement
necessary to identify technology as a key factor in determining the competitiveness and development of enterprises in the integration process. Enterprises need to invest properly in research and development and carried out at the enterprises. In addition to radical innovations, which require abundant financial resources and high risk, enterprises can focus on continuous improvement and incrementally improve production efficiency, improve the product, improve the process, renovate models to enhance their competitiveness.
Within the enterprises, attention should be paid to improving the level of staff, especially managers and investment in R & D staff, and encourage employees to contribute to the development of the enterprises through competitions, advocacy programs to mobilize them to improve the quality of activities in the areas of the production process. The current international economic integration process is both a challenge but also an opportunity for Vietnamese enterprises to expand their market. However, to take advantage of opportunities, enterprises need to capture information to be more dynamic in competition with foreign businesses. To do this, enterprises need to focus on marketing, research and market development; collaborate with strategic partners to proactively access technology transfer and improve competitiveness. In addition, the financial problem, especially the funding for research implementation should be focused and expanded by the enterprises. This funding can be extended in many different forms, not just from the owner's equity. However, taking advantage of the support from the Government or investors, enterprises must also have the capacity shown through their research and development results.
For the Government. Together with defining that the enterprises as a driving force for economic development, it should be accompanied by the implementation of supporting policies. Enterprises have difficulty in mobilizing capital in production and accessing new technological advances. Therefore, the Government, besides promulgating support policies, also needs to show concrete activities, closely monitor the implementation of policies to create an equal environment for the enterprises to access capital and disseminate information on new technologies in the world. With the role of directing and creating the working environment, the Government should first create an equal "playing field" on the basis of clear, strict and transparent regulations. To intensify administrative procedures and policies related to business and investment. In addition, as a function of direction, the Government should also provide the necessary support to businesses operating in sectors that need to be encouraged.
Improving the quality of research by scientific organizations as well as training high quality human resources is always the policy and direction of the Government. In recent years, the Government has concretized these policies with specific policies such as autonomy of science and technology organizations, encouraging autonomous and research-oriented universities. However, this policy also needs time to transform, along with the development of resources to ensure that these institutions are strong enough to be autonomous, so in the first period, the government still needs to have appropriate supportive policies, such as focused investments in nationwide high-level scientific organizations, high-tech centers, and the expansion of attracting the research talent from foreign countries (or overseas Vietnamese) to be back to work at universities and research institutions. In addition, it is necessary to build bridges between enterprises and scientific and technological organizations through programs such as the fairs introducing new technology, dissemination of scientific knowledge, etc.
Finally, the Government needs to continue to reform its institutions, perform its macroeconomic management functions: control the inflation, stabilize the exchange rate and interest rates, thus create a favorable environment for enterprises to focus on the production and business, perform well their role in the economic development of the country.
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Table
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