SME business associations of vietnam 11 case studies

Bat Trang Ceramics and Pottery AssociationA portal for export and a business model for the traditional craft village Background For hundreds years, Bat Trang, on the north bank of the Re

SME Business Associations of Vietnam

11 case studies

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SME Business Associations of Vietnam

MỤC LỤC

1 Bat Trang Ceramics and Pottery Association

2 The Can Tho Business Association

3 HCMC Young Business Association

4 Ho Chi Minh City Shoes and Leather Association

5 Binh Phuoc Cashew Association

6 The Hanoi Union of Associations of Industry and Commerce

7 Da Nang Women’s Business Club

8 Nam Dinh Small and Medium-sized Enterprise Association

9 Nam Dinh Women’s Business Club

10 Thanh Hoa Women’s Business Association

11 Hai Phong Land Transportation Association

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Bat Trang Ceramics and Pottery

Association

FOREWORD

The existence of well functioning Business Associations in a society plays a key role

in the development of enterprises By representing business interests and providingspecific services to their members they can achieve social and economic improvementsfor their members and the private sector in general

The Vietnamese government recognizes the importance of Business Associations for awell functioning market economy and is therefore promoting their establishment anddevelopment Numerous new associations have been founded recently to the point wherethere has been a sort of “association boom” Many of them thrive and grow, but manyalso face challenges

Since 2003, the International Labor Organization (ILO) and the Vietnam Chamber

of Commerce and Industry (VCCI) have worked together to support and promotebusiness associations among small enterprises in Vietnam A Resource Guide wasdeveloped in 2004 to support small businesses in establishing and building strong,efficient associations In 2006, the Resource Guide was complemented with acomprehensive Trainers’ Manual During the training of facilitators, it became clearthat the training material needed to be complemented with real examples of businessassociations in Vietnam Therefore, ILO and VCCI, under the PRISED project,undertook to illustrate the current state of associations by documenting their recenthistory and current situation

The case studies presented in this publication have been undertaken by Tang Van Khanhand To Ngoc Anh, OCD Consultants Pictures were taken by Nguyen Na Son JennyIkelberg and Kees van der Ree of the PRISED project initiated the publication anddeveloped the concept and methodology of the case studies Important guidance wasprovided by Pham Xuan Mai, President of Institute of Management and TechnologyPromotion (iMT) and Vice-Chairman of the Shoes and Leather Association of Ho ChiMinh City, who contributed the concluding remarks The final editing was done byRichard Pierce (English) and Do Thi Tu Anh (Vietnamese)

It is truly hoped that these case studies will inspire trainers, consultants, associationleaders and members themselves in their efforts to increase the role of BusinessAssociations and improve the services that the associations provide

Bat Trang Ceramics and Pottery Association

A portal for export and a business model for the traditional craft village

Background

For hundreds years, Bat Trang, on the north bank of the Red River, has been known for high-quality ceramic and pottery products Visitors today see a very dynamicand active craft village that has become the symbol of vitality for the traditional craftsmarket carved into the long history of Vietnam

well-Bat Trang traditionally produced crockery for the local market only But gradually,foreign tourists learned about the village and began seeking out its products Today,more and more visitors and crafts dealers are bringing Bat Trang products home, givingthem a strong national and international reputation The lasting result is that households,once the basic unit of production, are improving business practices and expanding intolarge companies And perhaps most important, they are exporting more

In recent years, production in Bat Trang has developed significantly to meet thisincreasing demand and at last count the village had over 60 small and medium-sizedenterprises A full 60% of the 1,000 households were involved in the ceramics business.Their products are now shipped worldwide including to highly competitive markets such

as Japan, the US, Italy and Korea

By 2001 the market had reached a level of development where producing familiesidentified a need for a body with more power to protect the Bat Trang trademark and therights of small and medium-sized production households The Bat Trang Ceramics andPottery Association (BTCA) was born, a voluntary social and professional associationfor businesses, entrepreneurs, households and other stakeholders to institute greaterprofessionalism in all aspects of the business Membership was extended to peripheralservices too, such as trading houses and tourism in Hanoi (for much-needed foreigncustomers)

BTCA is a non-profit organization which is not an authority and does not interfere in theordinary business practices of its members It provides crucial services to its membersand supports the development of the market

network members experienced in ceramics and pottery as well as international artisans

to promote these products abroad There are even press and PR components providinggreater exposure

Yet while BTCA strongly encourages all businesses and households in the village to jointhe association for the services it offers, they do not limit support to members only If abusiness or household meets export standards and is certified by a quality control body,they may still use the BTCA brand name and export their products via the Association

or via the newly-established Bat Trang Exporting Promotion Center (BTEP)

Partnering for growth

Understanding the importance of institutional linkages in the development of businessassociations, BTCA partnered with the International Finance Corporation (IFC), amember of the World Bank, which funded a US$15,000 project for small and medium-sized enterprises BTCA has also received support form the Mekong Private SectorDevelopment Facility, a program of the IFC, in promoting the Association through in-flight magazines on airlines bringing foreign tourists, flyers, and short promotional films

in the EU and Japan

In collaboration with the Hanoi Tourism Association, BTCA also invites tourists toBat Trang to introduce the history of the trade and demonstrate traditional methods.Members work with fine arts associations such as the Hanoi Fine Arts Associationand the Vietnam Fine Arts Association as well, to share experience and technology inhandicrafts

The association also has international connections Together with the Jiangxi Ceramicsand Pottery Association in China, BTCA organizes study-tours for about 20 members ayear, and well-known Japanese artisans support members to attend trade fairs in Japan.Other member services include:

• Updating members on new technologies in production e.g more efficient

baking technology and new shaping techniques

• Connecting members to sign larger contracts

• Supporting copyright protections

• Moderating in labor disputes

• Researching markets and promoting member products to international buyerstypically beyond the reach of household businesses

Carrying on tradition

“We help the households to send their children - the future artists of the village - to

training courses on key skills for ceramics and pottery artists at reputable ceramic training agencies in Vietnam and abroad.”

-BTCA Chief of Office, Mr Nguyen Trong Thu

The association has a training budget of VND200 million per year, of which thirds is provided by the Industry Extension Fund and the remainder by members

two-To complement traditional in-house training from one generation to the next, theassociation provides vocational classes in ceramics, shaping and painting They havealso partnered with the Hanoi University of Fine Arts to provide courses on sculptureand recently offered a three-month training on computer-aided 3D design and painting.Fact Sheet

• Connecting members to realize large contracts

• Helping protect copyrights for members and artisans

• Acting as a moderator in labor disputes

• Searching for market information

• Promoting members on international markets

• TrainingsFunding 70% membership fees and service revenue30% donor contributionsServices and

Facilities Bat Trang Export Promotion Centre

Membership

Representative Mr Le Xuan Pho, Chairman

Contact

Xom 3, Bat Trang, Gia Lam, HanoiTel: 84-4 874 3522, Fax: 84-4

874 3587Email:info@battrang-ceramics.orgWeb site:

Then BTCA partnered with the Mekong Private Sector Development Facility (MPDF)

to develop the Bat Trang Export Promotion Centre (BTEP) This was a major stepforward toward developing capacity in Bat Trang as well as good experience in brandpromotion for small businesses in Vietnam There now over 30 companies making use

of the Center’s services

BTEP, as an arm of BTCA, manages the Bat Trang brand on behalf of members,markets member products, and provides a wide range of back-office services to promoteexport These include responding to buyer enquiries and orders, arranging shipment

of samples, assisting in export packaging, quality control, export documentation, andshipment

''This is a very big chance for the businesses and people in Bat Trang Ceramics Village

to promote Bat Trang’s products to the world.”

- Mrs Ha Thi Vinh, the Director of Quang Vinh Ceramics and Pottery

BTEP also keeps buyers updated on the latest developments in products and productioncapacity, working with suppliers to ensure that they meet buyer demand for quality,packaging, labeling and timely delivery This kind of support is of great importancesince producers in Bat Trang, while being skilled in ceramics and pottery production,have insufficient skills in foreign languages, marketing and trading, all crucial in theexport market

A new web presence

Following its establishment, BTEP developed a business portal at ceramics.orgto support the free flow of business information, to search for information

www.battrang-to disseminate www.battrang-to members, and www.battrang-to more easily introduce buyers www.battrang-to Bat Trang products.The portal presents a wide range of topics about sellers and their products and displays

an online showroom In addition, it allows buyers to place orders for sample products aswell as to place orders for shipment The site is also set to enable buyers to track theirorders online

Core BTEP services

• Customer – seller liaison This is the most important function provided byBTEP, for both members and clients Full-time staff are professionally trained,speak excellent English and have extensive understanding of Bat Trang

products and manufacturers They are able to assist buyers and sellers in allsteps of export, such as inquiry, negotiation, ordering, packing, quality control,and delivery

• Monitor’s producer designs and production processes to ensure they are in linewith customer requirements

• Arranges packaging of products from different producers and ensures thatproducts and packages are ready for point-of-sale display This conforms tostandard packing sizes, uses appropriate packaging for ceramics and potteryand environmentally-friendly materials to suit customer requirements BTEPassists in arranging freight to suit importers’ requirements either by air or sea,and consolidation or full container shipment It also helps arrange insurance forall shipments against breakage or loss

• Assists in quality control by reserving reference samples and guiding producersduring the production phase It also arranges full third party quality controlincluding inspection, laboratory analysis and testing for compliance with

company, national and international standards by international inspection

companies such as BVQI, TUV and SGS (http://www.sgs.com/)

For each export support service, BTEP will charge local producers 3% of contractvalue, applicable for both members and non-members with priority given to members

In addition, it charges international importers a small percentage of the contract value.This is emerging as an important revenue source for BTCA as a whole

Lessons learned

• BTEP was established just in time 2004 was a difficult time for the Bat Trangceramics producers Many small producers had to close Although many werequite dynamic in looking for markets both via traditional and modern methods,

this did not bear fruit Producers simply hadn’t grasped modern methods Andthey developed only static websites, which, by virtue of their basic structure,don’t necessarily attract customers They provide only limited informationwithout allowing clients to place orders But the online portal at BTCA nowfills this gap.

• BTEP’s services are exactly what the producers from a traditional village likeBat Trang lack Namely export services, which require proper foreign languageability, knowledge of export procedures and standard requirements in

packaging beyond the capacity of local businesses

• BTEP created an alliance of small, formerly competing producers to fulfilllarge orders Individual producers no longer have to spend time searching formarkets and negotiating with buyers They may instead concentrate on

production, their strong suit Buyers are assured larger quantities, improvedexport procedures and greater quality control

• Looking to the future, Vietnam’s accession to the World Trade Organizationwill further expose Bat Trang to international recognition of its brand name.This will benefit producers markedly, as larger foreign markets now have easieraccess to these products But this will also create a greater need for legal

protection of the Bat Trang trademark

The Can Tho Business Association

The Can Tho Business Association

Providing training services to members

Background

The Can Tho Business Association (CBA) is a voluntary, non-profit, multi-sectoralorganization State-owned or private, large or small, Vietnamese or foreign, all arewelcome CBA was founded when Can Tho businesses perceived a need to have theirown ‘proving ground’ They held the founding meeting on n January 28th, 2005 Shortlyafter CBA become the official partner of Business Edge (BE), a project of the MekongPrivate Sector Development Facility (MPDF) to provide training courses to businesses

in Can Tho and surrounding areas

All of the members were company directors or business owners, both men and women,and soon proposed the idea to gather again and exchange ideas They then founded

‘Business Owners Club’ as an organization under CBA They also set up the ‘BusinessOwners Joint Stock Company’ in 2006 Though women members account for only15% of CBA’s 159 members, they play an important role, especially in training anddissemination of information

Major operating principles are voluntary self administration and financial independence.CBA is a self-funded association receiving no state support All operating costs arefinanced by member service fees and contributions from businesses or individuals.Membership fees account for 40% and are contributed voluntarily every year at ratesfrom VND 500,000 to 5,000,000 The other 60% mainly comes from trainings

CBA’s executive board includes a president, five vice presidents, five executivemembers and a secretary general The Association also has an auditing board Five of thetwelve executive members and one of three members of the auditing board are women.The General Secretary, who has executive charge of the office, is an SIYB

Start and Improve Your Business (SIYB) is a training program developed by ILO andimplemented by VCCI

master trainer with extensive experience working at the Vietnam Chamber of

Commerce and Industry (VCCI) In addition there are four full-time staff (three

women)

Member services

One of the major characteristics of CBA’s services is its concern for the development

of women entrepreneurs The Association has organized the Conference to CelebrateInternational Women’s Day, March 8th, in cooperation with MegaScience It also heldthe conference, “Management Experience for Women Entrepreneurs” with backingfrom the Department of Culture and Information and the U.S Embassy They sentmembers as well to the Women Entrepreneurs Exchange and Business Visit alongwith the Ho Chi Minh City Young Business Association and Hanoi Young BusinessAssociation

CBA effectively taps members for support and collaborates with other associations, forexample, on developing its website The Association has also partnered with the Ho ChiMinh City Young Business Association and the Hanoi Young Business Association tooffer conferences, business visits and exchanges via networking, cultivating linkageswith government bodies as well And in keeping with best practices for a businessassociation, CBA offers trainings, disseminates vital information, supports tradepromotion and advocates for the legal rights of its members

Traditional, passive teaching methods have strong roots in Vietnam, and previousmanagement trainings in Can Tho were no exception While many trainers now offer adynamic learning environment, some have relied on this passive teaching method withthe result that participants lose interest and don’t retain the material.

“My staffs don’t want to go to the class They said: Studying at the class is very ‘sleepy’ and cannot apply in reality I used to send some staffs to some training courses and they got bored ”

-Director of Can Tho Branch of Marine Bank

Participants began citing a need for a more dynamic, participatory environment, andCBA resounded with changes, where the participants were more active and thecommunication was from both sides The Association has partnered with BusinessEdge (BE), a project of the International Finance Corporation/Mekong Private SectorDevelopment Facility (IFC/MPDF), to provide businesses with a new ‘problem solving’approach BE supports small and medium-sized businesses in developing their capacityfor more competitive advantages The program develops materials on businessmanagement, trains trainers and selects partners to provide businesses with services thatinvolve participants rather than simply lecturing

BE has developed its courses via several steps First, content experts will visit SMEs

to identify common problems Then they develop content that focuses on individualsolutions These solutions must pass a test phase before use on the market As thecourses are very much problem-based, businesses lose less time in studying theory tofind solutions

“I studied this topic (Distribution) previously in a class held by an institution However,

after these training courses, I see what I can apply in reality.”

- Participant in a CBA marketing course based on the BE learning model

For the BE programs, CBA applies a ‘three-dimensional’ interactive training methodvia group discussion, case studies, role plays and games Participants are encouraged

to be proactive in coordinating with other participants under trainer instruction Theydraw practical lessons and must develop an action plan by the end of the course.Trainers must be highly skilled in management and facilitation and must have practicalmanagement experience in the field BE also has requirements for partners, in logisticsfor training courses, facilities and equipment as well as minimum and maximum number

of participants and revenues per course Partners must meet these requirements

And now, in addition to the BE trainings, CBA also organizes its own trainings usingthe BE model These have proven highly effective for entrepreneurs concerned withimmediate, practical application

“I am a farmer who runs a business Previously, I thought I was very intelligent and not worse than anyone in business But after attending this training course (Marketing

- Money or Intelligence) I saw many problems which I needed to re-think, and made certain changes.”

- Participant in a marketing program

The reward for CBA is that members return for the service and the group will continueoffering these trainings According to surveys, 80 to 90 per cent the participants in BE-based and CBA courses are satisfied Number of courses per year has now risen to 30

“In comparison with the passive methodology of learning, this active participative

training forces the participants to look directly at the problems to share and discuss, which means they don’t forget it when they leave the class.”

- Mr Tran Kim Dinh, Director of the Mekong Advertisement and Tourism InformationCompany

Lessons learned

• Direct attention to promoting women entrepreneurs truly opens the field

Women members feel that they equally benefit from the association They, inturn, are more encouraged to participate

• Traditional, passive teaching methods may not be appropriate for the

demanding, dynamic business environment

• By providing high-quality training to members, CBA meets the common

capacity building needs of businesses in Can Tho Before CBA, VCCI Can Thowas the only place in Can Tho to provide short training course to businesses Inthat sense, CBA acts as a common organizer to determine the need, find theproviders and organize courses The association has since decided to focusmainly on training to ensure that resources are focused where they make themost difference

• CBA events bring together members and help businesses to expand their

networks The Association’s network allows it to connect its members withother enterprises from other associations, such as the Ho Chi Minh City

Business Association, An Giang Business Association, Tien Giang BusinessAssociation and Ho Chi Minh City Young Business Association

Yet challenges remain, in providing training courses on L/C, international payments andinternational trade law And for the future, members have asked for more customizedtraining courses and more follow-up to help them with specific problems The group hasresponded by starting to offer post-training support for members who have participated

in its training program

HCMC Young Business Association

HCMC Young Business Association A comprehensive package of services

Background

Founded in 1994, the Ho Chi Minh City Young Business Association (YBA) was thefirst association expressly for young businesspeople in Vietnam Its mission is to gatheryoung entrepreneurs together to develop their business skills as well as to contribute tothe development of the local and national economy YBA’s major goal is to become

a professional business support organization to better meet the increasing needs ofmembers and to help them compete when Vietnam enters the global market

YBA is large It has 574 members, all of them owners or senior management of privatecompanies With such a large number of members naturally the group has a largeexecutive board with a chairman, six vice chairpersons and 18 commissioners The role

of the executive board is limited to policy without excessive overlap in administration.Two vice chairs and six commissioners are women Women also account for about one-fifth of the membership and play an increasingly important role The Secretary General

is a woman and eight out of the 10 office staff are also women Member services accountfor about 40% of YBA’s yearly operating budget The remaining 60% comes frommembership fees and voluntary donors

YBA has a good relationship with city government as well as other organizations It hasstrong connections with the Vietnam Young Business Association, Vietnam Chamber

of Commerce and Industry (VCCI), the Hanoi Young Business Association and the CanTho Business Association The group has organized many events with these partners tobring together businesses to share experience and resources and to date this has worked

Member services

YBA provides a comprehensive range of services to its members including a website(www.ybahcm.com.vn), an attractive newsletter (print and online), legal archives,workshops and seminars in which topics include the WTO, intellectual property, thenew Enterprise Law, trade promotion, site visits to successful businesses, networking,brand promotion and training

Training

YBA frequently organizes trainings and workshops for middle and top managers Itregularly searches overseas courses to bring new knowledge and skills for international

business, technology, and market situation The group seeks to make this its core servicethrough its YBA Joint Stock Company, to increase revenues Service will be extended tonon-members, and by partnering with Business Edge, a program of the Mekong PrivateSector Development Facility, YBA can offer more practical and attractive courses.

“In comparison with other courses which I have taken, the training courses by YBA arewell organized in terms of content, methodology, and supporting services, with topicswhich suit the reality of business and experienced trainers from reputed companies.”

- Mr Vuong Quoc Quang, Director of Gia Gia Lac Company

Seminars: The Association also offers seminars to keep members up to date on

developments in the political, social, legal, economic, and business environments.Organizers choose relevant topics and sought-after speakers

Information: YBA also offers a comprehensive website, an attractive newsletter, and

other channels The website provides vital information about all aspects of theassociation’s work for both members and stakeholders

Trade promotion: YBA has become a focal point for connecting members to their

markets by providing information and opportunities via website and newsletter

• Yet there is room for improvement Members have asked for greater consultingservices and more business visits to learn from first-hand experience at othercompanies.

“YBA’s operations are very good, with a lot of helpful training programs and

conferences for members… I think that this is a strength of the association and needs to

be continued.”

- Mr Huynh Van Thien Thanh, Director of Huynh Nguyen Phung Co.

Ho Chi Minh City Shoes and Leather

Association

Ho Chi Minh City Shoes and Leather Association

Taking on the world through advocacy and trade promotion

Background

Shoes and leather products are among the most important traditional sectors for HoChi Minh City, particularly for export While there are more and more medium-sizebusinesses every year, there are also many small or ‘micro’ businesses that need access

to market information, especially international markets Thus, in 1996 shoe and leatherbusinesses and households got together and formed the Ho Chi Minh City Shoes andLeather Association (SLA)

SLA is a voluntary organization that enhances the competitive advantages of memberbusinesses and the larger industry One core goal is to develop the leather and shoessector and positively contribute to the economy while supporting sustainabledevelopment SLA is a member organization of the Ho Chi Minh City Union ofBusiness Associations and Vietnam Leather and Shoes Association (LEFASO) Todate, it has a total of 178 members but no clear strategy to attract new members Thegroup enrolls new businesses through direct talks and word of mouth Membershipfees account for 66% of total funding Training fees account for the remainder Theassociation has an executive board of 35 members, one chairman six vice chairmen, onegeneral secretary and two support staff The secretary and two staff are full time

One of the most important roles of SLA is to represent and protect the legal rights ofmembers and businesses in the sector It also acts as a connecting point between itsmembers and government to address concerns SLA representatives also participate inworkshops and seminars by LEFASO and the Ho Chi Minh City Union of BusinessAssociations

Member services

SLA updates members with a newsletter providing general economic analysis, sectorspecific information, news on member services and technology, as well as marketinformation Every month, about 200 copies of this newsletter are printed and delivered.The Association also holds seminars and trainings to give members experience inbusiness development, management and production The group acts as a connecting

point among the member businesses when they need to expand their access to larger

or more competitive markets, connecting them with international clients and in certaincircumstances protecting their legal rights, such as in the recent EU dumping caseagainst Vietnamese shoes and leather

Another of SLA’s strengths is trade promotion In partnership with the Ho Chi MinhCity Investment and Trade Promotion Center (ITPC), SLA helps members to participate

in international footwear exhibitions such as GDS in Dusseldorf, Germany, “VietnamDays in France”, SOURCE IT in Hong Kong, as well as local trade shows like A&FEXPO 2005 It has also been instrumental in establishing a series of export showroomsfor leather and shoes

Fund Membership Fees: 66%Other Fees: 34%

Services and

Facilities

Line

Membership LEFASO, HCMC Union of Business Associations

Representative Mr Vu Van Cham, Chairman

Contact 185 Lý Chính Thắng, TP Hồ Chí MinhTel: 08-2905045Fax:08-2905023sla.org.vnsla@hcm.fpt.vn; sla@sla.org.vn;

Turning points

Export showrooms for leather and shoes: an initiative for trade promotion

When the EU, a traditional export market for Vietnamese goods, heightened protections

on its own shoe/leather industry by filing a dumping case against Vietnam, producershere had to look for the new markets They reached out to Japan, Russia, ASEAN,Eastern Europe, the Middle-East and Africa The goal was to meet a target of 470million pairs of shoes and sandals with total export revenue of US$3.3 billion So in

2004, SLA worked with the ITPC to organize a series of showrooms as a connectingpoint for contracts with international partners

Then, in 2006, competition heightened, this time from China with very low prices, andwith the WTO, while the EU dumping case refused to abate

“Even Vina Giay, a strong local shoes brand, had to spend time to study the China market to develop a business strategy with the WTO They decided to change strategy to move to high-end products to be able to compete with Chinese products”.

- Vu Van Cham, founder of Vina Giay

The showrooms and exhibitions became more important as a focal point SLA and ITPCalso worked to improve member competitiveness via an Export Business Portal andCustomer Contact Center They initiated programs assisting in design and offering talks

on industry trends, giving presentations to groups of customers The Association alsooffered workshops to introduce new garment and shoes markets, and expand exports.Then, in 2005, 150 businesses participated in an expo that attracted 2,800 visitors, a 20%increase over 2004 By 2007, there had been four expositions and companies had signed

53 contracts with partners from the US, Canada, Japan and Eastern Europe for a totalvalue of US$ 4.63 million

“This direct display showroom is a good approach in combination with the business

portal and internet-based business transactions to support businesses in introducing their products to buyers in international markets.”

-Vu Kim Hanh, Director of ITPC

Lessons learned

• By organizing a series of export showrooms, SLA provided its members withvery clear benefits Their products got exposure to international customers andvisitors locally at much lower cost And small businesses in shoes and leatherwith limited access to market information (many of them have no Internetconnection) benefit from information consolidated and disseminated by theAssociation via newsletter, seminar and workshop

• Yet services provided by SLA are still, in general, limited While trade

promotion and information are strong, other supporting services, such as

training and consulting, are weak This is due to time constraints and staffing.Infrastructure and facilities are lacking as well While a website is under

development, a small office with basic facilities for two staff is not enough toserve the needs of the organization’s nearly 200 members And the newsletter,which is set to be printed in color, is still behind

• Finally, SLA is too dependent on too few board members The current officeand facility of the association is substantially subsidized by the Chairman.Among the Vice-Chairmen, only few have time for association work Althoughthe chairman has a strong voice with government, these issues still force

development through a bottleneck

Binh Phuoc Cashew Association

Binh Phuoc Cashew Association

How much government participation is too much?

To address the problem, Binh Phuoc sought to gather cashew businesses under acommon body to stabilize purchase prices and ensure quality Thus was born the BinhPhuoc Cashew Association (BPCAS) in 2005 It has an executive board including nineexecutive members, three of whom are women The board also includes a chairman andtwo vice chairmen as well as a secretary

BPCAS has very strong local government presence, however The chairman of theassociation is also the director of the local Department of Industry (DOI) Most otherkey personnel are also from the DOI and the organization’s charter states that thepresident must not be a business owner As a result, the group leans heavily towardgovernment management The association has 78 member businesses (23 run bywomen), most of them private Some members sit on sub-executive committees, such asthe Purchasing Committee, a Finance Committee and a Monitoring Committee

The group has almost no strategy to attract new members and the members that they doretain contribute membership fees to fund administration This is the major source forfunding, collected according to quantity of cashew sold each year, at about VND 1,500per kilogram In addition, the association also receives donor funding from projects such

as PRISED It has no revenue-generating services of its own Nor does it have an office

or full-time staff Any administration is part-time only

Member services

BPCAS has made some effort to provide services to its members It has begun to providetrainings in business management and is providing market information, especially priceforecasts on the international market These are in the form of a newsletter with theVietnam Cashew Association (VINACAS) It also provides technology support to

farmers by collaborating with the Southern Agricultural Science Institute and ProvincialDepartment of Agricultural and Rural Development The association also proposed,and received, approval from the provincial Council for Science and Technology forfinancing the research and invention of cashew core and ‘shucking’ (shelling) machine.

The Association also advocates that the Provincial People’s Committee supportbusinesses with greater capacity as the core exporting force in the province while trying

to channel smaller businesses together to provide raw cashew for larger exporters Thereare also plans to develop the Binh Phuoc Cashew brand and outline standards for cashewnuts

But to date, the most important function of BPCAS has been to push for common priceand standards on raw cashew to stabilize revenues and ensure export quality It hasproposed regulations on organizing the purchasing of cashew in which each businessregisters and reports purchase price and agrees common procedures on transport

An opportunity for expanded coverage

The concept of greater member services may still, however, need more promotion,

particularly among members who may not yet see the benefits “Currently, we don’t

need any information for the cashew association We buy when we have agreement between buyers and sellers," said one agent of a large-scale cashew purchaser.

Line

Membership Vietnam Cashew Association

Representative Department of Industry

Contact

Mr Ho Van Huu, Chairman of Binh Phuoc and Senior Expert of BPCashew Association Office of Department of Industry14th Highway,Tan Phu Commune, Dong Xoai Town, Binh PhuocTel: 0651 887742Fax: 0651 879 199

Turning points

Stabilizing price and quality by monitoring the process

At the beginning of 2006, cashew producers in Binh Phuoc were facing a poor crop due

to foul weather with high winds and unseasonably heavy rains Output dropped 20%over the previous year Quality also suffered and much of the crop contained ‘extraneousmatter’, such as floating (flat) nuts Many agencies in the lower Tier 1 and Tier 2 alsobegan to soak their stock in water to make it swell and increase weight, hoping it wouldappear as added volume This only drove down quality

Unfair price competition among companies also crept into the market, as did several

‘short-term’ purchasing agents All of this further drove down quality “We were buying

from farmers at VND 8,500 VND per kilo Suddenly, the agents jumped in to buy at 8,700 per kilo Then they mixed cashew with extraneous matter and sold it back to us at 8,500 per kilo But the actual price should have been from 9,500 to 10, 000,” said Mrs.

Phan Thi My Le, Director of My Le Ltd Company

Then, at a conference in 2006 in HCMC, VINACAS strongly reiterated to members tobuy cashew at an agreed price of VND 8,000 per kilogram and not to buy low qualitystock with extraneous matter and floating nuts, to ensure the export quality Membersthen reached an agreement on pricing and standard quality This they broadcast toother members and even farmers via radio spots funded by ILO-PRISED The resultsexceeded expectations Local government also supported the movement, offering to

examine and supervise lots and enforce strict fines for price fixing and adulteratedmaterials.

As a result, price manipulation dropped significantly and export quality jumped Pricesstabilized at VND 10,200 per kilogram on average over the VND 9,500 of the previousyear This price, though higher, ensured profits for processors Product for export sold atUS$ 4,341 per ton over the US$ 3,674 of the previous year By the end of season, BinhPhuoc had purchased, processed and exported about 100,000 tons of cashew for export,selling the rest domestically

Lessons learned

• Stabilization of price and quality are crucial to Binh Phuoc cashew processingand exporting companies By guaranteeing these factors, BPCAS can help itsmembers to ensure the profitability And with the right kind of help from thelocal government, BPCAS has the means at its disposal to act as an effectiveintermediary among members Yet this still needs improvement and

government partners would see far greater results if they listened to, and actedmore swiftly on, feedback from members

• BPCAS also needs to close gaps in its management structure, staffing andfacilities Where the strong government oversight is a boon, it can also be ahindrance BPCAS’ high dependency on the local government puts it at oddswith many members, who may feel that their specific interests are not

addressed With DOI personnel on the board, members may feel the association

is simply another government body rather than a transparent, independentsource of technical support Here, VINACAS would be a valuable partnerparticularly in organizational resources For example, members need marketinformation They do currently receive this in the form of notices and a

newsletter, but it is from VINACAS rather than from their home association.BPCAS only acts as the medium, and then at a less dynamic level than whatmembers need

• Ultimately, the way forward on all of these issues may be by hiring full-timestaff independent of DOI This would afford members greater focus on

management, which would allow for collection of membership fees, whichcould in turn be used for trainings The support of the DOI and other

governmental offices would still play an important role in the development ofBPCAS as well

The Hanoi Union of Associations of

Industry and Commerce

The Hanoi Union of Associations of Industry and Commerce

Big plans ahead for Hanoi’s private sector

Background

The Hanoi Union of Associations of Industry and Commerce (HUAIC) today is a

product of the Doi Moi era, when government policy in Vietnam shifted toward open

market reforms It functions as a facilitating institution for businesses in the marketeconomy, representing and protecting their legal rights and offering informationexchange among members and government partners HUAIC promotes trade investmentand cooperation among businesses, facilitates business ventures with foreign investors,and provides services such as brand building and competitiveness training

The first Hanoi industry and commerce association dates back to 1956, led by what was

known in the terminology of the time as ‘nationalist bourgeois’ Bui Gia Hung This

association was mandated to mobilize the industrial and commercial sector to supportthe private and capital reform policy The association continued during the war but was

dissolved in 1975 Ten years later, Doi Moi again allowed people to go into business

for themselves but after a year there were only about 20 private business, all factories.Then the Politburo issued a decision allowing small business owners and individualmanufacturers to form an association In early 1989, businesspeople in the city thenproposed establishment of their own representative body under the name of the HanoiIndustrial and Technological Association Word of the new association attracted theinterests of more small business owners and after a great deal of effort, in 1996 HUAICwas born

HUAIC has been very active in advocating for the legal and business environment Itsrepresentatives now participate in drafting or revising trade law, laws on banks andcredit organizations, tax law, corporate tax law, VAT, land laws, the Enterprise Law andInvestment Law The Association also conducts market research and has participated inseveral studies together with the National Economics University and other institutes

Member services

Mapping the future

HUAIC was instrumental in preparing the plan for the South Thang Long IndustrialPark, where it seeks to provide spaces for its members And through its Trade PromotionCentre, the Association has been successful in matchmaking between businessesdomestically and internationally Hundreds of companies have received support todesign projects, conduct market research and attend foreign trade fairs.

The group established its Trade Promotion Center in 1998 when no agencies, not eventhe Ministry of Trade, had such a facility The center is administered by the Association

It is its own legal entity, has its own seal and generates its own finances, and aftereight years has proven its role as a bridge between local enterprises and domestic andinternational markets Hundreds of enterprises have received funds to conduct marketresearch or take part in trade fairs both domestically and abroad

Before the launching of the current information portal, HUAIC has also collected some10,000 legal documents and several hundred thousand pages of materials for businessresearch

Access to credit and financial support

The Association has established relations with organizations that support domesticand international enterprises, such as the Danish International Development Agency(DANIDA), Mekong Private Sector Development Facility (MPDF) and the Japan Bankfor International Cooperation (JBIC) Once members have established relations withenterprises they turn to direct contact and only return to the Association when necessary.Over 30 enterprises have received $2000 to $3000 for grants from DANIDA to developbusiness partnerships in Denmark Over 20 enterprises have received loans of VND

1 to 3 billion each from MPDF as well, and 20 enterprises have received loans ofapproximately VND 55 billion total from JBIC to expand production

Partnerships

The Association has established dynamic relationships with many domestic andinternational organizations, including the Beijing Industry and Trade Association andother Chinese groups to facilitate business on both sides It has also been active in thefollowing:

• Partnership with ZDH (Germany)

• Partnership with the Asia Foundation (U.S.)

• Works with the Asia World Research Institute (Japan) to recruit mechanics andwelders to participate in technical training courses

• Partnership with JETRO

• Works with IMF and the World Bank in creating a more favorable environmentfor business through annual business forums in Vietnam

• Participates in linkages between business associations of ASEAN and Indiachaired by the Prime Minister of India.

HUAIC has also joined with domestic research institutes and associations such as VCCI,the industry and trade associations of Ho Chi Minh City, Dong Nai, and Can Tho, andassociations in steel, tea coffee, sea food and wood to exchange information and toorganize conferences, workshops and dialogues

• Promote trade and investment

• Promote business linkages and cooperation

• Provide training services

Services and

Facilities

• Trade and Training Promotion Centre

• Legal Consulting Service Centre

• “Doanh nghiep & Kinh te thu do” Newspaper

• Infrastructure Consulting Centre

• Pro-poor Fund (planned)

• Business Development Research Institute (planned)Line

Membership City Fatherland Front