All the questions asked in these sectors mostly identify information about how much assistance and support all SMEs receive from infrastructure, current export promotion networks, relations with the government and public services.
As globalization is the current trend with fast growing of business communication, E-Commerce is now considered as a vital tool of all business transaction in internationalization. Therefore, information on E-Commerce usage by the SMEs, and how they exploit E-Commerce serving their international business activities is included in the questionnaire.
Figure 4.3: Application of E-Commerce
Internet using
Internet using
yes no
Percent
80
60
40
20
0
30 Table 4.12:
Mean %Total sum
Under 1 billion VND (66,000USD) (11) .27 8.3
From 1-5 billion VND (66,000-330,000USD) (26)
.81 58.3
From 5-10 billion VND (330,000-660,000 USD) (13)
.92 33.3
Total .72 100.0
Private SMEs .70 58.3
SOEs .75 41.7
Total .72 100.0
Figure 4.3 shows that about 70% of the companies develop their import
& export activities through E-Commerce. While the share by ownership does not show much difference between SOEs and PSMEs, the share by firm size indicates a significant gap in E-Commerce accessibility of small and medium enterprises. Twice as many of medium-sized companies compared to small companies use E-Commerce intensively in their business day to day. If E- Commerce is seen as a rough indication of internationalization level of the firm, this result may confirm the observation that as the firm expands its operation, it will use the E-Commerce more intensively.
Moreover, there is a quite high proportion of firms saying that the main reason for using E-Commerce is to seek market information and trading partners. It is a positive sign of SMEs‟ active role in looking for potential co- operation. This finding differs from the conventional picture when SMEs seemed very reluctant to co-operate with new partners, especially international ones. Perhaps experience has taught them that co-operation in a
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narrow sense and internationalization in a broader sense increase their survival chance in an increasingly competitive business environment worldwide. The evidence also shows high demand of SMEs for accessing market information and potential partners where the government support can help SMEs most through its export promotion network.
Table 4.13: Reasons for not using E-Commerce
Mean Reason for not using E-Commerce is high cost .14 Reason for not using E-Commerce is helpless .10 Reason for not using E-Commerce is lacking internet using
skills
.06
Other reasons .02
The „high share of using E-Commerce but low intensity of using it‟
status can be explained by two reasons. First, E-Commerce charge is so high that most SMEs, especially small enterprises, seemed reluctant to use it. This justification seems obvious given the fact that so far, Vietnam is still having relatively very expensive charges if using E-Commerce.
The second reason is SMEs‟ lack of E-Commerce advantage awareness. They do not even know very well the advantages which can bring about when using E-Commerce. Then, there comes the lack of necessary knowledge to exploit the benefits of E-Commerce effectively. The survey shows that 14 firms (or about 25.5 percent of the sample) do not have access to E-Commerce, of which 7 firms specify the reasons as high operating cost (14.3%), ineffective exploitation or helpless usage (14.3%) and lack of knowledge of exploiting the benefits from it (42.9%). In other words, the second reason accounts for more than half of firms without E-Commerce access.
32 4.1 Utility provision
Table 4.14
N Mean
(Percentage)
Number of times of power cuts 41 12.8
Number of times of water interruption 46 11.5
Number of firms having generators 50 10(20%)
Number of firms having wells 50 15(30%)
The survey reveals that on average, each firm suffers almost 13 times (per year) or 1.35 times (per month) of power cut and 11 times (per year) or 0.91 time (per month) of water supply cut, but without financial data, the loss for the firm of those interruptions can not be analyzed. It is also not useful to stratify this problem by types of the firms (either by ownership, firm size or business activities), because utility supply cut, due to its weak connection or transmission systems, supply shortage or the like, often affect a certain area without discriminating any firm located in the area. Practically, however, utility supply interruption may cause different levels of loss on different types of firms. For example, it is reasonable to believe that the loss as a result of water supply cut of agro-processing firm may be higher than that of handicrafts firms, or textile and garment firms may suffer more from power cut than handicrafts firms do. But more interesting is to look at the firms‟
preparation of electricity generators or having their own wells, which is seen as proxy measure for the reliability of public utility provision.
The Table 4.14 suggests that there are still 20 percent of firms prepare for themselves power generators and 30 percent of firms having their own wells. For firms located in Hanoi and adjunct areas where utility supply is considered best in the country, these figures appear to indicate that more
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effort is still needed for ensuring a stable utility provision from the public sector.
4.2 Transportation facilities
Similar to utility, transportation facilities is another factor that concerns SMEs‟ operation. However, because of massive government investment on transportation facilities over the last decades, transport infrastructure system in Vietnam has been upgraded dramatically. This definitely helps easing the burden for SMEs in their operations. This judgment is supported by evidence in Table 4.15
Table 4.15: Difficulties in transportation
SMEs Mean % of Total
Sum
Under VND1 billion (VND66,000) (11) 2.00 23.7
From VND1-VND5 billion (US$66,000-330,000) (26)
1.81 50.5
From VND5-VND10 billion (US$330,000-US$660,000) (13)
1.85 25.8
Total 1.86 100.0
Private SMEs 1.87 60.2
SOEs 1.85 39.8
Total 1.86 100.0
According to table 4.15, on average all the companies regardless of types of ownership do not see public transportation facilities as obstacles to their export. Looking at this issue from the firm size classification also provides rather similar findings with the mean of 1.86, yet small companies still see it as a minor difficulty. But overall, most of the companies feel quite comfortable with public transportation facilities.
34 4.3 Export promotion network support
In their internationalization process, SMEs require a lot of support from public and private export promotion networks. This is especially true for Vietnamese SMEs, both the SOEs and the private enterprises. The SOEs were isolated from international exposure during the central planning era and the newly established private firms have not yet had much time to acquire experience in international business. Table 4.16 shows how SMEs gain support from various export promotion organizations.
Table 4.16
Main so urce of expo rt pr omoti on
50 4.20
50 2.96
50 2.96
50 2.28
50 Sourc e of ex port
promotion inf orm ation f rom f or eign c lients Sourc e of ex port
promotion inf orm ation f rom gov ernment, orgnazat ion
Sourc e of ex port
promotion inf orm ation f rom Internet
Sourc e of ex port
promotion inf orm ation f rom f or eign embas s y Valid N (list wis e)
N Mean
Source of export promoti on i nformation vs Economic sectors
3.67 2.60 4.40 2.17
74.3% 52.7% 62.9% 57.0%
1.90 3.50 3.90 2.45
25.7% 47.3% 37.1% 43.0%
2.96 2.96 4.20 2.28
100.0% 100.0% 100.0% 100.0%
Mean
% of Total Sum Mean
% of Total Sum Mean
% of Total Sum Economic sectors
Priv ate SOE Total
Source of export promotion inf ormat ion f rom Internet
Source of export promotion inf ormat ion
f rom gov ernment,
orgnazat ion
Source of export promotion inf ormat ion f rom f oreign
client s
Source of export promotion inf ormat ion f rom f oreign
embassy
The above tables show that the most important source of information for SMEs is the foreign clients, followed by export supporting organizations and Internet (E-Commerce). However, the tables also show that for any source
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of information, PSMEs always have higher rates in percentage than SOEs. For example, while only 25.7 percent of SOEs gets information from the Internet, 47 percent from export promotion organizations, 37.1 percent from customers and 43 percent from foreign embassies; the corresponding figures for PSMEs are 74.3%, 52.7%, 62.9% and 57% respectively. However, looking into the mean scores of how important those support really are, we can see that for PSMEs support foreign clients is the most important and for SOEs support from Government and other export supporting organizations is the most important. This also shows that SOEs have higher mean scores in receiving important support from export promotion organizations. This probably can be explained by the fact that PSMEs are new comers in relation to SOEs and as a consequence when lacking direct support from the government, they must be more active in seeking ways to expand their business operations.
Another observation from the above table is that despite an extensive export promotion network exists in Vietnam; it does not present the most important information provider for PSMEs. All SMEs look to customers as the main source of market information.
Within the export promotion network, the survey shows that different export promotion institutions have different effectiveness in supporting the SMEs.
Table 4.17
Su ppo rt fro m expo rt pro moti on n etwor k
50 .46
50 .40
50 .22
50 .22
50 .14
50 No support
Support f rom VCCI Support f rom Viettrade Support f rom Local
export prom ot ion cent ers Suport f rom other
non-gov erm ent al business association Valid N (listwise)
N Mean
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Table 4.17 shows that VCCI is viewed as the main source of support in the export promotion network but not Vietrade (MOIT) even though it is supposed to be. In other words, organizations such as professional associations, product associations, and private export promotion organizations tend to play a minor role in the field.
While a number of enterprises confirm that they have received support from export promotion organizations, the relevant question is how effective this support is. The effectiveness is partly reflected in the answers to the question on how they gained their first export order. The data shows that 36.7% of the firms got the first export order from a foreign customer who visited the firm directly, 10.2% got it from participating in fairs and exhibitions, 14.3% from overseas outlets of the firms, and 20.4% through VCCI and MOIT.