Bây giờ lập dàn ý thì có
What are opportunities and chanllenges for businesses in your country when trying to
enter international market?
I. Introduction 200
Vietnam is one of the most dynamic economies in Southeast Asia and is
experiencing significant economic growth. According to Trading
Economics, Vietnam's GDP increased by 5.05% in 2023, and saw a year-on-
year increase of 5.66% in the first quarter of 2024. Despite the COVID-19
pandemic, Vietnamese businesses have shown resilience and the country has
maintained economic growth. With stable economic growth, a strategic
location, competitive labor costs, and a stable political environment,
Vietnam has become an attractive destination for foreign direct investment
(FDI) from countries like Korea, Singapore, Japan, and Taiwan.
In recent years, international economic integration and efforts to reform the
investment and business environment have helped Vietnam affirm its
position in the international arena and attract investors. Vietnam has actively
participated in many free trade agreements (FTAs) and is a member of many
international organizations. According to the WTO Center, to date, Vietnam
has signed 13 FTAs and is currently negotiating 3 more FTAs. This
integration has opened new markets for Vietnamese businesses and boosted
the country's economy, shaping the business landscape and promoting
economic development. International integration brings opportunities for
Vietnamese businesses but also poses many challenges.
Introduce
In the era of globalization, businesses are increasingly expanding their vision beyond
national borders to penetrate international markets. This trend is especially evident in
Vietnam, a rapidly growing economy in Southeast Asia. While the international
market offers many opportunities for growth and expansion, it also poses unique
challenges that businesses must overcome. This article explores the opportunities and
challenges for Vietnamese businesses when trying to penetrate international markets.
Opportunities for businesses to participate in international markets
-One of the most important opportunities for Vietnamese businesses when entering
international markets is market expansion. By reaching out to international
customers, businesses can significantly increase their customer base, leading to
increased revenue and profits.
+st, regarding tariffs, businesses can access the markets of ASEAN countries with
preferential tax rates.
Specifically, more than 97% of tariff lines in the tariff schedule will be eliminated
from January 1, 2018 and nearly 3% of the remaining tariff lines will remain,
including (i) the group maintaining the tax rate of 5% (sugar, rice, chicken, pigs, eggs),
(ii) the group maintains the MFN tax rate (cigarettes, explosives, guns, fireworks,
medical waste).
Second, trade issues will have fewer barriers. With non-tariff issues such as import
licenses, food hygiene, safety and other requirements, countries within the framework
of the agreement will try to reach an agreement to limit the issuance of tariffs to
minimize obstruction.(https://vietnamtimes.org.vn/opportunities-and-challenges-of-
vietnamese-businesses-in-international-market-68789.html)
+espite economic uncertainty, Vinamilk, Vietnam's leading dairy brand and
the sixth most valuable dairy brand globally, has shown its determination to expand its
global reach by actively seeking new export markets. (Vinamilk Eyes International
Business Diversification Amidst Economic Challenges, Business News - AsiaOne)
-The first one is the opportunities to access the international market: In the
international integration stage, Vietnamese SMEs have a chance to widen their scope
to do business (Ngo, 2016; Nguyen, 2019). There are many opportunities for
Vietnamese SMEs in expanding into the export market. Vietnam is currently focused
on attracting Foreign Direct Investment (FDI) and actively participating in Free Trade
Agreements (FTA). This has shown strong commitments on improving the investment
environment and protecting intellectual property rights. When large international
corporations invest in Vietnam, SMEs have the opportunity to participate in the flow‐
on benefits in the global value chain. Vietnam now has access to the international
market for goods and services in all member countries attracting reduced import tariffs
and non‐discriminatory service sectors.
(https://www.jobmer.org/2020/jobmer_vol4_issue2_full_issue.pdf#page=35)
+Market Expansion: Market expansion refers to the process by which a company
enters into a new geographic area or industry to conduct its business. It's a growth
strategy that businesses use when their growth peaks in existing channels. One of the
most compelling opportunities that international markets offer Vietnamese businesses
is the chance to reach a broader customer base. This expansion allows Vietnamese
enterprises to tap into new markets, with millions of potential customers. For instance,
Vietnamese rice, renowned globally for its superior quality, has found a lucrative
market in the Philippines. The Southeast Asian nation is one of the top importers of
Vietnamese rice, which underscores the potential of international markets for business
expansion. Market expansion not only enables businesses to increase their customer
base but also allows them to increase their production scales, leading to improved
profitability.
Diversification: Diversification is a strategy that involves entering into new markets or
industries that a business was not previously involved in, while also simultaneously
creating new products for that new market. This is a significant strategy businesses use
to increase their growth and reduce their risks. International business provides an
opportunity for diversification, which allows businesses to spread their risk across
multiple markets. This reduces their vulnerability to economic fluctuations in any
single market. A prime example is Vinamilk, one of the leading dairy companies in
Vietnam. Vinamilk has successfully diversified its operations across several Asian
markets, ensuring steady revenue streams even when the domestic market is wavering.
This strategic move not only helps in risk mitigation but also opens up new avenues
for growth and expansion
-Secondly, opportunities to access advanced production technologies (Ngo, 2016).
Participating in large markets with investment from bilateral and multilateral trade
agreements, SMEs will have the opportunity to innovate systems and technologies to
produce products that meet the quality of the markets.
+We talk a lot about productivity, quality, technology, Industry 4.0 and digital
transformation but the core still lies in three following issues: First, the supply chain is
very closely linked to trade, investment and movement of different resources. The
government plays a vital role in creating a favorable environment for businesses.
Vietnam has integrated deeply with the world’s leading partners and markets. This is
an opportunity and Vietnamese businesses are encouraged to “learn how to play with
people who are better or who are the best” to learn, improve competitiveness and
gradually increase the value that they can create.Việt Nam gia nhập kinh tế quốc tế sẽ
tranh thủ được kỹ thuật công nghệ tiên tiến của các nước đi trước để đẩy nhanh quá
trình công nghiệp hóa, hiện đại hóa đất nước, tạo cơ sở vật chất kỹ thuật cho công cuộc
xây dựng CNXH.
+Technology environment: Compared to other countries in the region, Vietnam is not
highly appreciated for the technology environment. However, in recent years the
situation has improved somewhat. That is the rapid growth of laptops and smart
phones to replace obsolete products and meet the development needs of human
society. Taking this opportunity Samsung took part in the battle when in turn launched
quality products with superior technology. Micro factors impact on the strategy of
Samsung in Vietnam market
-Thirdly, there is an opportunity to improve the quality of the workforce (Ngo,
2016), due to the higher quality and volume requirements of the international market.
SMEs should not only consider the improvement of their technology but also they
should improve the quality of the workforce to meet the requirement of a higher
international standard
+Another opportunity lies in enhancing brand recognition. An international presence
can significantly enhance a company's reputation, making it more recognizable to
consumers around the world.
+Diversification is another important opportunity. Operating in multiple markets
allows businesses to spread risks and reduce dependence on a single market.
+Furthermore, exposure to international markets can help businesses access new ideas
and cutting-edge technology, promoting innovation.
+Finally, international trade can contribute to Vietnam's economic growth, creating
jobs and improving living standards.
Challenges for businesses when participating in international markets
Besides those opportunities, Vietnamese businesses also face many challenges when
participating in the international market.
(One of the main challenges is dealing with cultural differences. Understanding and
adapting to the culture, language, and business practices of foreign markets can be
difficult.
Legal and regulatory barriers also pose a significant challenge. Complying with
foreign laws and regulations requires a thorough understanding of the legal landscape,
which can be complex and time-consuming.
Rising costs associated with international trade, such as shipping and tariffs, can also
pose challenges.
Political risks, such as instability or unfavorable government policies in foreign
markets, can also pose risks.)
-Finally, Vietnamese businesses must be ready to face fierce competition from
reputable businesses in foreign markets.
+urrently, over 97% of Vietnamese businesses are small and medium-sized enterprises
(SMEs), with weak financial resources, vulnerable to market fluctuations, and low
competitiveness compared to international peers.However, the biggest shortcoming of
most SMEs is their lack of awareness and proactivity. Some companies still operate
with short-term thinking, engage in opportunistic practices, and fail to plan
strategically for the long term, resulting in a lack of consistent investment in both
human and financial resources. These companies also often have little initiative to
seize opportunities, improve their awareness and capabilities, and expand their vision
for greater achievement.(https://hanoitimes.vn/tet-thinking-big-vietnamese-enterprises-
aim-high-to-secure-success-326069.html)
Additionally, according to Chu, (2015); Nguyen, (2019), The role of the SME sector is
very crucial in developing the society such as providing more jobs, reducing poverty
and a much stronger economy. The SME sector takes a vital role not only to develop
the Vietnamese economy but also to provide additional support creating stability
society. However, in the international integration stage, Vietnamese SMEs still have
some challenges that they need to tackle to survive and adapt to the market. According
to Mwika et al., (2018), SMEs are more effective now in the face of globalization
which has become more influential within the global trading market. SMEs have
benefits from the international integration but they also have many disadvantages as
below mentioned: Firstly, the challenge of Vietnamese SMEs is highly competitive in
international markets (Ngo, 2016; Dang and Nguyen, 2017; Nguyen, 2019). According
to Tran, (2019), Vietnamese SMEs lack of competitiveness in the global market.
Therefore, SMEs should improve their competitive advantages in the market such as
they have to innovate their products/services to complete with their rivals in the
market; improving their technology and overall restructure within SMEs. Secondly,
Vietnamese SMEs have many limitations in management skills and methods of
operating enterprises in the international integration (Chu, 2015; Nguyen (2017); Dang
and Nguyen, 2017; Vu et al., 2019; Nguyen, 2019; Tran, 2019). Additionally,
according to the Vietnam Institute for Economic and Policy Research, despite SMEs
development in past decades, there is nearly 56 percent of SMEs that do not have
sufficient knowledge in business and corporate management, financial management,
and business law (Nguyen, 2019). So that they can survive in the global market,
Vietnamese SMEs should improve the management capacity to complete with
international corporations (Nguyen, 2019). Therefore, to survive and adapt to the
global market, Vietnamese SMEs should change their management process and they
need to find out which management factors that support their firm performance to
catch up with the trend of the global market. Thirdly, Vietnamese SME’s have a
financial limitation within the management of their cash flow incorporated in the
overall budget process development and implementation (Chu, 2015; Tran (2015); Vu
et al., 2019; Nguyen, 2019;). SMEs faces many challenges in the globalization era
including; absence of adequate and timely finances, limited capital as well as access to
international market and knowledge (Anand, 2015; Mwika et al., (2018). The
limitation in financial resources is one of the major barriers for SMEs in terms of
integration (Chu, 2015; Dang and Nguyen, 2017; Nguyen, 2019). Additionally,
according to Nguyen, 2019, Vietnamese SMEs need to adopt the world best practices
in developing budget process for their enterprises, giving added support to the
performance of business and management. Budget setting in SMEs is not linked to
reality and it affects the overall business and management (Chu, 2015). If the budget
process is not linked to reality or the mistakes come from the budget process, these
activities of the business will generate waste to the budget (Doan et al., 2015).
Additionally, there is asymmetric information between the management and
employees to set up the overall budget for business and management within SMEs.
Therefore, to improve the quality of the budget setting, SMEs should improve the
overall budget process adapting it for suitability to better planning and implementation
of all the activities of the business, management, operation, and manufacturing, etc.
Fourthly, according to Nguyen, (2019), It is evident that SMEs need to improve their
skills to enable them to develop and implement the systems and procedures for better
business planning and increase their capacity for managerial control. The functions of
planning and controlling take a vital role to support the goals and objectives for the
SMEʹs development. Therefore, SMEs have a limitation in developing and
implementing capacity that should be improved. There are many areas that SMEs need
to improve overall to their business planning: market analysis, competitor analysis,
developing and implementing a good corporate vision and mission statements to their
enterprises” (Chu, 2015, Nguyen, 2019). SMEs are aware of the importance of
business planning. However, they have not focused on making a complete business
plan in its own right to bring optimal efficiency, but often give sketchy plans due to
lack of resources, human resources and time. If SMEs do not have a good business
plan, no matter how great their business ideas are, it will be difficult to succeed to any
degree. A good
-Second, in a difficult and uncertain context, the risk of supply chain disruption is
always imminent (https://vccinews.com/news/49946/vietnamese-businesses-
navigating-challenges-capitalizing-on-opportunities-and-embracing-new-trends.html)
+Vietnam export markets are relatively concentrated Vietnam’s exports rely heavily
on five markets. In 2020, about 75 percent of Vietnam’s final product exports were
destined for the United States (37 percent), the EU (19 percent), China (8 percent),
Japan (7 percent), and Korea (6 percent). The United States and the EU were the
largest markets for Vietnam’s exports of communication equipment and computers.
The United States was the top market for Vietnam’s traditional, labor-intensive, low-
tech products such as apparel, furniture, and footwear. China was a major market for
Vietnam’s seafood and fruit exports, while Japan and Korea were for Vietnam’s
apparel exports. Vietnam’s export performance is vulnerable to demand shocks in
these key markets.(Vietnam's Integration in Global Value Chains: Opportunities and
Vulnerabilities (usitc.gov))
-ast but not least, every entrepreneur and every business need to have a timely plan to
stay ahead of new trends and build their reputation and brand. Digital transformation,
scientific and technological application, innovation and personnel quality need to be
enhanced. And, the special focus is building culture - the corporate gene and the
foundation to ensure their sustainable development.
+ere is underinvestment in building corporate culture and complying with laws and
regulations. A business mindset based on relationships, rather than one based on
principles and well-thought-out plans, is still a deep-seated problem. This is the root
cause of hesitation and uncertainty in business operations over tim
+. Sự khác biệt về văn hóa và ngôn ngữ cũng có thể đặt ra những thách thức đáng kể.
Ví dụ, các công ty phần mềm Việt Nam mở rộng sang Nhật Bản đã phải đầu tư rất
nhiều vào đào tạo văn hóa và kỹ năng ngôn ngữ để giao tiếp hiệu quả với khách hàng
và hiểu được yêu cầu của họ. Điều này thường dẫn đến tăng chi phí hoạt động và chu
kỳ phát triển sản phẩm dài hơn.
1. Cultural Differences: Cultural differences can pose a challenge for foreign
businesses trying to establish themselves in Vietnam3.
2. Corruption: Despite significant improvements in Vietnam’s anti-corruption
legal framework, corruption and administrative red tape within the government
is still a vast challenge for governmental consistency and productivity and for
foreign companies doing business in Vietnam4.
Absolutely, cultural differences can indeed pose a significant challenge for foreign
businesses trying to establish themselves in Vietnam. Understanding and adapting to
the local culture is crucial for successful business operations. This includes
understanding local customs, traditions, language, and business etiquette.
For instance, building relationships and trust is a vital part of doing business in
Vietnam. Business meetings often start with informal discussions, which are seen as a
way of building rapport. Also, the concept of “face” (or reputation) is very important,
and direct confrontation or criticism is often avoided to prevent causing
embarrassment or discomfort.
Moreover, the Vietnamese market has its unique characteristics in terms of consumer
behavior and preferences. Therefore, businesses need to conduct thorough market
research to understand the needs and wants of Vietnamese consumers.
In summary, while cultural differences can be challenging, they can be overcome with
proper understanding, respect, and adaptation to the local culture. It’s all part of the
exciting journey of going global! If you have any other questions or need further
information, feel free to ask.
Case study
A typical example of a Vietnamese enterprise that has successfully entered the
international market is Vietnam Dairy Products Joint Stock Company. The company
has expanded its operations outside of Vietnam to several Asian markets, ensuring a
stable source of revenue even when the domestic market fluctuates. This example
illustrates how Vietnamese businesses can take advantage of the opportunities offered
by international markets while also addressing related challenges.
Conclusion
In short, although the international market brings many opportunities for Vietnamese
businesses, it also has many challenges. Careful planning and research are vital for
businesses considering entering international markets. By understanding and
addressing these challenges, Vietnamese businesses can exploit the enormous potential
of international markets and achieve sustainable growth.
