Jul 23, 2020 / 23:50

USAID supports Vietnam manufacturers in post-Covid19 supply chain realignment

The Hanoitimes - What companies in the supporting industries need most at the moment is the connection with customers, said an official of the Vietnam Association for Supporting Industry.

The USAID-funded Linkages for SMEs project (LinkSME) on July 23 aided the Vietnam Association for Supporting Industry (VASI) to hold the Manufacturing Match Making event 2020 to support local manufacturers to realign their supply chain post Covid-19.

 The Manufacturing Match Making Event 2020 serves as a platform to strengthen linkages among 16 lead firms sourcing in Vietnam and SMEs in local supply chain. Photo: USAID LinkSME

The volatile, uncertain, and complex conditions caused by the Covid-19 pandemic have negatively impacted the social and economic life of many countries, including Vietnam, a country with significant global integration. The Covid-19 pandemic, therefore, has severely affected the country's supply chains in the manufacturing industry.

“What companies in the supporting industries need most at the moment is the connection with customers,” said VASI’s vice chairwoman Truong Thi Chi Binh, referring to a survey conducted by the organization in the second quarter that showed a sharp decline in the number of orders due to Covid-19.

The Manufacturing Match Making Event 2020, therefore, would serve as a platform to strengthen linkages among 16 lead firms sourcing in Vietnam, including Thaco, Samsung Vietnam, Mitsubishi Motors Vietnam, Vietnam Outsourcing, among others and more than 60 SMEs in the local supply chain.

Corporate governance needs to improve

Inconsistent product quality and small-scale production are two major issues restricting Vietnam’s SMEs from joining global supply chains, USAID LinkSME Deputy Director Duong Thi Kim Lien told Hanoitimes on the sidelines of the event.

 USAID LinkSME Deputy Director Duong Thi Kim Lien. Photo: USAID LinkSME.

According to Lien, the linkage between Vietnamese SMEs and leading firms was weak, evidenced by the fact that the USAID LinkSME project had, from the very beginning, attracted 1,700 enterprises, 400 of which later qualified for the first round of evaluation. However, the figure later reduced to 80 after the on-site review, and 19 businesses were introduced to lead firms, resulted in 82 orders so far.

Notably, many manufacturers losing orders during the Covid-19 could not secure new ones. “Some SMEs now lose 40 – 80% of their orders and face the risk of being shut down,” Lien said. 

Lien also pointed to the fact that many SMEs do not have a long-term development strategy or specialized department in business operation, which could be the difference in having order flowing without any disruption.

“Therefore, with the aim to facilitate the supplier – buyer relationship, the USAID LinkSME project will, during the five years of the Project (from 2018 to 2023), enhance local SMEs capacity and upgrade quality of linkage with lead firms and promote their participation in manufacturing supply chains. Furthermore, from the process of supporting enterprises, USAID LinkSME would propose recommendations for the government to improve the business environment for the business community as a whole,” Lien added.