Competitiveness analysis of small and medium-sized enterprises in the Northern Rural Areas of Vietnam
2011
Nguyen Hung Anh | Tran Huu Cuong | Chu Thi Kim Loan, Hanoi Univ. of Agriculture (Vietnam). Dept. of Marketing
This paper attempts to analyze the competitiveness of small and medium-sized enterprises in the domestic market as well as international market where globalization process recently has resulted in rapid increase of product movement, capital and labor. Analysis is conducted at enterprises level by using 'Resource Cost Ratio' (RCR coefficient) to identify evidence implying competitive advantage. In order to question which has most influenced the enterprise's competitiveness, ECM model (error correction model) was used to quantify relationship between RCR and its factors contributed. Finally, some practical policy recommendations were offered to strengthen the competitiveness of enterprises. The results of the study revealed that most of agricultural small and medium enterprises are competitive, so as service enterprises. There is no case of competitive industrial enterprises. Enterprises from Hanoi are more competitive than those from other provinces in the North. In terms of legal form, more competitive are private, joint-stock, and foreign-invested companies, and less are state-owned and limited liability companies. Results from ECM estimation showed the direct influence of volume of sale, selling price, own capital and land on the change of RCR coefficient. Technical capacity and scale economies pose problems, particularly for small firms. The recommendations to enhance competitiveness are the government should ban unnecessary formalities in land hiring procedure and cut down interest rate to invest and upgrade production facilities in order to comply with more stringent standards.
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