Nam Dinh Small and Medium-sized Enterprise Association

Background

Nam Dinh is an agricultural province in the south of the Red River Delta. It has a population of about 2 million. Currently, there are about 2,000 enterprises in operation. Some are large ‘equitized’ state firms but most are small and medium-sized enterprises in agricultural production, small scale metalwork, handicrafts, garments and textiles. Nam Dinh was once centre of the textile industry during the subsidy era, but when subsidies ended the province suffered serious unemployment and the social problems that come with it.

From 2001 to 2004 GDP was 7.3%, much lower than the average in the Delta (10.5%), and Nam Dinh ranked second lowest (above Thai Binh). It was also near the bottom of GDP, at VND 4.47 million per year.

Yet despite this, private enterprise has grown 27.9% on average since 2001 while state sector growth has been just 14.2%. In 2001, local enterprises partnered with the Nam Dinh Urban Development Project and the Swiss Agency for Development and Cooperation (SDC) to found the Nam Dinh Private Enterprise Association. Just 58 businesses joined at first and growth remained sluggish due to limited resources; members repeatedly cited a need for greater coordination. So on April 24th, 2006, the Nam Dinh Small and Medium Enterprise Association (NADISME) was established as a result of non-stop lobbying and encouraging of businesses and local authorities. The Association fosters cooperation networking and mutual support. It also improves efficiency, protects the legal rights of members, connects SMEs with government authorities, improves business policy and fosters deeper integration into the international economy.

Member services

NADISME offers support and consulting services for SMEs. With support from SDC/Nam Dinh Urban Development Project, the Association has conducted a number of trainings on business law, preparation for WTO membership, production management, marketing and best practices. It has also bridged the public and private sector. In 2006, NADISME brought together the provincial Department of Planning and Investment, Department of Taxation, Department of Natural Resources and Environment, as well as other agencies to meet with the business community. The dialogue provided a platform for free and direct communication with policymakers.

Corporate responsibility is another of the Association’s strong points and members have organized trainings for disabled entrepreneurs to exchange information and raise awareness of government policy. And with the support of the Nam Dinh Urban Development Project, NADISME also posts vital information on www.nadisme.org.vn, although the site is yet to be finished.

But while trade promotion and business linkage are core elements in the group’s charter, members have yet to implement them formally. Currently, these issues are addressed mostly by the entrepreneurs themselves without any active support from the Association.

Turning points

At its inception, NADISME found that it needed an operating budget. But member dues were insufficient, so it established a business consulting company. This was a joint-stock company offering consultancy, training, and health services for businesses. In the future it will focus on health care, offering medical check-ups and health insurance. It will also open a clinic for member staff and monitor their health. This sort of onsite service has proven to be more affordable and convenient, and it meets WTO requirements on corporate responsibility.

The Association also provides the other following services:

• Supports establishment of new businesses (drafts company charter, business registration, tax registration, and official stamp).
• Trainings on selected management topics as requested by clients.
• Health care services for workers in factories, regular health check-ups, health insurance, emergency.

To date, the company has been successful. There are more clients seeking services. This helps build trust in the Association while guaranteeing an income to finance operations.

Human resources and local government support are the strongest points for NADISME. A former governor of the State Bank (now chairman of the Vietnam Association of Businesspeople) has endorsed it. The group has also won favor with the Alliance of Cooperatives, the Department of Taxation, the Department of Natural Resources and Environment, and especially the Department of Planning and Investment. It has now established sub-associations in three districts and one member has been honored among 100 typical enterprises receiving the Thanh Giong Cup. And at the lower level, NADISME has helped members explore more efficient use of materials, helping enterprises in Hai Hau District re-process waste materials from the production of mushrooms for cooking and medicinal purposes.

Lessons learned

• Public relations are still weak for NADISME and the group has just established a website to promote itself, although the site is yet to be completed. Members have cited a need for more interesting articles and enhanced advertising. The Association also needs to cultivate a deeper relationship with newspapers.

• Membership meanwhile, is, at 325, modest for a provincial level organization in an area with more than 2,000 businesses. Most current members are situated in the city or around district townships and efforts to reach remote and isolated areas containing more enterprises could be stepped up. Within the first six months of 2007, the Association enrolled only 20 members due almost entirely to personal encouragement by the chairman.

• With the support of the government and donor projects and with earnings from services, the Association can maintain and expand its programs, but human capacity and strategic development remain questions.