SME Business Associations in Vietnam: Eleven case studies (2007)

Background

For hundreds years, Bat Trang, on the north bank of the Red River, has been well-known for high-quality ceramic and pottery products. Visitors today see a very dynamic and active craft village that has become the symbol of vitality for the traditional crafts market carved into the long history of Vietnam.

Bat Trang traditionally produced crockery for the local market only. But gradually, foreign tourists learned about the village and began seeking out its products. Today, more and more visitors and crafts dealers are bringing Bat Trang products home, giving them a strong national and international reputation. The lasting result is that households, once the basic unit of production, are improving business practices and expanding into large companies. And perhaps most important, they are exporting more.

In recent years, production in Bat Trang has developed significantly to meet this increasing demand and at last count the village had over 60 small and medium-sized enterprises. A full 60% of the 1,000 households were involved in the ceramics business. Their products are now shipped worldwide including to highly competitive markets such as Japan, the US, Italy and Korea.

By 2001 the market had reached a level of development where producing families identified a need for a body with more power to protect the Bat Trang trademark and the rights of small and medium-sized production households. The Bat Trang Ceramics and Pottery Association (BTCA) was born, a voluntary social and professional association for businesses, entrepreneurs, households and other stakeholders to institute greater professionalism in all aspects of the business. Membership was extended to peripheral services too, such as trading houses and tourism in Hanoi (for much-needed foreign customers).

BTCA is a non-profit organization which is not an authority and does not interfere in the ordinary business practices of its members. It provides crucial services to its members and supports the development of the market.

Member services

BTCA members form a mixture of pottery and ceramics companies and households, as well as tourism companies and other supporting businesses. This forms a vital network at many levels. As a traditional village, Bat Trang attracts tourists for its historical and cultural role, and this network helps spread the word. The group also includes network members experienced in ceramics and pottery as well as international artisans to promote these products abroad. There are even press and PR components providing greater exposure.

Yet while BTCA strongly encourages all businesses and households in the village to join the association for the services it offers, they do not limit support to members only. If a business or household meets export standards and is certified by a quality control body, they may still use the BTCA brand name and export their products via the Association or via the newly-established Bat Trang Exporting Promotion Center (BTEP).

Partnering for growth

Understanding the importance of institutional linkages in the development of business associations, BTCA partnered with the International Finance Corporation (IFC), a member of the World Bank, which funded a US$15,000 project for small and medium-sized enterprises. BTCA has also received support form the Mekong Private Sector Development Facility, a program of the IFC, in promoting the Association through in-flight magazines on airlines bringing foreign tourists, flyers, and short promotional films in the EU and Japan.

In collaboration with the Hanoi Tourism Association, BTCA also invites tourists to Bat Trang to introduce the history of the trade and demonstrate traditional methods. Members work with fine arts associations such as the Hanoi Fine Arts Association and the Vietnam Fine Arts Association as well, to share experience and technology in handicrafts.

The association also has international connections. Together with the Jiangxi Ceramics and Pottery Association in China, BTCA organizes study-tours for about 20 members a year, and well-known Japanese artisans support members to attend trade fairs in Japan.

Other member services include:

• Updating members on new technologies in production e.g. more efficient baking technology and new shaping techniques.
• Connecting members to sign larger contracts.
• Supporting copyright protections.
• Moderating in labor disputes.
• Researching markets and promoting member products to international buyers typically beyond the reach of household businesses.

Carrying on tradition

“We help the households to send their children - the future artists of the village - to training courses on key skills for ceramics and pottery artists at reputable ceramic training agencies in Vietnam and abroad.”

-BTCA Chief of Office, Mr. Nguyen Trong Thu

The association has a training budget of VND200 million per year, of which two-thirds is provided by the Industry Extension Fund and the remainder by members. To complement traditional in-house training from one generation to the next, the association provides vocational classes in ceramics, shaping and painting. They have also partnered with the Hanoi University of Fine Arts to provide courses on sculpture and recently offered a three-month training on computer-aided 3D design and painting.

Turning points

The Bat Trang Export Promotion Center: Bringing members a world of possibilities in export

2004 was a difficult time for Bat Trang. Many producers had to shut temporarily because they could not find markets for their products. Their products had failed to compete on the international market and the prevailing traditional way of doing business wasn’t enough. In response, many companies in the village tried to develop websites to promote their products but without success.

Then BTCA partnered with the Mekong Private Sector Development Facility (MPDF) to develop the Bat Trang Export Promotion Centre (BTEP). This was a major step forward toward developing capacity in Bat Trang as well as good experience in brand promotion for small businesses in Vietnam. There now over 30 companies making use of the Center’s services.

BTEP, as an arm of BTCA, manages the Bat Trang brand on behalf of members, markets member products, and provides a wide range of back-office services to promote export. These include responding to buyer enquiries and orders, arranging shipment of samples, assisting in export packaging, quality control, export documentation, and shipment.

'This is a very big chance for the businesses and people in Bat Trang Ceramics Village to promote Bat Trang’s products to the world.”

- Mrs. Ha Thi Vinh, the Director of Quang Vinh Ceramics and Pottery

BTEP also keeps buyers updated on the latest developments in products and production capacity, working with suppliers to ensure that they meet buyer demand for quality, packaging, labeling and timely delivery. This kind of support is of great importance since producers in Bat Trang, while being skilled in ceramics and pottery production, have insufficient skills in foreign languages, marketing and trading, all crucial in the export market.

A new web presence

Following its establishment, BTEP developed a business portal at www.battrang-ceramics.org to support the free flow of business information, to search for information to disseminate to members, and to more easily introduce buyers to Bat Trang products. The portal presents a wide range of topics about sellers and their products and displays an online showroom. In addition, it allows buyers to place orders for sample products as well as to place orders for shipment. The site is also set to enable buyers to track their orders online.

Core BTEP services

• Customer – seller liaison. This is the most important function provided by BTEP, for both members and clients. Full-time staff are professionally trained, speak excellent English and have extensive understanding of Bat Trang products and manufacturers. They are able to assist buyers and sellers in all steps of export, such as inquiry, negotiation, ordering, packing, quality control, and delivery.
• Monitor’s producer designs and production processes to ensure they are in line with customer requirements.
• Arranges packaging of products from different producers and ensures that products and packages are ready for point-of-sale display. This conforms to standard packing sizes, uses appropriate packaging for ceramics and pottery and environmentally-friendly materials to suit customer requirements. BTEP assists in arranging freight to suit importers’ requirements either by air or sea, and consolidation or full container shipment. It also helps arrange insurance for all shipments against breakage or loss.
• Assists in quality control by reserving reference samples and guiding producers during the production phase. It also arranges full third party quality control including inspection, laboratory analysis and testing for compliance with company, national and international standards by international inspection companies such as BVQI, TUV and SGS (http://www.sgs.com/).

For each export support service, BTEP will charge local producers 3% of contract value, applicable for both members and non-members with priority given to members. In addition, it charges international importers a small percentage of the contract value. This is emerging as an important revenue source for BTCA as a whole.

Lessons learned

• BTEP was established just in time. 2004 was a difficult time for the Bat Trang ceramics producers. Many small producers had to close. Although many were quite dynamic in looking for markets both via traditional and modern methods, this did not bear fruit. Producers simply hadn’t grasped modern methods. And they developed only static websites, which, by virtue of their basic structure, don’t necessarily attract customers. They provide only limited information without allowing clients to place orders. But the online portal at BTCA now fills this gap.

• BTEP’s services are exactly what the producers from a traditional village like Bat Trang lack. Namely export services, which require proper foreign language ability, knowledge of export procedures and standard requirements in packaging beyond the capacity of local businesses.

• BTEP created an alliance of small, formerly competing producers to fulfill large orders. Individual producers no longer have to spend time searching for markets and negotiating with buyers. They may instead concentrate on production, their strong suit. Buyers are assured larger quantities, improved export procedures and greater quality control.
• Looking to the future, Vietnam’s accession to the World Trade Organization will further expose Bat Trang to international recognition of its brand name. This will benefit producers markedly, as larger foreign markets now have easier access to these products. But this will also create a greater need for legal protection of the Bat Trang trademark.

Background

The Can Tho Business Association (CBA) is a voluntary, non-profit, multi-sectoral organization. State-owned or private, large or small, Vietnamese or foreign, all are welcome. CBA was founded when Can Tho businesses perceived a need to have their own ‘proving ground’. They held the founding meeting on n January 28th, 2005. Shortly after CBA become the official partner of Business Edge (BE), a project of the Mekong Private Sector Development Facility (MPDF) to provide training courses to businesses in Can Tho and surrounding areas.

All of the members were company directors or business owners, both men and women, and soon proposed the idea to gather again and exchange ideas. They then founded ‘Business Owners Club’ as an organization under CBA. They also set up the ‘Business Owners Joint Stock Company’ in 2006. Though women members account for only 15% of CBA’s 159 members, they play an important role, especially in training and dissemination of information.

Major operating principles are voluntary self administration and financial independence. CBA is a self-funded association receiving no state support. All operating costs are financed by member service fees and contributions from businesses or individuals. Membership fees account for 40% and are contributed voluntarily every year at rates from VND 500,000 to 5,000,000. The other 60% mainly comes from trainings.

CBA’s executive board includes a president, five vice presidents, five executive members and a secretary general. The Association also has an auditing board. Five of the twelve executive members and one of three members of the auditing board are women. The General Secretary, who has executive charge of the office, is an SIYB

Member services

One of the major characteristics of CBA’s services is its concern for the development of women entrepreneurs. The Association has organized the Conference to Celebrate International Women’s Day, March 8th, in cooperation with MegaScience. It also held the conference, “Management Experience for Women Entrepreneurs” with backing from the Department of Culture and Information and the U.S. Embassy. They sent members as well to the Women Entrepreneurs Exchange and Business Visit along with the Ho Chi Minh City Young Business Association and Hanoi Young Business Association.

CBA effectively taps members for support and collaborates with other associations, for example, on developing its website. The Association has also partnered with the Ho Chi Minh City Young Business Association and the Hanoi Young Business Association to offer conferences, business visits and exchanges via networking, cultivating linkages with government bodies as well. And in keeping with best practices for a business association, CBA offers trainings, disseminates vital information, supports trade promotion and advocates for the legal rights of its members.

Turning points

Balancing tradition and innovation

Traditional, passive teaching methods have strong roots in Vietnam, and previous management trainings in Can Tho were no exception. While many trainers now offer a dynamic learning environment, some have relied on this passive teaching method with the result that participants lose interest and don’t retain the material.

“My staffs don’t want to go to the class. They said: Studying at the class is very ‘sleepy’ and cannot apply in reality. I used to send some staffs to some training courses and they got bored .”

-Director of Can Tho Branch of Marine Bank

Participants began citing a need for a more dynamic, participatory environment, and CBA resounded with changes, where the participants were more active and the communication was from both sides. The Association has partnered with Business Edge (BE), a project of the International Finance Corporation/Mekong Private Sector Development Facility (IFC/MPDF), to provide businesses with a new ‘problem solving’ approach. BE supports small and medium-sized businesses in developing their capacity for more competitive advantages. The program develops materials on business management, trains trainers and selects partners to provide businesses with services that involve participants rather than simply lecturing.

BE has developed its courses via several steps. First, content experts will visit SMEs to identify common problems. Then they develop content that focuses on individual solutions. These solutions must pass a test phase before use on the market. As the courses are very much problem-based, businesses lose less time in studying theory to find solutions.

“I studied this topic (Distribution) previously in a class held by an institution. However, after these training courses, I see what I can apply in reality.”

- Participant in a CBA marketing course based on the BE learning model

For the BE programs, CBA applies a ‘three-dimensional’ interactive training method via group discussion, case studies, role plays and games. Participants are encouraged to be proactive in coordinating with other participants under trainer instruction. They draw practical lessons and must develop an action plan by the end of the course. Trainers must be highly skilled in management and facilitation and must have practical management experience in the field. BE also has requirements for partners, in logistics for training courses, facilities and equipment as well as minimum and maximum number of participants and revenues per course. Partners must meet these requirements.

And now, in addition to the BE trainings, CBA also organizes its own trainings using the BE model. These have proven highly effective for entrepreneurs concerned with immediate, practical application.

“I am a farmer who runs a business. Previously, I thought I was very intelligent and not worse than anyone in business. But after attending this training course (Marketing - Money or Intelligence) I saw many problems which I needed to re-think, and made certain changes.”

- Participant in a marketing program

The reward for CBA is that members return for the service and the group will continue offering these trainings. According to surveys, 80 to 90 per cent the participants in BE-based and CBA courses are satisfied. Number of courses per year has now risen to 30.

“In comparison with the passive methodology of learning, this active participative training forces the participants to look directly at the problems to share and discuss, which means they don’t forget it when they leave the class.”

- Mr. Tran Kim Dinh, Director of the Mekong Advertisement and Tourism Information Company

Lessons learned

• Direct attention to promoting women entrepreneurs truly opens the field. Women members feel that they equally benefit from the association. They, in turn, are more encouraged to participate.
• Traditional, passive teaching methods may not be appropriate for the demanding, dynamic business environment.
• By providing high-quality training to members, CBA meets the common capacity building needs of businesses in Can Tho. Before CBA, VCCI Can Tho was the only place in Can Tho to provide short training course to businesses. In that sense, CBA acts as a common organizer to determine the need, find the providers and organize courses. The association has since decided to focus mainly on training to ensure that resources are focused where they make the most difference.
• CBA events bring together members and help businesses to expand their networks. The Association’s network allows it to connect its members with other enterprises from other associations, such as the Ho Chi Minh City Business Association, An Giang Business Association, Tien Giang Business Association and Ho Chi Minh City Young Business Association.

Yet challenges remain, in providing training courses on L/C, international payments and international trade law. And for the future, members have asked for more customized training courses and more follow-up to help them with specific problems. The group has responded by starting to offer post-training support for members who have participated in its training program.

HCMC Young Business Association A comprehensive package of services

Background

Founded in 1994, the Ho Chi Minh City Young Business Association (YBA) was the first association expressly for young businesspeople in Vietnam. Its mission is to gather young entrepreneurs together to develop their business skills as well as to contribute to the development of the local and national economy. YBA’s major goal is to become a professional business support organization to better meet the increasing needs of members and to help them compete when Vietnam enters the global market.

YBA is large. It has 574 members, all of them owners or senior management of private companies. With such a large number of members naturally the group has a large executive board with a chairman, six vice chairpersons and 18 commissioners. The role of the executive board is limited to policy without excessive overlap in administration. Two vice chairs and six commissioners are women. Women also account for about one-fifth of the membership and play an increasingly important role. The Secretary General is a woman and eight out of the 10 office staff are also women. Member services account for about 40% of YBA’s yearly operating budget. The remaining 60% comes from membership fees and voluntary donors.

YBA has a good relationship with city government as well as other organizations. It has strong connections with the Vietnam Young Business Association, Vietnam Chamber of Commerce and Industry (VCCI), the Hanoi Young Business Association and the Can Tho Business Association. The group has organized many events with these partners to bring together businesses to share experience and resources and to date this has worked.

Member services

YBA provides a comprehensive range of services to its members including a website (www.ybahcm.com.vn), an attractive newsletter (print and online), legal archives, workshops and seminars in which topics include the WTO, intellectual property, the new Enterprise Law, trade promotion, site visits to successful businesses, networking, brand promotion and training.

Training

YBA frequently organizes trainings and workshops for middle and top managers. It regularly searches overseas courses to bring new knowledge and skills for international business, technology, and market situation. The group seeks to make this its core service through its YBA Joint Stock Company, to increase revenues. Service will be extended to non-members, and by partnering with Business Edge, a program of the Mekong Private Sector Development Facility, YBA can offer more practical and attractive courses.

“In comparison with other courses which I have taken, the training courses by YBA are well organized in terms of content, methodology, and supporting services, with topics which suit the reality of business and experienced trainers from reputed companies.”

- Mr. Vuong Quoc Quang, Director of Gia Gia Lac Company

Seminars: The Association also offers seminars to keep members up to date on developments in the political, social, legal, economic, and business environments. Organizers choose relevant topics and sought-after speakers.

Information: YBA also offers a comprehensive website, an attractive newsletter, and other channels. The website provides vital information about all aspects of the association’s work for both members and stakeholders.

Trade promotion: YBA has become a focal point for connecting members to their markets by providing information and opportunities via website and newsletter.

Lessons learned

• By joining the association, businesses have priority access to all of its services. They can in turn expand their networks overseas and tighten operations. And as a strong business association with a large number of businesses in the largest city in Vietnam, YBA has a strong voice with the public, central and local government, VCCI and other state agencies. It is a voice to the government on policy, laws and other issues related to business.

• Yet there is room for improvement. Members have asked for greater consulting services and more business visits to learn from first-hand experience at other companies.

“YBA’s operations are very good, with a lot of helpful training programs and conferences for members… I think that this is a strength of the association and needs to be continued.”

- Mr. Huynh Van Thien Thanh, Director of Huynh Nguyen Phung Co.

Background

Shoes and leather products are among the most important traditional sectors for Ho Chi Minh City, particularly for export. While there are more and more medium-size businesses every year, there are also many small or ‘micro’ businesses that need access to market information, especially international markets. Thus, in 1996 shoe and leather businesses and households got together and formed the Ho Chi Minh City Shoes and Leather Association (SLA).

SLA is a voluntary organization that enhances the competitive advantages of member businesses and the larger industry. One core goal is to develop the leather and shoes sector and positively contribute to the economy while supporting sustainable development. SLA is a member organization of the Ho Chi Minh City Union of Business Associations and Vietnam Leather and Shoes Association (LEFASO). To date, it has a total of 178 members but no clear strategy to attract new members. The group enrolls new businesses through direct talks and word of mouth. Membership fees account for 66% of total funding. Training fees account for the remainder. The association has an executive board of 35 members, one chairman six vice chairmen, one general secretary and two support staff. The secretary and two staff are full time.

One of the most important roles of SLA is to represent and protect the legal rights of members and businesses in the sector. It also acts as a connecting point between its members and government to address concerns. SLA representatives also participate in workshops and seminars by LEFASO and the Ho Chi Minh City Union of Business Associations.

Member services

SLA updates members with a newsletter providing general economic analysis, sector specific information, news on member services and technology, as well as market information. Every month, about 200 copies of this newsletter are printed and delivered.

The Association also holds seminars and trainings to give members experience in business development, management and production. The group acts as a connecting point among the member businesses when they need to expand their access to larger or more competitive markets, connecting them with international clients and in certain circumstances protecting their legal rights, such as in the recent EU dumping case against Vietnamese shoes and leather.

Another of SLA’s strengths is trade promotion. In partnership with the Ho Chi Minh City Investment and Trade Promotion Center (ITPC), SLA helps members to participate in international footwear exhibitions such as GDS in Dusseldorf, Germany, “Vietnam Days in France”, SOURCE IT in Hong Kong, as well as local trade shows like A&F EXPO 2005. It has also been instrumental in establishing a series of export showrooms for leather and shoes.

Turning points

Export showrooms for leather and shoes: an initiative for trade promotion

When the EU, a traditional export market for Vietnamese goods, heightened protections on its own shoe/leather industry by filing a dumping case against Vietnam, producers here had to look for the new markets. They reached out to Japan, Russia, ASEAN, Eastern Europe, the Middle-East and Africa. The goal was to meet a target of 470 million pairs of shoes and sandals with total export revenue of US$3.3 billion. So in 2004, SLA worked with the ITPC to organize a series of showrooms as a connecting point for contracts with international partners.

Then, in 2006, competition heightened, this time from China with very low prices, and with the WTO, while the EU dumping case refused to abate.

“Even Vina Giay, a strong local shoes brand, had to spend time to study the China market to develop a business strategy with the WTO. They decided to change strategy to move to high-end products to be able to compete with Chinese products”.

- Vu Van Cham, founder of Vina Giay

The showrooms and exhibitions became more important as a focal point. SLA and ITPC also worked to improve member competitiveness via an Export Business Portal and Customer Contact Center. They initiated programs assisting in design and offering talks on industry trends, giving presentations to groups of customers. The Association also offered workshops to introduce new garment and shoes markets, and expand exports. Then, in 2005, 150 businesses participated in an expo that attracted 2,800 visitors, a 20% increase over 2004. By 2007, there had been four expositions and companies had signed 53 contracts with partners from the US, Canada, Japan and Eastern Europe for a total value of US$ 4.63 million.

“This direct display showroom is a good approach in combination with the business portal and internet-based business transactions to support businesses in introducing their products to buyers in international markets.”

-Vu Kim Hanh, Director of ITPC

Lessons learned

• By organizing a series of export showrooms, SLA provided its members with very clear benefits. Their products got exposure to international customers and visitors locally at much lower cost. And small businesses in shoes and leather with limited access to market information (many of them have no Internet connection) benefit from information consolidated and disseminated by the Association via newsletter, seminar and workshop.
• Yet services provided by SLA are still, in general, limited. While trade promotion and information are strong, other supporting services, such as training and consulting, are weak. This is due to time constraints and staffing. Infrastructure and facilities are lacking as well. While a website is under development, a small office with basic facilities for two staff is not enough to serve the needs of the organization’s nearly 200 members. And the newsletter, which is set to be printed in color, is still behind.

• Finally, SLA is too dependent on too few board members. The current office and facility of the association is substantially subsidized by the Chairman. Among the Vice-Chairmen, only few have time for association work. Although the chairman has a strong voice with government, these issues still force development through a bottleneck.

Background

Binh Phuoc is the unofficial ‘land of cashews’ in Vietnam, with about 196,024 hectares under cultivation producing about 194,400 tons of cashew nut in 2006, accounting for 50 per cent of total production nationwide. But these businesses have traditionally had only limited resources and the fierce competition among them caused many to buy raw cashew at high prices and low quality.

To address the problem, Binh Phuoc sought to gather cashew businesses under a common body to stabilize purchase prices and ensure quality. Thus was born the Binh Phuoc Cashew Association (BPCAS) in 2005. It has an executive board including nine executive members, three of whom are women. The board also includes a chairman and two vice chairmen as well as a secretary.

BPCAS has very strong local government presence, however. The chairman of the association is also the director of the local Department of Industry (DOI). Most other key personnel are also from the DOI and the organization’s charter states that the president must not be a business owner. As a result, the group leans heavily toward government management. The association has 78 member businesses (23 run by women), most of them private. Some members sit on sub-executive committees, such as the Purchasing Committee, a Finance Committee and a Monitoring Committee.

The group has almost no strategy to attract new members and the members that they do retain contribute membership fees to fund administration. This is the major source for funding, collected according to quantity of cashew sold each year, at about VND 1,500 per kilogram. In addition, the association also receives donor funding from projects such as PRISED. It has no revenue-generating services of its own. Nor does it have an office or full-time staff. Any administration is part-time only.

Member services

BPCAS has made some effort to provide services to its members. It has begun to provide trainings in business management and is providing market information, especially price forecasts on the international market. These are in the form of a newsletter with the Vietnam Cashew Association (VINACAS). It also provides technology support to farmers by collaborating with the Southern Agricultural Science Institute and Provincial Department of Agricultural and Rural Development. The association also proposed, and received, approval from the provincial Council for Science and Technology for financing the research and invention of cashew core and ‘shucking’ (shelling) machine.

The Association also advocates that the Provincial People’s Committee support businesses with greater capacity as the core exporting force in the province while trying to channel smaller businesses together to provide raw cashew for larger exporters. There are also plans to develop the Binh Phuoc Cashew brand and outline standards for cashew nuts.

But to date, the most important function of BPCAS has been to push for common price and standards on raw cashew to stabilize revenues and ensure export quality. It has proposed regulations on organizing the purchasing of cashew in which each business registers and reports purchase price and agrees common procedures on transport.

An opportunity for expanded coverage

The concept of greater member services may still, however, need more promotion, particularly among members who may not yet see the benefits. “Currently, we don’t need any information for the cashew association. We buy when we have agreement between buyers and sellers," said one agent of a large-scale cashew purchaser.

Turning points

Stabilizing price and quality by monitoring the process

At the beginning of 2006, cashew producers in Binh Phuoc were facing a poor crop due to foul weather with high winds and unseasonably heavy rains. Output dropped 20% over the previous year. Quality also suffered and much of the crop contained ‘extraneous matter’, such as floating (flat) nuts. Many agencies in the lower Tier 1 and Tier 2 also began to soak their stock in water to make it swell and increase weight, hoping it would appear as added volume. This only drove down quality.

Unfair price competition among companies also crept into the market, as did several ‘short-term’ purchasing agents. All of this further drove down quality. “We were buying from farmers at VND 8,500 VND per kilo. Suddenly, the agents jumped in to buy at 8,700 per kilo. Then they mixed cashew with extraneous matter and sold it back to us at 8,500 per kilo. But the actual price should have been from 9,500 to 10, 000,” said Mrs. Phan Thi My Le, Director of My Le Ltd. Company.

Then, at a conference in 2006 in HCMC, VINACAS strongly reiterated to members to buy cashew at an agreed price of VND 8,000 per kilogram and not to buy low quality stock with extraneous matter and floating nuts, to ensure the export quality. Members then reached an agreement on pricing and standard quality. This they broadcast to other members and even farmers via radio spots funded by ILO-PRISED. The results exceeded expectations. Local government also supported the movement, offering to examine and supervise lots and enforce strict fines for price fixing and adulterated materials.

As a result, price manipulation dropped significantly and export quality jumped. Prices stabilized at VND 10,200 per kilogram on average over the VND 9,500 of the previous year. This price, though higher, ensured profits for processors. Product for export sold at US$ 4,341 per ton over the US$ 3,674 of the previous year. By the end of season, Binh Phuoc had purchased, processed and exported about 100,000 tons of cashew for export, selling the rest domestically.

Lessons learned

• Stabilization of price and quality are crucial to Binh Phuoc cashew processing and exporting companies. By guaranteeing these factors, BPCAS can help its members to ensure the profitability. And with the right kind of help from the local government, BPCAS has the means at its disposal to act as an effective intermediary among members. Yet this still needs improvement and government partners would see far greater results if they listened to, and acted more swiftly on, feedback from members.
• BPCAS also needs to close gaps in its management structure, staffing and facilities. Where the strong government oversight is a boon, it can also be a hindrance. BPCAS’ high dependency on the local government puts it at odds with many members, who may feel that their specific interests are not addressed. With DOI personnel on the board, members may feel the association is simply another government body rather than a transparent, independent source of technical support. Here, VINACAS would be a valuable partner particularly in organizational resources. For example, members need market information. They do currently receive this in the form of notices and a newsletter, but it is from VINACAS rather than from their home association. BPCAS only acts as the medium, and then at a less dynamic level than what members need.
• Ultimately, the way forward on all of these issues may be by hiring full-time staff independent of DOI. This would afford members greater focus on management, which would allow for collection of membership fees, which could in turn be used for trainings. The support of the DOI and other governmental offices would still play an important role in the development of BPCAS as well.

Background

The Hanoi Union of Associations of Industry and Commerce (HUAIC) today is a product of the Doi Moi era, when government policy in Vietnam shifted toward open market reforms. It functions as a facilitating institution for businesses in the market economy, representing and protecting their legal rights and offering information exchange among members and government partners. HUAIC promotes trade investment and cooperation among businesses, facilitates business ventures with foreign investors, and provides services such as brand building and competitiveness training.

The first Hanoi industry and commerce association dates back to 1956, led by what was known in the terminology of the time as ‘nationalist bourgeois’ Bui Gia Hung. This association was mandated to mobilize the industrial and commercial sector to support the private and capital reform policy. The association continued during the war but was dissolved in 1975. Ten years later, Doi Moi again allowed people to go into business for themselves but after a year there were only about 20 private business, all factories. Then the Politburo issued a decision allowing small business owners and individual manufacturers to form an association. In early 1989, businesspeople in the city then proposed establishment of their own representative body under the name of the Hanoi Industrial and Technological Association. Word of the new association attracted the interests of more small business owners and after a great deal of effort, in 1996 HUAIC was born.

HUAIC has been very active in advocating for the legal and business environment. Its representatives now participate in drafting or revising trade law, laws on banks and credit organizations, tax law, corporate tax law, VAT, land laws, the Enterprise Law and Investment Law. The Association also conducts market research and has participated in several studies together with the National Economics University and other institutes.

Member services

Mapping the future

HUAIC was instrumental in preparing the plan for the South Thang Long Industrial Park, where it seeks to provide spaces for its members. And through its Trade Promotion Centre, the Association has been successful in matchmaking between businesses domestically and internationally. Hundreds of companies have received support to design projects, conduct market research and attend foreign trade fairs.

The group established its Trade Promotion Center in 1998 when no agencies, not even the Ministry of Trade, had such a facility. The center is administered by the Association. It is its own legal entity, has its own seal and generates its own finances, and after eight years has proven its role as a bridge between local enterprises and domestic and international markets. Hundreds of enterprises have received funds to conduct market research or take part in trade fairs both domestically and abroad.

Before the launching of the current information portal, HUAIC has also collected some 10,000 legal documents and several hundred thousand pages of materials for business research.

Access to credit and financial support

The Association has established relations with organizations that support domestic and international enterprises, such as the Danish International Development Agency (DANIDA), Mekong Private Sector Development Facility (MPDF) and the Japan Bank for International Cooperation (JBIC). Once members have established relations with enterprises they turn to direct contact and only return to the Association when necessary. Over 30 enterprises have received $2000 to $3000 for grants from DANIDA to develop business partnerships in Denmark. Over 20 enterprises have received loans of VND 1 to 3 billion each from MPDF as well, and 20 enterprises have received loans of approximately VND 55 billion total from JBIC to expand production.

Partnerships

The Association has established dynamic relationships with many domestic and international organizations, including the Beijing Industry and Trade Association and other Chinese groups to facilitate business on both sides. It has also been active in the following:

• Partnership with ZDH (Germany).
• Partnership with the Asia Foundation (U.S.).
• Works with the Asia World Research Institute (Japan) to recruit mechanics and welders to participate in technical training courses.
• Partnership with JETRO.
• Works with IMF and the World Bank in creating a more favorable environment for business through annual business forums in Vietnam.
• Participates in linkages between business associations of ASEAN and India chaired by the Prime Minister of India.

HUAIC has also joined with domestic research institutes and associations such as VCCI, the industry and trade associations of Ho Chi Minh City, Dong Nai, and Can Tho, and associations in steel, tea coffee, sea food and wood to exchange information and to organize conferences, workshops and dialogues.

Turning points

New endeavors

HUAIC is currently planning two projects in parallel, a Pro-poor Fund and the Business Development Research Institute. The Pro-poor Fund originated from an inspiration for larger firms to conduct corporate social responsibility programs. This will raise funds from HUAIC members and domestic and international organizations to sponsor disadvantaged individuals, businesses that need support and poor children who show talent and the willingness to better themselves. Target beneficiaries include the disadvantaged in Hanoi and individuals who demonstrate talent, notably young adults who demonstrate skills in technology, architecture, music, arts, and business. The program also reaches out to victims of accidents and natural disasters. It will grant limited cash support to target groups as funds for procurement of pr