The existence of well functioning Business Associations in a society plays a key role in the development of enterprises. By representing business interests and providing specific services to their members they can achieve social and economic improvements for their members and the private sector in general.
The Vietnamese government recognizes the importance of Business Associations for a well functioning market economy and is therefore promoting their establishment and development Numerous new associations have been founded recently to the point where there has been a sort of “association boom”. Many of them thrive and grow, but many also face challenges.
Since 2003, the International Labor Organization (ILO) and the Vietnam Chamber of Commerce and Industry (VCCI) have worked together to support and promote business associations among small enterprises in Vietnam. A Resource Guide was developed in 2004 to support small businesses in establishing and building strong, efficient associations. In 2006, the Resource Guide was complemented with a comprehensive Trainers’ Manual. During the training of facilitators, it became clear that the training material needed to be complemented with real examples of business associations in Vietnam. Therefore, ILO and VCCI, under the PRISED project, undertook to illustrate the current state of associations by documenting their recent history and current situation.
The case studies presented in this publication have been undertaken by Tang Van Khanh and To Ngoc Anh, OCD Consultants. Pictures were taken by Nguyen Na Son. Jenny Ikelberg and Kees van der Ree of the PRISED project initiated the publication and developed the concept and methodology of the case studies. Important guidance was provided by Pham Xuan Mai, President of Institute of Management and Technology Promotion (iMT) and Vice-Chairman of the Shoes and Leather Association of Ho Chi Minh City, who contributed the concluding remarks. The final editing was done by Richard Pierce (English) and Do Thi Tu Anh (Vietnamese).
It is truly hoped that these case studies will inspire trainers, consultants, association leaders and members themselves in their efforts to increase the role of Business Associations and improve the services that the associations provide.
A portal for export and a business model for the traditional craft village
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 t he ordinary business practices of its members. It provides crucial services to its members and supports the development of the market.
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:
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.
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
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.
Providing training services to members
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
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.
Networking
Training
Trade promotion support
Consultancy
Information provision
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
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
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.
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.
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 14000 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
“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.
Taking on the world through advocacy and trade promotion
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.
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.
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
How much government participation is too much?
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.
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.
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.
Big plans ahead for Hanoi’s private sector
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.
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:
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 production materials or equipment, and as scholarships.
The Business Development Research Institute (BDRI) was inspired by Vietnam’s accession to the World Trade Organization, which will bring both opportunities and challenges for members. The challenges will come from foreign competition and will dramatically increase the need for capacity building in domestic entrepreneurship. BDRI, which operates on service fees, will function as a research institute on macro-economic policies, economic institutions and the issues of business administration, financial management and human resources. It will create a network of high profile researchers from national and regional institutes as well as business leaders. Currently, the Institute has been able to bring together 20 scientists (professors and doctors) and six notable business leaders. HUAIC is now finalizing procedures for the establishment of the institute, slated to come into operation at the end of 2007. It is also re-designing its “Doanh nghiep & Kinh te thu do” Newspaper as “Thoi bao doanh nhan ngay nay” (Modern Entrepreneur Times).
Joint procurement to reduce costs
Da Nang is a municipality in the heart of Vietnam. Its geography is well-suited to economic development and it is an ideal tourist destination for both Vietnamese and foreign visitors. The city is in the middle of the country on the north-south road, rail, sea and air routes and is near three well-known world cultural heritage sites, Hue, Hoi An and the My Son Holy Land. It is also one of the important gateways to the Central Highlands, Laos, Cambodia, Thailand and Myanmar via the East-West Economic Corridor linking Tien Sa Seaport to regional trade corridors.
Da Nang has about 7,000 SMEs, many of them in tourist services and food processing. A significant number of these are run by women. Yet they have traditionally operated in almost complete competition with each other and many lack professional business skills and market information. There has been almost no collaboration. But recently, business owners called for an institution to gather small business into a larger body to foster development and benefits for all. In 2000 the Da Nang Women’s Business Club was formed and in 2001 it received UNIDO support to establish a network of member clubs. There are now nine satellite organizations in services, rice noodle production, fish sauce production, dried cuttlefish production, stonework and cultivation of mushrooms, among others. UNIDO also provided funding to organize training-of-trainers (TOTs) for member enterprises.
The Club’s mission is to:
The club has also begun meeting every three months on issues such as business law, AFTA, and value added tax.
The club has conducted a survey on the needs of small enterprises managed by women. They interviewed 900 women entrepreneurs in food processing and from these findings defined their program. They now offer training in financial management, business administration and marketing, among others. Specific trainings have covered food production, product quality improvement, fish sauce production, and skills building. Members may also get small business loans through projects by the Belgian Government and the World Bank.
Training and consultancy
With UNIDO’s “Program on the development of woman-owned businesses in food processing”, there have now been 81 training courses on food production, financial management and marketing. The club has also been instrumental in a number of other valuable programs, including:
Access to credit
The Club has also worked within the Women’s Union structure to lend VND 28 billion to 5,201 businesses to develop production. This has been combined with a series of trainings on best use of capital.
Markets information, and technology
The Club helps members access market information and technology as well. Members have organized several workshops on building trademarks and brand. They also hosted 40 woman-owned businesses to participate in a special trade fair for products made strictly by women.
The chairwoman of the Club has also met with faculty from the Ho Chi Minh University of Technology’s Food Bio-Technology and Environment Department on new methods to produce better fish sauce. This included a component with a three-year loan to buy the latest labor-saving equipment.
Workshops
The group has organized a wide range of workshops, such as “Special Praise for Businesswomen”, “Enhancing Capacity for Da Nang’s Businesswomen”, and “Da Nang’s Businesswomen and Economic Integration”. And to supplement information on policy and law, the Club also invites local officials to its regular meetings.
From 2000 to 2003, there was only one women’s business club in Da Nang with 30 members. But since 2003, those numbers have increased markedly and through aggressive networking there are now nine clubs with 220 members. Last year, nine women members of these clubs were appointed to participate in the APEC Summit.
Corporate social responsibility
The Club has also given VND 14 million to build houses for women in Lai Chau Province. In addition, at the beginning of this year, the group contributed VND 50 million to build a treatment center for poor women.
At its inception, the Club had just a few members, mostly in rice noodle production. Each enterprise had to go to the far northern provinces such as Thanh Hoa or Nghe An, or southern provinces such as Tien Giang or Hau Giang, to buy material. The cost of transport and retail purchase made this an expensive way to do business The Club then started looking for new, bulk resources to get the price down. This was a milestone for future development and demonstrated the buying power of the group. The club has also changed attitudes and the way people do business. By pooling their buying power they’ve seen the benefits of cooperation.
The way forward
Today in Vietnam women’s rights in economic self determination are protected by law and Da Nang officials have demonstrated support, for example, by reducing fees for them at the annual spring trade fair. Yet business skills of most women in Da Nang and the surrounding area are still limited. They act merely on ‘the way they have always done it’ rather than on market research, business plans, marketing, financial management and good personnel management. Most businesswomen in food production have insufficient knowledge of processing techniques and food hygiene, and other enterprises simply lack capital, or they have capital but have not used it effectively. Still others are overwhelmed by the fierce competition on the market. They are afraid of taking risks.
Incorporating to serve members
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.
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.
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:
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.
Mutual benefits from business linkages among member networks
There are more than 2,000 small and medium-sized enterprises and about 25,000 household businesses in Nam Dinh Province. Many of the very small ones are operating in rural and remote areas. Women play an essential role. But before 2002, there was no such thing as a women’s business group. There were only the City Private Enterprise Association and similar bodies in rural areas. Some woman entrepreneurs had been active in these business associations, but there was nothing specifically for this growing force in the community.
The first women’s business group in Nam Dinh was established in 2002 as a district ‘club’ in Xuan Truong. Then, with the support of the Dutch Government and the Women’s Union, three more district associations were established. They all then united into a provincial body called the Nam Dinh Women’s Business Club in 2006. It is there for businesswomen of every economic sector in Nam Dinh Province. The Club aims at gathering and attracting women entrepreneurs, creating a forum to exchange, share and learn while protecting the rights and interests of members.
But the Club is still an informal institution and most of their activities are still closely linked with the Women’s Union. Yet with the support of the International Labor Organization-Japan program, the Club has expanded at the grassroots level and has covered a wider geographical scope.
In addition to offering credit programs, the Nam Dinh Women’s Business Club consults with women entrepreneurs and represents their interests at government agencies on planning issues and policy. They also organize training courses on business administration for women-owned SMEs free-of-charge, and bring members together for sustainable development. This has been a showpiece for the success of the group.
The club also encourages social responsibility with charity programs and development initiatives and in this way increases its influence and reputation with other public and civil society organizations. Members participate in regular meetings to discuss and contribute ideas often holding forums to learn about business administration from other markets as well.
Linking for mutual benefit
Though the Club is still relatively new, it has developed a wide network of member clubs in all 10 districts of Nam Dinh Province. It is the only such organization. Most member clubs are run effectively and are closely linked. Member enterprises work in ‘symbiosis’ for greater efficiency and mutual benefit. For instance, a bran mill in the organization sells its byproducts to a poultry farm for food at preferential prices.
The club is also very strong in rural areas where businesswomen face serious difficulties in transportation, market information, market access and business skills. The group has, in fact, reached a point where government and non-government organizations rely on them for implementation in some cases.
In larger affairs, members of the Club have also joined the Asian Regional Program for Expansion of Employment Opportunities for Women-Vietnam Chapter, organized by ILO Japan, and have collaborated with the Swiss Development Corporation (SDC) - Nam Dinh Urban Development project offering trainings in entrepreneurship.
Standing apart form the crowd
Thanh Hoa Province is in the north central region of Vietnam. In 2007 the population was over 3 million. It has about 3,000 small and medium-sized enterprises and there are about 20 civil society associations in the province, unusually high compared to the rest of the country. Where most women’s civil society business groups tend to come under the Women’s Union, Thanh Hoa has something different: a separate Women’s Business Association.
The idea originated when a local director of a hospitality company and women entrepreneurs sought a single “roof” under which they could exchange experience in business. They also sought a forum where they cold exchange market ideas and support one another. With the support of other associations and agencies, and the initiative of the core group, the Association was founded in September, 2005, at a general meeting. This became the Thanh Hoa Women’s Business Association.
At first, it was difficult. Membership was low and those who did come had to travel far. And funding was scarce. However, with the strong support of the Vietnam Chamber of Commerce and Industry (VCCI) and the Women’s Union, the Association began to gain momentum. They immediately began raising awareness to establish the reputation and image of the association, collaborating with different agencies, organizing management trainings and other key events. Members have since organized several study tours and forums and on marketing, raising capital and management.
It is now a totally stand-alone association. Members have worked hard to attract more businesses and the question of how to bring benefits to members is always the focus of the discussions. They recently added 40 new members to their rolls and are presently at 100.
The Association has developed four ‘clubs’ at the local level. Together they address managerial skills building and knowledge, market research, business law, enterprise law and investment law. A delegation also went recently to the APEC meeting on women business leaders. This included a trade fair, for which the delegation brought three displays. This offered a rare chance for local businesswomen to learn and to market their project to the world. Association members have also participated in a high profile delegation to Laos, the US, Japan, France, Germany and Austria.
Other issues addressed by Thanh Hoa Women’s Business Association:
As a result of the Association’s work, members are more self-confident, experienced and knowledgeable, and their businesses attract more clients. Their success has caught the attention of the local government, which has since added women to their ranks on the People’s Committee.
Harnessing the power of BAs to reduce poverty
To support poor women, the Thanh Hoa Women’s Business Association has facilitated micro-credit services from the Agriculture and Rural Development Bank, the Social Policy Bank, the National Employment Fund, and international donor projects. The group has disbursed VND 997,247,000,000 worth of loans to 248,436 women to invest in household businesses and stabilize their family lives. And as good corporate citizens, the Association also contributes to charity, raising their profile and setting a good example.
The lasting achievement of the Thanh Hoa Women’s Business Association has been to create a healthy business environment where enterprises can cooperate and support each other in looking for markets, tightening organization, developing business channels and streamlining production. What the Association does will promote its image and reputation to attract new members and create more opportunities for women entrepreneurs.
A model for policy advocacy
Hai Phong Land Transportation Association (HATA) brings together transportation companies in the Hai Phong area. One of its main functions is to reduce competition within the goods transportation sector, to set common freight rates to prevent price ‘dumping’ and participate in removing obstacles in land transportation policies. The organization has one chairman, two vice chairmen, two standing commissioners and one Secretary General, who is in charge of the association’s office. All board members are owners/directors of member enterprises as well. There is one administrative staff member. Revenues come mostly from membership fees based on fleet size. Other income comes from transportation insurance premiums. Otherwise, revenue is difficult to generate.
The organization grew out of the fact that long-distance land transportation companies could not survive in a climate of over-regulation by the government. And corruption was increasing. That finally prompted businesses to come together and create a better environment on their own. Hence, the Association was founded in April 2003, in the context which the Government issued the Decision 15CP on settling violation of land transportation regulation. Decision 15CP.
In the early days, HATA had 81 members. It was able to successfully advocate for the removal of a number of unreasonable regulations on the transportation of commodities. But then many enterprises left the group rather than pay membership fees. By July 2006, 40 enterprises remained, 38 of which were private businesses and two of which were joint-stock companies. Together they managed over 1000 vehicles capable of transporting super-long and heavy loads at about 70% of imported and exported goods via Hai Phong Port.
Member outreach and enrolment is low and there is no specific plan to expand. Enterprises that apply for membership have said that they learned about the group on their own and not from any outreach. As a part 613f of recent advocacy campaigns, however, HATA’s name and presence have grown in newspapers and television, and conferences are common. However, such public presence is more to call for support on policy rather than to attract new members.
Traditionally HATA has not had a long-term strategic development plan. Its operations are mainly directed by the General Meeting annual operating plan. But with the support of the EU’s Vietnam Private Sector Support Program last year, HATA is developing a strategic development plan.
The organization has certain strong points as well, such as full-time staff that are experienced and committed to development. And the vice chairman of the association is enthusiastic and experienced in advocacy. They have also initiated some pilot member support services. But the need remains for a long-term development strategy and diversified services, especially those that create long-term benefits for members.
Trainings
HATA has cooperated with the Vietnam Chamber of Commerce and Industry (VCCI) in Hai Phong to send members to management trainings with city bodies to organize trainings on transportation safety. Yet these have seen lower HATA member attendance, partly because there is little incentive and no recognition that might make HATA’s members stand out among non-members. HATA also offers an information service, consolidating new policies and regulations into a short, easy-to-understand format.
Other services include legal assistance and consultancy, for example, when members violate transportation laws. This consultancy is normally in the form of legal support to minimize fines. However this type of assistance is “reactive” only and doesn’t provide more long-term benefits to members.
The Association is also preparing a proposal to use 10 ha of land in Dinh Vu for parking, which it will rent to enterprises. Members will enjoy a favorable price or payment scheme.
Policy Advocacy
Among the greatest difficulties facing transportation businesses in Hai Phong are an overwhelming regulatory climate and lack of transportation infrastructure. A larger organization would give shippers a common voice. This takes the form of advocacy, most recently for the removal of sub-licenses on trailers, removal of excessive height limits on containers transiting bridges, an increase in the speed limit on motorways, and removal of certain tolls. Advocates follow a comprehensive process, reviewing existing regulations, conducting field investigations, reviewing best practices in other countries, developing proposals, using mass media and conferences to disseminate the proposal, and finally direct dialog with policymakers.
Two typical examples of policy advocacy were to change the position of tollbooths on National Highway No. 5 and to change height regulations for loaded trucks to fit HC40 containers (‘high containers’). Advocacy to change these height regulations for loaded trucks to fit the “high containers” best illustrates the policy advocacy model by HATA.
Reviewing existing regulations and conducting field investigations
In the HC40 campaign, the basic regulation addressed land transportation of ‘super long’ and super heavy goods. ‘Super-long’ goods are over 20m, width of over 2.5m and height of over 4.2m from the ground when loaded. Businesses that wanted to transport them had to apply for a special license guaranteeing that trucks would clear bridges by at least 30cm. (Based on the assumption that most ‘flyovers’ in Vietnam are at least 4.5m).
HATA measured the distance between the road and the lowest point of all the flyovers on Highway 5 and found that the lowest one, Niem Bridge in Hai Phong, had the lowest height, of 4.6m. HC40s would pass well under this at normal speed. The Association also proposed increasing the relative height of certain lower flyovers by lowering the road surface as a less-costly alternative to forcing the entire fleet to shift away from HC40 containers.
Reviewing regulations and common practices to develop a proposal
After conducting further field investigations on the HC40 issue, HATA collected information on the regulations and common practices in other countries with similar systems. They pointed to the fact that HC40s are in accordance with international standards at 2.8 to 2.9m. The trailers are produced in accordance with ASEAN standards and imported from Korea, Japan and Taiwan. They also indicated that such trailers and containers are used together in those countries as common practice.
Once they had enough information, they developed a proposal to change the regulation and also recommended lowering the road at certain flyovers. They started a media campaign about the issue in Business Forum Newspaper, Labor Newspaper, Youth Newspaper, Agriculture, Transportation and Traffic, local Hai Phong Newspapers, as well as various programs on VTV1 and Hai Phong Television. They also brought up the issue at business forums by VCCI and persuaded the clients as well as transportation firms to have a common voice.
Dialog with policymakers
The group held dialogs with the Ministry of Transportation in 2003 and 2004 on the issue. Equipped with sufficient evidence to make their case, they were able to influence MOT to change the regulations. Their first point was to ask for removal of the special license in April 2003 and in June 2004 they asked for removal of a ban on HC40s. One week later, MOT signed the decision.
Following-up change
HATA did not stop there. They continued to follow up on the implementation of the new policies to see that all partners, including traffic police and transportation management agencies, were in compliance. Now, other associations have approached them to learn from their experience.
One of the most important benefits which HATA brought to its members is policy advocacy to remove irrelevant legal or regulated barriers to facilitate the operations of members’ businesses. With regards to this matter, HATA played a very strong role as a connecting point between member businesses and policymakers. ”
- Mr. Pham Trong Thinh, Vice Chairman and General Secretary
The cases presented in the preceding pages illustrate the breath and diversity of business associations today. They are old or new, large or small, consisting of men or women, with members from one sector or including people from a variety of professions, and with success stories and also difficulties. The information presented does not permit a very thorough analysis, but is helpful in making the life of associations visible and understandable. It also provides some insights into what works well, and what are the main obstacles to count with when promoting associations.
The facts about the start-up phase of associations as reflected in some of the case studies give a comprehensive picture of how Business Associations (BA) in Vietnam come into being. They underlines both the objective necessity for such organizations in the market-based economy as well as the maturity of part of the business community in getting together to solve common problems. Relevant cases are those of HATA, BTCA and BPCAS. In many cases, the initiatives and support of Government authorities and development agencies have been crucial for BAs to start and build up their capacity in delivering services for their members, such as in the case of the Nam Dinh Women’s Business Clubs, BPCAS and BTCA.. Most business associations for women in the case studies take the shape of informal business clubs and do not enjoy full legal recognition (except Thanh Hoa Women’s Business Association). Nevertheless, they have proven helpful particularly in support for women entrepreneurs thanks to their connection with the Women’s Union network and considerable support from international donor projects
The activities undertaken by associations are initiated mainly to respond to the immediate needs of the members. Most BAs do not have a clear vision and a consistent long-run plan or documented development strategy. In some cases, members just receive verbal or informal ‘direction’ at meetings. Evaluations of activities and results are rarely done. These are symptoms of the limited managerial capacity and sometimes low commitment of the leaders of the associations, explaining some of the ups and downs of BAs.
Most BAs focused on one or two services only. Thus, some associations focus on training, others on policy advocacy, price and quality control or trade promotion. This is often a good start, which needs to be followed by a strong portfolio of services based on members’ needs which must link to the purpose and future development of BAs. Policy advocacy proves to be very important if not the most important activity of any BA. In the case studies, that is the starting point that put many associations ‘on wheels’. It seems that successful associations develop a policy advocacy strategy aimed at identifying, analyzing and improving the laws and regulations that affect their members and must be firm to implement it. In this regard, HATA offers a case with many learning points.
The association management in many cases pays insufficient attention to membership development and retention. Only few have some sort of membership strategy. At the associations with a mixed membership (corporate and individual, big enterprises and small ones, and different professions) a significant group of members often receive little attention. This risks leading to a low level of participation and, in the long term, members could decide to withdraw. Though the associations in the case studies have developed certain organizational set-up, it is far from being an efficient and professional one. Some associations keep a very simple set-up, while others developed a comprehensive structure with large number of governing bodies compared to its size of membership and to its capacity of deployment. In most of the cases, the activities of BA depend greatly on a few core members who are willing to support the association. However, the proportion of membership in the sector/area is small, which makes if difficult to become effective in representation and advocacy. Often, among the executives, even among Vice-Chairmen and Chairmen, only few have time and are actually dedicated for association work. Improvement of these aspects will substantially increase the strength of BAs and level up its position in the eye of business community and public.
In most of the cases, the association’s office is not sufficiently staffed and the remunerations and working conditions are not attractive. This could lead to high staff turnover and the lack of necessary expertise required to serve the members properly. In addition, most BAs have difficulty in generating operation funds. For many, sustainable finance is a crucial issue and BAs have been looking for different measures to assure minimum resources.
The experience from these and other Business Associations in Vietnam provides ample evidence of the potential benefits members can obtain from building effective advocacy strategies and providing worthwhile services for enterprise development. This publication has presented some of the experience of the associations but there is more to learn. Below follows other successful activities of the associations:
