Nghiên cứu các nhân tố ảnh hưởng tới nâng cao năng lực quản trị cho các doanh nghiệp nhỏ và vừa Việt Nam nhằm vượt qua hàng rào tiêu chuẩn quốc tế trong xuất khẩu nông sản

Nội dung text: Nghiên cứu các nhân tố ảnh hưởng tới nâng cao năng lực quản trị cho các doanh nghiệp nhỏ và vừa Việt Nam nhằm vượt qua hàng rào tiêu chuẩn quốc tế trong xuất khẩu nông sản

1. INFLUENTIAL FACTORS TO THE MANAGEMENT CAPACITY OF VIETNAMESE SMALL AND MEDIUM SIZED ENTERPRISES TO OVERCOME TECHNICAL TRADE BARRIERS IN AGRICULTURAL EXPORT Le Tien Dat, PhD Vu Thi Thuy Linh, MA Thuongmai University Abstract Small and medium sized enterprises (SMEs) play an important role in the growth, and have been considered as an import factor in the economic development strategies of Vietnam. When developing countries are more involved in the global supply chain of agricultural products, the role of Vietnamese agricultural export SMEs is increasingly crucial. However, the internationalization of Vietnamese agricultural exports SMEs is still unsustainable, mainly due to the limited resources, especially human resources. The shortage of labors and manager with efficient management capacity makes Vietnamese SMEs difficult to overcomes challenges, particularly those from trade barriers. To improve management capacity in particular, export performance in general, the consideration of influential factors is very necessary. The appropriate solutions and effective strategies cannot be developed without the consideration of such influential factors - that are factors from macro-environment, industry environment and internal factors. In this study, by using a qualitative approach, the researcher conducted interviews with 124 managers from Vietnamese agricultural export SMEs to investigate their perception with regard to influential factors to their export activities and management capacity improvement. These SMES are various in export markets, come from various cities in Vietnam and export different agricultural products. Based on the outcomes of the study, policies makers and SMEs may develop suitable programs to enhance management capacity as well as export performance for Vietnamese agricultural export SMEs to overcome trade barriers. Keywords: SMEs, agricultural exports, influential factors, trade barriers Tóm tắt Các doanh nghiệp vừa và nhỏ (DNNVV) đóng vai trò quan trọng trong sự tăng trưởng và được coi là thành phần cốt lõi trong chiến lược phát triển kinh tế của Việt Nam. Trong bối cảnh các quốc gia đang phát triển tham gia vào chuỗi cung ứng toàn cầu về sản phẩm nông nghiệp ngày càng sâu và rộng, vai trò của các doanh nghiệp xuất khẩu nông sản (DN XKNS) Việt Nam lại càng được khẳng định. Tuy nhiên, thực tế cho thấy quá trình quốc tế hóa của các DNNVV xuất khẩu nông sản Việt Nam còn chưa bền vững, một phần nhiều là do nguồn lực hạn chế, đặc biệt là nguồn nhân lực. Sự thiếu hụt về đội ngũ nhân lực, đặc biệt là đội ngũ nhà quản trị (NQT) có năng lực (NL) làm các DNNVV Việt Nam 347
2. gặp khó khăn trọng việc vượt qua các rào cản tiêu chuẩn kỹ thuật quốc tế. Để có thể nâng cao hiệu quả XK nói chung, nâng cao NLQT nói riêng, việc tính tới các nhân tố ảnh hưởng là cần thiết. Không thể đưa ra được các giải pháp và chiến lược phù hợp nếu không tính tới các nhân tố ảnh hưởng - ở đây bao gồm cả các nhân tố thuộc môi trường vĩ mô, các yếu tố thuộc môi trường ngành và các yếu tố bên trong DN. Trong nghiên cứu này, bằng việc sử dụng phương pháp nghiên cứu định tính, nhà nghiên cứu tiến hành phỏng vấn trực tiếp với 124 NQT DNNVV XK NS Việt Nam về các nhân tố ảnh hưởng tới nâng cao NL XK nói chung và NLQT nói riêng. Các DNNVV này có sự đa dạng về thị trường XK, đến từ các tỉnh, thành phố khác nhau và XK các sản phẩm đa dạng khác nhau. Dựa trên kết quả nghiên cứu, bản thân các NQT DNNV và các nhà hoạch định chính sách có thể đưa ra được các chương trình phù hợp nhằm nâng cao NLQT và hiệu quả XK cho DNNVV XK NS Việt Nam vượt qua các hàng rào kỹ thuật thương mại. Từ khóa: Doanh nghiệp nhỏ và vừa, xuất khẩu nông sản, các nhân tố ảnh hưởng, hàng rào thương mại 1. Introduction According to General Statistics Office of Vietnam (2017), Vietnamese SMEs accounted for a great number (98.1%) of all types of enterprises. SMEs are considered by the government as an important component in the socio-economic development strategies. However, most of Vietnamese SMEs still face difficulties in their development process, especially in the economic integration. These challenges may be due to the limitations in scale, the shortage of capital and difficulties in accessing capital, backward technology, inefficient corporate governance, lack of qualified human resources. Especially, SMEs which want to expand their exports to international markets may face much more difficulties related to trade barriers. The report of the Ministers Meeting on SMEs in 2018 (OECD, 2018, p. 20) organized by OECD shows that changes in business behaviors may have an impact on growth and innovation of enterprises (OECD, 2010). The growth of entrepreneurship and business requires a range of skills related to various fields such as trade (e.g. marketing and services), project management. (e.g. logistics, event management), finance (e.g. capital and cash management) and strategies (e.g. internal leadership development), which is especially difficult for SMEs. To promote growth, SMEs are required to overcome challenges in developing businesses while attracting and retaining qualified human resources, particularly upgrading management capacity (OECD, 2013). This paper is derived from a great project focusing on support for Vietnamese export agricultural SMEs to improve management capacity, with the aim of exporting more effectively, overcoming technical barriers in foreign markets. With such support, Vietnamese SMEs may take appropriate steps to develop and improve labor productivity, upgrade product value, and enhance export competitiveness. To carry out synchronously and effectively activities to improve export capacity and competitiveness of SMEs, it is necessary to study influential factors. In other words, support programs given should be placed in the consideration of influencing factors. Factors affecting the improvement of management 348
3. capacity of Vietnamese SMEs to overcome trade barriers in agricultural product export may include: Macro-environment factors, industry environment factors and internal factors. 2. Literature Review 2.1. Agricultural export SMEs and trade barriers imposed on SMEs in agricultural product exports Agricultural export SMEs Although most of successful exporters are large-scale enterprises, the involvement of SMEs in agricultural export has recently become more intensive. Especially, when developing countries are more involved in the global supply chain of agricultural products, the role of agricultural SMEs is increasingly important. The 2016 Global Trade Report (WTO, 2016) shows some of the characteristics of agricultural exports of SMEs as follows: (1) The proportion of SME participation in agricultural exports is still low compared to that of large enterprises; (2) SMEs participate in exporting agricultural products indirectly rather than directly; (3) Thanks to revolutionary advances in information technology and e-commerce, the potential of SMEs to participate in exports (especially direct exports) is increasing; (4) The potential of SMEs in the era of technological revolution makes governments more and more interested in promoting the participation of this sector in exporting agricultural products. According to the research of Hataba & Hess (2013, p.80), difficulties faced by SMEs in developing countries may include: fierce competition in international markets; financial and macroeconomic constraints; barriers related to administrative procedures and standards set by export countries; lack of human resources; and poor infrastructure. Although the agricultural export of SMEs is on the rise, the internationalization of SMEs in agricultural product import and export is still unsustainable in the global supply chain. There are several studies identifying the underlying causes for these limitations. As such, a major reason is that SMEs have limited financial and human resources (WTO, 2016), which makes SMEs face many difficulties in competition. In addition, SMEs in developing countries also cope with problems from business cultural differences and risks stemming from international agricultural markets fluctuation. In particular, according to the study of Neupert et al. (2006) challenges faced by SMEs in developing countries are often related to technical barriers concerning product quality and logistics management. Technical barriers when exporting agricultural products to demanding markets such as the EU, USA, Japan, Australia are great challenges for Vietnamese SMEs. Trade barriers imposed on SMEs in agricultural product exports According to Hataba & Hess (2013), there have been a number of studies on export barriers faced by enterprises in different sectors (see Haahti et al. 2005, Sousa et al. 2008). However, there are few empirical studies focusing on export barriers faced by enterprises in developing countries (Tesform and Lutz 2006, Al-Hazaimeh et al. 2011). Moreover, most of these studies focus on non-agricultural exporters, while the attention paid to exporters of agricultural commodities is insignificant (Kazem and Heijden 2006). 349
4. The study on export activities of tropical agricultural products such as bananas, pineapple, watermelon, coffee to three developing countries including Ecuador, Costa Rica, Kenya, show that most of manufacturers and exporters had to deal with trade barriers related to the Agreement on Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary Measures (SPS). The study also emphasizes that the number of requirements from those measures, combined with specific requirements of trading countries, is increasing. Continual changes in the allowable level of chemical residues in products, as well as permitted agrochemicals, are significant barriers to agricultural exports. In addition, SMEs have a lot of difficulties rather than large firms when facing strict trade barriers from developed markets. This requires SMEs to constantly update information, apply technology in production and export, as well as cooperate with other SMEs to form a larger-scale business such as cooperatives. Despite recent trade liberalization, tariffs remain a significant barrier to export (Disdier, Fekadu, Murillo, & Wong, 2008, p. 96). The statistical analysis also indicates that there are differences in the requirements of SPS and TBT among trading countries. Almost developed countries included in the research sample (EU, Canada, USA, Japan, Australia and Switzerland) did not use the same SPS and TBT measures. These differences created more difficulties for export SMEs from developing countries (Disdier, Fekadu, Murillo, & Wong, 2008). The impact of SPS measures can be grouped into three categories: (1) Trading countries may prohibit transactions by imposing import bans or by increasing production and marketing costs; (2) Trading countries may divert transactions from one trading partner to another by setting conditions that discriminate against certain sources of supply; (3) Trading countries can reduce overall transactions by increasing costs or increasing barriers for all potential suppliers. These issues have a great impact on the export SMEs from developing countries (Henson & Loader, 2001, p. 89). The Integrated Trade Intelligence Portal (I-TIP) also contains a detailed description of trade policy measures, including tariffs and non-tariff measures. Non-tariff measures include: TBT, SPS, trade measures, special agricultural protection measures, quantitative restrictions and state-owned enterprises. The majority of measures taken by APEC and EU economies are SPS and TBT. Of the measures taken by EU countries for exports of agriculture, food, and handicrafts, nearly 75% of the total SPS measures are for agricultural imports. TBT technical barriers account for 12.81% of the total barriers. SPS and TBT together account for nearly 88% of the total barriers. Tariff quotas rank third with 6.45% followed by special agricultural protection measures. APEC (2014) shows that anti- dumping, SPS and TBT are main measures affecting the APEC economies. Agricultural export is one of the most affected sector (APEC, 2016, p. 20). 2.2. Influential factors to the management capacity improvement of SMEs to overcome trade barriers in agricultural exports 2.2.1. Macro-environment factors Factors related to economic, cultural, social, and natural environment The international and domestic economic environment has a great influence on 350
5. management capacity of SMEs to overcome technical barriers. When the economy is open, this creates favorable conditions for trading activities, both export-import activities of SMEs and such SMEs find easier to attract qualified human resources. Also, these SME managers have more chances to learn from international businesses, and thereby, the management capacity may be significantly improved. In addition, an open economy also requires SMEs’ innovation in production and capacity improvement to compete with domestic and foreign enterprises. These factors directly affect SMEs, forcing SME managers to constantly improve the business management capacity. The cultural and social environment covers social attitudes and cultural values. The education system, economic and social environment also affect the development of management capacity of SMEs. Cultural factors of the region also affect the formation of SME management capacity (Thao, 2016). The cultural and social characteristics such as different value scales, gender and social class in each country and region also significantly affect human resources management. The natural environment may include factors such as geographic location, climate, natural resources, land, rivers and lakes. For SMEs operating in the agricultural sector in general, in farming and processing agricultural products in particular, natural conditions have a direct impact on the quality of their inputs and outputs. If the natural environment is suitable and favorable, agricultural enterprises get better conditions to reach required output quality. Conversely, if the natural environment is not favorable, it may significantly affect the production of these SMEs. Agricultural sector is seen as the field that is extremely affected by natural environment, which requires the effective management capacity of SMEs, particularly when they “go global”. Institutional and supporting policies for SMEs The system of state governance policies from central to local levels may relate to support programs on developing businesses and entrepreneurs. Understanding and mastering the state's laws and policies related to the business fields is imperative for SMEs to take appropriate actions and comply with the laws (Huong, 2017). SMEs play an important role in the country's economic development, so it is necessary to provide this sector with state’s supports through governance policies. When SMEs want to send their products to foreign markets, meeting the increasingly technical standards, they are required to have adequate management capacity. Therefore, with appropriate support policies, SMEs may have more opportunities and conditions to enhance management capacity, develop business activities to reach international markets. Regulations related to international technical standards for agricultural export Understanding rules related to international technical standards, policies set by trading countries and supports from the Vietnamese government is necessary for export SMEs. Mastering these regulations, SMEs may equip themselves with enough knowledge and skills needed to deal with requirements of the international market in general, specific requirements of each trading country in particular. Therefore, it can contribute to increasing the value of products to meet the requirements of trading countries, improving 351
6. export volume and enhancing competitiveness of SMEs in international markets. Policies of trading countries Trading countries may create policies to protect their agricultural production, improving the competitiveness of their agricultural products and stabilize their markets. However, this could be a challenge for SMEs exporting to these markets. Therefore, SMEs should understand clearly rules and policies of trading countries to take appropriate measures to cope with requirements set by such markets, especially strict regulations related to international technical standards. Many countries develop measures in order to apply standards in areas such as quality, hygiene, safety, labor, environment, origin or to impose high import and export taxes on certain imported goods to protect the country's manufacturing and services. It can be said that the policies of trading countries may greatly affect SMEs’ exports, forcing SMEs to make appropriate preparations to meet the requirements of these export markets. This requires SMEs to improve management capacity to develop properly, not being eliminated from the markets, taking advantages of opportunities from international markets. Support policies and measures of trading countries Vietnamese SMEs are facing a lot of obstacles in export due to a number of reasons such as small scale, lack of linkage with other enterprises in the same industries, outdated production technology, and limited management capacity. In addition, the competitiveness of key agricultural products is still poor. They lack brands in the international markets, mainly export raw products, and thus, the added value of Vietnamese export agricultural products is insignificant. International technical barriers are major difficulties for Vietnamese SMEs, The percentage of Vietnam's export goods meeting international technical standards makes up only about 5% (Giang, 2017). Therefore, policies and measures to support export SMEs are extremely necessary. These policies may include: - Develop legal documents and regulations related to the application of TBT and SPS for agricultural products to protect domestic agricultural production. - Develop national standards and regulations, in accordance with regulations of regional and international export markets. By doing so, manufacturing SMEs will not be unfamiliar with regulations or technical barriers when exporting agricultural products to foreign markets. - Adjust support policies, attract investment in the agricultural sector, improve product quality to satisfy technical standards. Meanwhile, enhance brands of Vietnam's agriculture in international markets; develop trade promotion activities; provide updated information for key SMEs and cooperatives in agricultural field. - Give priority to financial investment for research and technology transfer in order to apply new technologies and “green” technologies to production. Strengthen cooperation with countries in the region and the world to study and update advanced science and technology measures in production, disease prevention, preservation and agricultural production process. The government also needs to improve technical and management 352
7. capacity as well as socialization of vocational training to facilitate farmers to access to new technologies applied in production activities (Trung, 2016). - Continue to innovate and develop effective production methods, build concentrated raw material production areas; promote linkage of cooperatives. - Continue to negotiate with trading countries to remove trade barriers for Vietnamese agricultural products. This important factor has a direct impact on the export performance in general and on the management capacity improvment of SMEs in particular. Having support from state policies is a favorable condition for Vietnamese SMEs to improve production capacity, improve employee and management capacity. These supports also help SMEs understand export requirements and rules of trading countries, thereby strengthening brands for Vietnamese agricultural export SMEs. 2.2.2. Industry environment Factors Association connection Associations have an important impact on the development of SMEs. With limited business size, limited resources and capacity, joining the associations may promote the development of SMEs, creating a cooperative link between SMEs. The association of SMEs from the central to local levels may help SMEs share knowledge and experience through organizing workshops, consulting and training activities and trading promotion, which may management capacity of SMEs (Thao, 2016). Some of supports provided by associations can be listed as: training activities to improve the level of specialized technology and production techniques; support for brand development and market expansion; consultants on standards, technical regulations, measurement and quality; support for the implementation of procedures for trial production, testing, inspection and certification of product quality Competition level In the economic integration, the increasingly fierce competition in both domestic and international markets requires SMEs to constantly make efforts to meet new arising requirements. To survive, SMEs need to develop sustainably. Competition requires SMEs to innovate management, enhance management capacity, improve production processes, apply scientific and technological achievements, innovate and diversify products. 2.2.3. Internal factors Management Management is one of the main factors determining the success of SMEs, especially in their strategy development and implementation. In order to achieve the organization's goals effectively, SME managers need knowledge, skills, ethical qualities Financial capacity According to Huong (2017), a company's financial capacity is the ability to ensure financial resources for its operations to achieve goals. This is reflected in the ability to 353
8. mobilize capital needed for their activities. This can be seen through capital size, ability to mobilize and use capital effectively, and financial management capacity. For agricultural export SMEs, the financial capability becomes more important when the agricultural sector often requires a large capital. In the competitive context, SMEs need capital to upgrade technology to meet the requirements related to international technical standards. Technology According to Huyen (2018), when requirements related to international technical standards from trading markets are increasingly demanding, Vietnamese SMEs need to promote technological innovation, apply scientific and technology advances in business and production to improve product quality, create new and diversified products, increase labor productivity, lower costs, rational and economical use of materials in order to compete and expand markets, develop production and business fast and sustainably. Without technological innovation, production lines, machines, equipment will become outdated, leading to low economic efficiency. At that time, SMEs may find harder to meet international technical standards. Poor technological capacity may threat the development of SMEs. Therefore, technological innovation needs to be indispensable and consistent with the requirements of development. 3. Research Methodology This paper aims to investigates the perceptions of Vietnamese agricultural export SMEs with regard to the impact of factors affecting the export of agricultural products, especially to the management capacity improvement of SMEs. Based on the relevant literatures (see 2.2), the research framework was developed and guides the research Figure 1: Research framework 00 MACRO ENVIRONMENT SME export INDUSTRY management ENVIRONMENT capacity INTERNAL ENVIRONMENT Source: Authors In the study where the perceptions of participants are explored, the qualitative research method is seen the most appropriate method. The use of in-depth interviews assisted the researcher in investigating the perceptions of respondents about the influencing factors, as well as their extent of impact. 354
9. Interviews were conducted with 124 managers of Vietnamese agricultural export SMEs. Interviewers come from many cities/provinces such as Hanoi (35.48%), Bac Giang (17.74%), Ha Nam (12.90%), Son La (12.10%), Hai Duong (10.48%) and other cities/provinces such as Lang Son, Thai Nguyen, Lai Chau, Yen Bai, Ninh Binh, Nam Dinh, Quang Ninh, Ha Tinh. Such SMEs also have a variety of exported agricultural products such as teas, sugarcane, coffee, vegetables and their export markets are also different, mostly export to China (41.49%), EU (15.32%), US (3.23%) and other markets (39.52%) such as Korea, India, Taiwan, Singapore, Hungary, Belarut, Afganistan Based on the list from support agencies for export SMEs in provinces/cities, particularly the support from the Ministry of Planning and Investment, the researcher contacted and conducted interviews. Many participants were referred by previous interviewees, reflecting the usefulness of the "snowball" method in qualitative research. The interviews were mainly conducted at the office of participants and at the least-busy time, which was considered convenient to the interviewees. The interview protocol was built based on the literatures, and was adjusted to optimize the effectiveness of interviews. After data collection, the researcher used step-by- step qualitative data analysis method suggested by Creswell (2014) to analyze the data. To begin with, the audio records of the interviews were transcribed into word documents. In the early stage of data analysis, the researcher also sorted and arranged different types of data collected, such as field-note and additional documents which could be useful in the latter stages. These steps are considered useful in the process of organizing and preparing data for analysis (Creswell 2014). Once the data had been transcribed, the researcher read through it all to gain a general sense of the information. This is the stage where researcher “read the transcripts in their entirely several times, immerse yourself in the details, trying to get a sense of the interview as a whole before breaking it into parts” (Agar 1980, p.103). Next, these transcripts were summarized by shortening long interview passages into short sentences reflecting the content of the whole paragraph. By doing so, the researcher started developing rich ideas about the topics and arranging data for coding. As a result of this process, the researcher had a list of main and subtopics, ready for data coding step. The research results were presented in a descriptive form, based on the main topics, sub- topics, demonstrated examples, and multi-dimensional views from interviewees. The topics described were primarily based on the content analyzed from the interviews. In addition, examples and opinions expressed by participants were also directly quoted to make readers get the 'feel' contained in the answers as well as the “liveliness” in real business situations, adding to the persuasion of qualitative research results. 4. Results According to the General Statistics Office (2018), in 2018 global trade increased slowly, inflation rose, especially the increase in trade tensions between major countries, along with the trade protectionism, had a great impact on Vietnam's production and exports. 355
10. Fluctuations in economy may create opportunities and challenges for SMEs. In such context, SME managers must monitor, analyze and forecast the fluctuations to develop timely and appropriate solutions and policies. At the same time, SMEs themselves must constantly improve the management capacity to actively take advantage of opportunities from beneficial fluctuations, as well as to overcome challenges from the economy, especially from the increasingly stringent international trade barriers. Vietnam is a country with agricultural production heavily influenced by natural conditions. Agricultural production depends on the fertility of the land, the quality of water sources and the climate. Therefore, to produce clean and sustainable agriculture, it is necessary to preserve the natural environment and upgrade agricultural production. Understanding the features of soil, climate, water resources may help manufacturing and export SMEs, as well as farmers to produce agricultural products with high productivity, good quality, in appropriate to natural conditions and international technical standards such as Global GAP or ISO 22000. In the last 5 years, Vietnam has launched many policies to support enterprises, especially paying great attention to SMEs, because this sector accounts for over 90% of the total number of operating enterprises and is holding an irreplaceable position in the country's economic development and social stability. Some of these policies can be listed as: Resolution No. 19/2016/NQ-CP on improving the business environment and improving Vietnam's national competitiveness; Resolution No. 35/2016 / NQ-CP on supporting and developing enterprises to 2020. In 2018, the Government has implemented the Law on SME Support. According to Liu (2007), labeling regulations require information such as the country of origin, product name, type and quantity. Requirements related to product quality are the type, color, expired date, damage and shape of the product. The European Community requires imported fresh fruits and vegetables to meet EU market standards for quality and labeling, especially GLOBALGAP standards. Table 2.38: EU documents and directives related to food safety Documents European food law Regulation (EC) 178/200 Food hygiene includes hazard analysis and Regulation (EC) 852/2004; 853/2004; critical control points (HACCP) 854/2004 Contaminants in food Regulation (EC) 1881/2006 The maximum regulatory level for eruxic Directive 76/621 / EEC acid in oils and fats Maximum pesticide residue level in food Regulation (EC) 396/2005 Microbiological contamination in food Regulation (EC) 2073/2005 Sources: Authors In the following content, by using qualitative research methods, perceptions of SME managers with regard to factors influencing to agricultural export effectiveness in general, management capacity in particular to overcome technical trade barriers, were analyzed and presented. Accordingly, the macro-environment factors highlighted by the 356
11. SME managers include: the economic environment; legal and political environment; socio- cultural environment; science and technology environment; natural environment. Factors in the industry environment mentioned include: customers; partner; competitors; supplier and state agencies. The internal factors described by the SME managers in this study include two main factors: human resources and technology. 4.1. Macro-environment factors Economic environment - Protectionism of economies The first factor that may affect the export activities of SMEs in general, the efforts of SMEs export to gain international technical standards in particular, is an economic environment. Currently, economies with domestic production protectionism have been creating more and more barriers for export enterprises, especially stricter barriers concerning international technical standards. In addition, policies such as closing the border gates and limiting importing goods are policies causing many difficulties for enterprises, especially those from countries on the “black list”. - The stability of the economy The economic stability of both exporting and importing countries also affects export performance and activities to meet the standards of SMEs. Other factors of economic environment such as foreign exchange rates are also considered to have significant impact on export activities in general, on the efforts towards achieving export standards of Vietnamese agricultural export SMEs in particular. - Vietnam's economic development goals More specifically, Vietnam's economic development goals and strategies were also identified by the interviewers in the study to affect the ability to meet international technical standards of Vietnamese agricultural export SMEs. Accordingly, in line with the goals of economic development, policies to encourage or restrict industries are given. In the context when the export of agriculture is highly paid attention, the conditions for Vietnamese SMEs to meet international technical standards are better. One SME manager said: "Along with objectives set in economic development, the government can introduce policies to encourage or restrict agricultural export, and SMEs can benefit from those incentives" (M_81). - Changes in the economic environment of the trading countries and the relationship between Vietnam and other nations Changes in the economic environment of trading countries are also seen as an influencing factor. These changes create conditions for trading activities to be more dynamic, but also makes international technical standards stricter. In addition, the economic relationship between Vietnam and other countries also has a significant influence to the efforts to achieve international technical standards of Vietnamese SMEs. According to the manager in this study, "European countries do not often have a sympathetic view with Vietnamese SMEs" (M_96), and thus, Vietnamese SMEs must make more efforts to export to this market. 357
12. Legal and political environment - The political and legal environment of trading countries and Vietnam Factors in the legal environment are seen to directly affect the ability of SMEs to meet international technical standards because “state agencies set standards” (M_49). Therefore, in order to meet these standards, SMEs themselves must have a full understanding of the laws of trading countries, as well as those of Vietnam. - Regulations from regional trade agreements and international organizations in which Vietnam is a member In addition to the regulations of Vietnam’s law, the rules set in the agreements and regulations of regional and world trade organizations in which Vietnam is a member also affect export activities in general, to capacity to gain international technical standards of Vietnamese export SMEs in particular. - Export incentive policies of the government The government's incentive export policies are also believed to directly affect the capacity to meet international technical standards of Vietnamese agricultural export SMEs. These policies may be directly applied for export, for international technical standard achievement, or for related activities such as scientific and technological development for production and export. Cultural and Social Environment In addition to the economic, political and legal environment, the socio-cultural environment also affects the export activities, achieving international technical standards of Vietnamese agricultural export SMEs. For example, cultural differences affect business practices, especially the way in which international technical standards are negotiated in commercial contracts. And of course, the easy or strict of standards in exporting is affected by the long-standing business culture of different countries. One SME manager shared: "In international business, if SMEs want to export, they must pay attention and study cultural factors, especially the business culture concerning negotiation and contractual conditions" (M_123). Scientific and Technological Environment Export SMEs, especially those aimed at meeting international technical standards, are significantly impacted by the scientific and technological environment. The science and technology factors are not only a condition for innovation, increasing productivity and product quality, but also a pressure for SMEs. According to SME managers in the research, the science and technology environment is constantly changing and it requires the export SMEs to constantly innovate to meet standards and make good use of scientific and technical improvement. As shared by one manager: “International technical standards are constantly changing due to the modern technology applied by big countries. Meanwhile, the technology capacity of Vietnamese SMEs has not developed adequately to meet these standards” (M_55). Science and technology is also an important factor to enhance the value of 358
13. agricultural export. One SME manager stressed: “Science and technology are the key issues in agricultural export. Without the application of modern technology, it is hard for Vietnamese agricultural products to meet international technical standards” (M_99). Therefore, enhancing the development and application of advanced science and technology has become a task that many SMEs prioritize, as share by one SME manager "technology plays an important role in upgrading business scale, increasing competitiveness, greatly improving the quality of agricultural products" (M_115). Natural environment - Advantages/ disadvantages from natural conditions, weather, climate, water sources In exporting agricultural products, the natural environment is certainly the factor that Vietnamese agricultural export SMEs should strongly consider. These natural factors may be favorable or unfavorable, and may include those related to weather, air, water resources. Natural factors may directly affect the output as well as the quality of agricultural products. Economic environment Protectionism of economies The stability of the economy Vietnam's economic development goals Changes in the economic environment of the trading countries and the relationship between Vietnam and other nations Legal and political environment The political and legal environment of trading countries and Vietnam Regulations from regional trade agreements and international organizations in which Vietnam is a member Export incentive policies of the government Cultural and Social Environment Scientific and Technological Environment Natural environment Advantages/ disadvantages from natural conditions, weather, climate, water sources Source: Authors 4.2.Industry-environment factors Customers The customer was also emphasized by many SME managers in the research as an important factor, as shared by SME managers "Customer is a prerequisite for business orientation" (M_44) or "customer is the one who decides the price and quality standards in 359
14. business transactions" (M_115). As the person who selects, consumes and evaluates products, so when their quality and standard requirements are higher, the suppliers - that is the Vietnamese agricultural exporters, must also satisfy them. In addition, the "agricultural product consuming trend" (M_56) is also a factor that Vietnamese SMEs have to predict in order to develop appropriate business strategies. In particular, recent customers in large markets are increasingly difficult, as commented by one exporter "foreign customers are difficult and demanding, not really trust Vietnamese agricultural products" (M_96). The opportunity to interact with customers, especially foreign customers, is also a decisive factor for export success. Interacting with customers helps SMEs fully understand the requirements and standards set out by the customers. However, this is also considered as a limitation of Vietnamese export SMEs when "the ability to connect with customers of Vietnamese SMEs is limited, and SMEs have not received much support from the government" (M_95). Business Partners Besides the tastes of individual customers, the requirements of industrial customer, especially those of export partners are also factors needed to be considered. Different partners, with different economic, cultural, business practices and market characteristics, may have different ways of doing business, dealing and demanding. For example, partners from the United States and EU are often professional but fastidious, while partners from China are flexible but unstable and inconsistent in business. Competitors In business, facing competition is an inevitable, and this is more difficult in the international business environment. Competitive strategies of competitors may directly affect business performance of SMEs. Especially in export activities, competitors from importing markets often receive incentive policies, especially trade protection policies of host countries. Meanwhile, competitors from other countries may receive preferential treatment from favorable trade agreement and diplomatic relations between nations, so international technical barriers may be easier to overcome. On the other hand, unfair competition such as trade frauds or dumping is also an issue related to competitors that export SMEs need to take into account. Unpredictable policies of unfair competitors always force enterprises to research, forecast and take measures to prevent and manage risks. Competitors can cause businesses difficulties related to price or market/ market share. Besides above negative impacts, according to the SME managers in this study, competition should also be viewed in a positive light. Accordingly, the factor of competitors may require SMEs to constantly innovate products, upgrade technology, create products to meet international technical standards. As the rule of elimination, if not meet the requirements, enterprises may be eliminated from the market of agricultural export. One SME manager stressed: “Competition, on the one hand, also motivates SMEs to invest in machinery and equipment, upgrade product quality, thereby more easily to meet 360
15. international technical standards. But on the other hand, it may reject SMEs that are unable or slow to adapt to market changes and demands” (M_123). Suppliers - Quality of agricultural suppliers For agricultural export SMEs, the supplier factor is crucial to the success or failure of their export activities. The quality of agricultural products from the suppliers may determine whether or not SMEs satisfy international technical standards. Factors such as production methods, technical processes that suppliers use also greatly influence the standards of export products. As one SME manager said: “The supplier is very important to export SMEs. The supplier decides the quantity of export goods, the price in the transaction, and especially the quality that may meet the international technical standards” (M_115) For SMEs operating in both manufacturing and exporting agricultural products, the supplier of raw materials or other factors such as pesticides may determine the capacity of SMEs to meet standards. - The uniformity and capacity of the agricultural export suppliers In addition, as almost agricultural suppliers of SMEs are farmer households, their lack of understanding and inconsistency in the production process may greatly affect the capacity of export SMEs to meet international technical standard. Meanwhile, small producers, individual business households and even farmers are normally not familiar with using high technology. They get used to with old-styled business practices such as using pesticide, which may cause negative effects to Vietnamese agricultural export SMEs to meet international technical standards - Financial providers In addition, the financial providers such as banks may also affect the ability of Vietnamese export SMEs to invest in improving production and processing technologies to ensure the quality of agricultural product export The government agencies - Capacity of government officials State management policies may directly affect export activities in general and the capacity to meet international technical standards in particular. When the state has effective management of export activities, from managing input materials such as biological products, pesticides to governing irradiation and quarantine, this may facilitate SMEs in exporting their agricultural products. According to the comments of the SME manager "Vietnam's policies are not really favorable, many incentive documents are in paper forms only, and the governance capacity of state officials is limited" (M95), especially "the use of pesticides is still widespread and has not been well managed in Vietnam” (M_119). Similar to the economic environment, the stability or instability of the political- legal environment may directly affect the ability of SMEs to meet international technical 361
16. standards. Accordingly, export activities are governed by the law, and SMEs are always in the passive situation to comply with the law. When the law is stable, the export activities of enterprises will be less volatile. At that time, SMEs may invest in production and export better agricultural products. Table 2: Industry-environment factors affecting to management capacity of Vietnamese SMEs to overcome international technical barriers in agricultural export Customers Business Partners Competitors Quality of agricultural suppliers The uniformity and capacity of the agricultural export suppliers Financial providers The government agencies Capacity of government officials Source: Authors 4.3. Internal factors Human Resources - Managers Factors related to managers may also have great influence to the capacity to meet international technical standards of SMEs. One manager stressed: "Factors related to manager is firstly seen in the ability to set goals, formulate strategies, implement and manage activities" (M_115). When SME managers have good capacity to construct and implement strategies, this may guide long-term development of SMEs, thereby achieving export goals and overcoming strict international technical barriers in foreign markets. In addition, SME managers in this study emphasized the management capacity in using resources to meet standards. Accordingly, SME managers need to be equipped with skills to use resources such as financial resources, technological resources, human resources to create products satisfying international technical standards. One SME manager said: "Competent managers will know how to use enterprise resources skillfully in the most beneficial direction, saving expenses, improving production and export efficiency" (M_56) - Ability to seize opportunities of managers More specifically, other factors related to managers such as their strategic vision, their ability to grasp the opportunities may also affect the ability to meet international technical standards of SMEs. When SME managers have a good strategic vision, they may know how to prepare and mobilize resources towards readiness to provide standards- compliant products. Also, when SME managers have the ability to seize good 362
17. opportunities, they may know which opportunities are really suitable to their capacity, particularly the capacity in satisfying international technical standards to make right decisions to enter appropriate markets. - Skilled labor force The qualification and skills of workers may affect the uniformity and quality of agricultural export products. Although other factors such as technology and in-put materials are good, without skilled workers, it would be difficult for SMEs to create products satisfying international technical standards for export. Employees directly involved in export activities are also required to have good capacity, high qualifications, and good sensitivity in the international environment. Finance The financial capability of SMEs is considered as the key to success for the development of enterprises, "determining the competitiveness of SMEs. Good financial capacity is related to the ability to use high quality human resources, to invest in equipment, to upgrade technology. As a result, the products of SMEs may be improved in terms of quality, meeting the most rigorous standards. In exporting agricultural products, orders are always huge, requiring a large amount of capital and pay-in-advance method. With these characteristics, "good financial resources help SMEs to meet the needs of timely production of export orders "(M_63). - Capital size & ability to collect capital The size of capital and ability to collect capital directly determine the financial capacity of SMEs. In other words, the financial capability of SMEs is reflected in the existing capital size and their ability to raise capital. Financial capacity is related to the restriction or development of other resources of SMEs, therefore it is a premise for all activities of enterprises. Especially for SMEs, the capital scale is often not large, which requires SMEs to have a good capital mobilization capacity to meet development needs. One SME manager said: "Only when having stable financial ability, SMEs can start exporting and enhancing export performance" (M_115). Technology - The ability to organize production; Production technology; Technology for harvesting, preserving and processing Production technology has a direct impact on output and quality satisfying international technical standards. Accordingly, high production technology, more specifically the capacity of upgrading machinery and equipment, helps SMEs to improve productivity. Only when the production technology, particularly the technology of harvesting, preserving and processing is effective, the quality can be guaranteed. Besides, the production technology directly determines the product design, the ability to meet standards related to manufacturing safety and environmental protection. The production line technology decides the uniformity of agricultural export products. 363
18. Table 3: Internal factors affecting the improvement of management capacity of Vietnamese SMEs to overcome international technical barriers in agricultural export Human Resources Managers Ability to seize opportunities of managers Skilled labor force Finance Capital size & ability to collect capital Technology The ability to organize production; Production technology; Technology for harvesting, preserving and processing Source: Authors 5. Solutions to enhance the management capacity of SMEs to overcome trade barriers in agricultural export in the consideration of influential factors To improve export efficiency in general, management capacity in agricultural product exports in particular, overcoming international technical barriers, the consideration of influencing factors is strongly necessary. Understanding such factors, SMEs may know how to use their internal capacity (S-strengths, W-weakness) to take advantages of opportunities (O) and cope with threats (T). Meanwhile, government agencies also need to create conditions to build a favorable development environment for SMEs in the agricultural export general, in improving their management capacity to overcome international technical barriers in particular. Solutions related to macro-environment factors To survive and develop in the context of economic fluctuations, SME managers need to proactively monitor, analyze and forecast the changes of macro-environment factors to create solutions timely and appropriately to seize opportunities, as well as to minimize risks and threats. Also, export SME managers should take advantage of support policies from the state to take appropriate steps to satisfy the stringent requirements of export countries. Promoting innovation in SMEs to meet constantly changing requirements from international technical standards requires the improvement related to institutional framework and policy measures towards innovation. With advanced innovation, SME managers are asked to improve capacity to take use of such innovation, and then, they may find effective methods to help their export meet international technical standards. In addition to supports from the government, it is also necessary to enhance the role of localities and business associations in improving management capacity of SMEs. Provinces with many successful agricultural export SMEs can exemplify other localities. Clubs, associations may be a place/forum to share and study for the SME managers, especially for SMEs newly involved in the field of agricultural export. Solutions related to industry environment factors Relevant agencies need to create support policies and specific action programs to 364
19. support SMEs to improve their human resources in general, their management capacity in particular. These programs may include management training classes (in training institutions or in SMEs) and field-trips to SMEs that succeeded in exporting agricultural products. By doing so, SMEs may be supplemented with more theoretical and practical knowledge. Authorities also need to develop the quality management system to apply unified standards for agricultural export products. These standards should be constantly updated from the main import markets such as the US, EU, Japan, Australia. This system should have the connection between: customers (import partners), manufacturing enterprises and supplier. This may create favorable conditions for negotiating and handling possible risks. This may also greatly support SMEs in the process of managing their export activities. Besides, SME managers themselves need to understand policies and regulations of the country importing their agricultural products in order to successfully export agricultural products and compete with competitors. Solutions related to internal factors Agricultural export SMEs need to focus on strengthening the management capacity, including some management skills such as leadership skills, presentation skills; technical management skills; human resource management skills; contract negotiation skills; product quality management skills; information technology applications skills; new product development skills. This may help SMEs better manage the manufacturing and business process, gradually penetrating and expanding foreign markets. SME managers also need to be equipped with more knowledge about business fields, leadership, strategies, and other knowledge related to corporate culture, change management, and international economic integration, foreign languages, information technology. With such knowledge, SMEs may improve the management capacity, be proactive in finding strategies and business opportunities, expanding export markets, dealing with policies and barriers from export countries, thereby promoting businesses to grow and compete successfully in international markets. To effectively use new technology equipment, SMEs need to develop human resources who are trained in relevant field, to meet actual production needs. Also, SMEs need to create appropriate environment to maximize the creative capacity of the labor force. Training human resources in combination with improving management, developing effective training polices and regulations, applying new training methods may help SMEs prepare good capacity to cope with requirements from increasingly technical standards. Cooperating with universities and training institutions may also assist SMEs to have effective workers to develop appropriate agricultural products meeting the standards. Agricultural export SME managers need to improve labor quality, production technology equipment, product quality, dynamism and creativity if they want to upgrade their brand value and competitiveness in international markets. If SMEs want to maintain and expand their production and business, they should invest in the renewal of equipment and technology to facilitate product and market 365
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22. products M_81 Director Son La LC Manufacturing <10 <10 11-20 Iran and exporting teas M_95 Director Bac LC Investing and 200-300 10-20 11-20 Russia, Giang developing Belarut, agriculture Hungary M_96 Director Bac LC Trading and 10-200 20-100 11-20 China Giang exporting agricultural products (M_99 Director Bac JSC Manufacturing 10-200 20-100 11-20 China Giang and exporting food M_115 Head of Hai JSC Manufacturing 10-200 20-100 11-20 EU Sale Duong and exporting Dep. agricultural products M_119 Head of Hai LC Manufacturing 10-200 <10 3-5 China Sale Duong and exporting Dep. agricultural products M_123 Director Quang JSC Trading 10-200 20-100 3-5 others Ninh agricultural products 368