تصمیم گیری های صادرات و قرارداد از شرکت های کوچک و متوسط ویتنام The exporting and subcontracting decisions of Viet Nam’s small- and medium-sized enterprises

1. Introduction and background Viet Nam’s economic achievements since the start of đổi mới in 1986 are remarkable. Real income per capita (purchasing power parity basis) in 1990 was only 5.2 per cent of the income levels of high-income countries. By 2016, this reached 13.8 per cent (World Bank, 2017). More importantly, the percentage of the population living in poverty dropped from 77.1 per cent in 1992 to 12.0 per cent in 2014.1 Viet Nam’s economic achievements are partly due to its export success (WTO, 2013). However, a majority of the country’s exports are from foreign-invested enterprises (FIEs) with a 70.7 per cent share of Viet Nam’s exports in 2015, and FIEs import more than half of their inputs (Malesky, 2016). This means that a large part of Viet Nam’s exports are predicated on assembly work with minimal local content. There is recognition on the part of Viet Nam’s government that small- and medium-sized enterprises (SMEs) might benefit from internationalization through exposure to increased competition and quality standards, or through learning by doing.2 Decision No. 1231/QĐ-TTg dated 7 September 2012 approved Viet Nam’s 2011–15 Small and Medium Enterprises Development Plan which sought to increase the share of SMEs to 25 per cent of exports.3 On June 12, 2017, Viet Nam’s National Assembly passed the Law on Supporting SMEs which takes effect January 1, 2018 (KPMG, 2017). Because SMEs account for a considerable share of enterprises in Viet Nam, enhancing their competitiveness through internationalization has the potential for delivering considerable macro effects in the form of increased employment and income, improved working conditions, and production diversification.4 But, hurdles to internationalization by SMEs are also numerous. What determines whether SMEs manage to internationalize? Enterprises’ exporting decision is well studied in the literature, but their subcontracting decision is not. In the context of Viet Nam, the decision to work as subcontractor or not turns out to be quite pertinent.5 Tas and van Oyen (2000) describe Vietnamese government’s efforts to raise awareness among SMEs of the benefits of subcontracting, and modest attempts by the Viet Nam Chamber of Commerce and Industry in the late 1990s at matching potential subcontractors with contractors. These attempts were largely unsuccessful due primarily to a weak institutional environment and limited local firm capabilities. Since then, the legal and regulatory environments are much improved, and subcontracting has become one of the cornerstones of Viet Nam’s development strategy. In fact, the 2014 amendment to Viet Nam’s Law on Investment provides preferential treatment to subcontractors (referred to as supporting industries) in support of select industries such as electronics. Because of subcontracting’s potential to complement enterprises’ internationalization efforts, we expand current literature by considering enterprises’ joint exporting and subcontracting decisions. In particular, we focus on whether these decisions are related to SMEs’ access to finance, knowledge of relevant laws, and technical capacity. These three areas are addressed by Viet Nam’s 2011–15 SME Development Plan.6 Their importance is reflected in the survey data we use where respondents say authorities can best ‘help the enterprise expand and increase its profits’ by providing access to credit (18.4 per cent indicate this as most important in the 2015 survey), by further removing bureaucratic requirements/restrictions (16.3 per cent), and through better private sector policies (12.9 per cent).