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A Research Report : A Team from Seijo University Conducts Interviews with People in Vietnamese SMEs

Okio Fukushima (Institute for Economic Studies, Seijo University)

We conducted a survey in Vietnam from August 16 to 26, 2017, as part of Seijo University’s MEXT-supported Research Branding Program for Private Universities. The survey was conducted among local small and medium-sized enterprises (SMEs), industrial estates, and banks, with which Japanese firms may collaborate in the future. I conducted the survey, along with Nobuyuki Tsuru (Sanno University) and Kazumasa Aoyama (Tokyo Fuji University).
We began the survey by visiting five SMEs in Hanoi. These SMEs manufacture goods, such as valves, concrete, and wooden household furniture. The management of each firm follows Japanese corporate practices, having undergone a training program provided locally by the Japan International Cooperation Agency. Methodologies, such as kaizen and 5S, are a staple of Japanese SMEs, but they are novel concepts in Vietnam, a socialist state in which the private-sector SMEs are relatively new. The five SMEs we visited achieved striking outcomes after being introduced to these methodologies. However, these methodologies represent a break from traditional local practices, and it will take some time for the management and staff to fully understand them.

Next, we visited firms in Ho Chi Minh City. We also visited Mizuho Bank’s Ho Chi Minh City branch to inquire about the recent trends in Japanese investment in Vietnam, and how Japanese SMEs are faring in the country. Japan provides the second largest amount of foreign direct investment in Vietnam. Having completed their initial step—investing in manufacturing-oriented industrial estates—Japanese businesses have now shifted their focus toward reinvestment, expansion, and construction.
The interviewees also reported a groundswell of investment in restaurants, retail, services, IT, and real estate. The opening of Aeon Mall and Takashimaya stores in the city have been trumpeted in the Japanese media; however, according to the interviewees, this trend seems to be overheating in District 7, with large-scale developments (e.g., residential complexes and shopping malls) for foreign residents.

Whenever I visit Vietnam, I am always struck by the sheer number of motorcycles and scooters. On this visit, I found that the number of cars on the roads had increased, producing further traffic congestion. One factor behind this trend seems to be the rise of smartphones and transportation apps, such as Uber and Grab. Given that Vietnamese incomes are improving, we can expect Vietnam to become a car-based society soon.
Observing the business potential of this development, Toyota and Honda invested in Vietnam; however, their progress was hampered by limitations in the traffic infrastructure. Uber and Grab have sparked development on this score. Nobuyuki Tsuru, himself, frequently uses his smartphone to summon Uber and Grab rides. These services allow users to specify the type of vehicle and they free users from traffic jams and the hassle of paying in cash. With these advantages, these services will gain even more traction in the future. According to media reports, Uber/Grab vehicles already outnumber conventional taxis in Hanoi and Ho Chi Minh City, which has impacted revenue.

During the trip, I noted a dynamic change in Vietnam’s SMEs and economy.

  • Ho Chi Minh has many Uber vehicles.
    Ho Chi Minh has many Uber vehicles.

  • It is common to see two or even three people on a bike.
    It is common to see two or even three people on a bike.

  • Wedding-dress production.
    Wedding-dress production.

  • Hoi An’s ties with Japan have a long history.
    Hoi An’s ties with Japan have a long history.

  • A private cardboard factory.
    A private cardboard factory.

  • With Mr. Long in a rice-polishing factory
    With Mr. Long in a rice-polishing factory