Small firms struggle in tough market

Small companies are finding it hard to compete with technological and product diversity as they struggle to gain a foothold in the marketplace.

Vietnam Chamber of Commerce and Industry (VCCI) statistics show small-sized enterprises were in trouble in the first four months of 2015. Medium and big-sized enterprises' grew, but orders and revenues of small-sized firms declined, forcing many to lay off workers.

Of the enterprises that had to halt operation in the first four months, 76.5% were small businesses, unable to compete with medium and big-sized companies to find outlets for their products.

Small firms are easier to established, but often lack technology and most of the equipment is old and obsolete, lack skilled personnel, have problems negotiating polices and laws, leading to low production.

Bui Thu Thuy, an official from the Ministry of Planning and Investment, said small-sized enterprises often have trouble accessing credit from banks.

But Tran Thi Hong Hanh, general secretary of Vietnam Banks' Association, said many of the firms fail to meet financial requirements for loans, and banks were reluctant to lend for fear of default.

Despite the difficulties, many firms show optimism for the second half of 2015.

Pham Thi Thu Hang, general secretary of VCCI, said firms should diversify their products and find several different markets.

"They should focus on new potential markets and build effective distribution channels to deal with high inventory," she said.

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