With Italian funding, UNIDO boosts Viet Nam’s small and medium businesses

Up to 90 per cent of Vietnamese businesses are small and medium size enterprises (SMEs). They play a crucial role in creating jobs, increasing incomes and contributing to the country’s development. Despite the global economic and financial crisis, Viet Nam’s SMEs have retained continuous development in the last few years.

A three-year EUR 3 million, funded by the Italian Government and being implemented by UNIDO and the Confederation of Italian Industries (Confindustria), is focusing on upgrading the competitiveness and capacity of Viet Nam’s SMEs through extensive technical assistance programmes and the promotion of business partnerships between Italy and Viet Nam. The project is helping develop SME clusters which are commonly found worldwide but not in developing countries like Viet Nam.

The development of SME clusters, a sectoral and geographical concentration of enterprises which produce and sell a range of related and/or complementary products, will help Viet Nam’s businesses raise their competitiveness, integrate deeper into the world economy and contribute to the country’s sustainable growth. Clusters can increase competitiveness for local enterprises and living standards in the territories where they exist. They also help lower costs, promote trust among small businesses and identify a shared interest and vision.

“In Italy, SME clusters and enterprise networks are renowned the world over for being the driving force behind the country’s economy,” says Gerardo Patacconi, UNIDO’s Senior Industrial Development Officer, who oversees the Vietnam project.

“The Italian experience shows that industry associations can help SMEs act collectively to improve their competitiveness. This project is helping establish closer ties between Italian and Vietnamese industry associations, their service providers and SMEs. It will also advance further the already existing fruitful technical and commercial cooperation between the two countries."

Fabio Manzini and Antonello Segatto, wood working experts from an Italian technical service centre in Pordenone, spent two weeks in Vietnam delivering a training course to employees of wood working industries in the provinces of Binh Duong and Hanoi. This was their first work experience in Vietnam, and both of them were struck by the enthusiasm and willingness to learn and improve shown by the trainees.

“We have been received with warmth, kindness and great interest in all the factories. Workers and managers where eager to improve their processes, safety and working methods and the quality of their products,” said Manzini.

“It was not only a rewarding professional experience, but also a personal enrichment,” added Segatto. He said he highly appreciated the local culture and the friendly support received from the staff of HAWA, the industry association that organized the course together with UNIDO.

According to Patacconi, the project is being implemented in three phases. UNIDO began with mapping small and medium enterprise clusters in Vietnam and selecting three target clusters with a high development potential. These include a textile and garment cluster, a footwear and leather processing cluster, and a wood processing and furniture cluster. The industries were selected as they are among five top exporters of Viet Nam. However, they are of low added value, low integration, and often lack design and marketing capacity.

Under the second phase, the selected clusters and their industry associations are now receiving technical support. Cooperation agreements have started with Italian clusters to promote technology transfers and technical assistance. Selected enterprises in each cluster will be assisted in upgrading and in preparing business partnership proposals to Italian enterprises.

The third phase includes promoting long-term cooperation linkages and agreements among Vietnamese and Italian associations at the district and enterprise levels. These business agreements will be facilitated through different events, capacity building and business-to-business matching mechanisms.

Over 100 enterprises, territorial and sectoral associations and Export Consortia within the Confederation of Italian Industries have expressed keen interest to participate in the project. Italian experts in woodworking and textile technology and markets have already been fielded by UNIDO to Vietnam to carry out technical assessment and training of local enterprises.
UNIDO is recognized internationally as the leading agency for SMEs upgrading and cluster development in developing and emerging economies. Its Cluster Development Programme has yielded successful results in Africa, Asia, and Latin America.

Posted January 2011

For more information on the project, contact:

Gerardo Patacconi

UNIDO Senior Industrial Development Officer

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