by
Mr. Nguyen Trung Kien
(PhD Student, Kobe University)

Summary

In this workshop, Mr. Kien presented a qualitative study on factors behind the successful links between small-scale producers and markets, and implications for poverty reduction based on a survey of fifty case studies of small firms in a variety of geographical settings and covering a diverge range of agriculture, non-agriculture, and services. This was a research project of the National Institute for Science and Technology Strategy and Policy, Ministry of Science and Technology of Vietnam (NISTPASS), in which Mr. Kien was a member of the research team.

In the sample, it was common that all the entrepreneurs started their businesses with disadvantageous positions, and then became successful by hard work, self-education, as well as dedication. In details, Mr. Kien presented the way and behaviour of small producers in getting into the market, adopting different business structures, and becoming successful. The findings showed that as small producers, it was possible and feasible to establish them in the market, look for the way, and get it done. The way of getting into the market was most visible by finding the niche, and then getting into the niche, especially the local one. At the same time, the firms could share their low end of market segment to other partners in order to create a network and value chain for all members to enjoy benefits. Relying on traditional strengths (for instance, background knowledge in certain key areas, accumulated experiences, and the existing relationship) did help the sample firms to get into certain markets. To improve market relationship with potential buyers, those firms used various creative methods to attract them, e.g. sale on credit, donation, free trial, and unique business package provision. This seemed to work fairly well under the infant market conditions in Vietnam.

Based on the above analysis, Mr. Kien continued with possible lessons and policy implications that could be learned and discussed. There are two main lessons from case studies: (i) Constant saving and gradual accumulation of not only finance and material assets, but also expertise, experiences, and knowledge were crucial factors in accumulation of wealth and resources in those small-scaled firms; and (ii) Nurturing entrepreneurship and relying on this key factor in the increasingly competitive markets are very critical for firms to thrive. The entrepreneurship could not be created, but could be identified, nurtured, and encouraged to grow from inside potential business owners. Therefore, it raised a policy issue of nurturing entrepreneurship for potential business owners.

Additionally to those above successful factors, Mr. Kien also listed some challenging ones that could become threats to those businesses such as weak technological base, lack of training, unstable market factors, weak competitiveness, and risk (particularly for the firms working in nature-related industries such as agriculture, and agriculture-based services).

The workshop continued with Q&A session. Most of the participants discussed about the sample choice with the number of chosen firms, their locations, and business activities since, based on the presentation, those criteria seemed not enough to have policy implications for such broad issue as poverty reduction. In addition, some participants also asked Mr. Kien to clarify definitions in his presentation, such as poverty, and small-scaled firms. Replying to those comments, Mr. Kien said that the research was not aimed at quantitatively evaluating the impacts of doing business on poverty reduction as in general. Instead, it focused on practical cases in various field in order to see how people could overcome their poverty incidence through business. Therefore, definitions and their criteria were analyzed in relative context.

Discovering findings of the research, most of the participants were interested in other important factors such as gender and educational levels. They shared a common concern that how those small-scaled firms could continue their successes in the future competitive markets since many of them had low levels of education. According to Mr. Kien’s explanation, it seemed that those people had been doing their businesses by strong relationship with employees and customers as well as solid network with other firms, which in turn helped them access appropriately with targeted businesses. Mr. Kien, however, also agreed that education was really important for those people since they would face with much more competitive business environment when Vietnam deeply integrated into the regional and global economy.

The discussion came to the end with conclusions that, under certain conditions, the poor could overcome poverty by pursuing business, and that the government and related agencies needed to have appropriate policies to promote such business activities that could result in a more efficient poverty reduction.

As usual, we had 30-minute meeting, in which VDF announced the forthcoming workshops, and the participants informed their on-going studies, which would be discussed in the VDF workshop series.

Abstract (PDF15KB)  Slides (PDF1020KB)

(By Nguyen Trung Kien, and Giang Thanh Long)