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 project, 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 Viet Nam 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 Viet Nam 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 Viet Nam, 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 were 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 Viet Nam 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 Viet Nam to carry out technical assessment and training of local enterprises.

At the end of 2010, as part of the implementation strategy, Minister Elisabetta Belloni, the Director-General of the Directorate General for Development Cooperation, Italian Foreign Ministry; the Vice Minister of the Vietnamese Ministry of Planning and Investment, Nguyen Van Trung; UNIDO Managing Director, Dmitri Piskounov, and the Vice President of Confindustria, Paolo Zegna, signed a formal letter of intent aimed at involving the Italian industrial system in the implementation of the cooperation project “SME Cluster Development” in Viet Nam. Confindustria will play an active role as an implementation partner without charging its activities to the project’s budget.

This agreement represents the first experience of such kind in development cooperation, and is a spin-off of recent agreements between the Italian Foreign Ministry and Confindustria, and a good example of new areas of cooperation and institutional coordination.

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
Email