New global trends of product value chains

Enterprises need to research the global value chain and the world 's manufacturing factories besides Vietnam, gradually building strategies to produce goods with their own brands.

Digitally enabled global value chains benefit developing economies as they make it easier for them to diversify from commodities to higher value-added manufactured goods and services. (Source: heidoc.net)

Today's world of economic integration is changing rapidly, bringing businesses both opportunities and challenges in three important new trends that impact product value chains, including: the rise of global value chains, changes in business strategy, and focus on brand development.

The rise of global value chains

The fragmentation of production processes at the global level offers new opportunities for integration between rich and poor economies. Digitally enabled global value chains benefit developing economies because they make it easier for them to diversify from commodities to higher value-added manufactured goods and services. The fragmentation of production processes involves steps performed in different countries rather than one country having to master the production of the entire product for export.

With value chains, a country can specialize in one or more activities in which it has an advantage. The unbundling of production started in advanced economies to cope with competition and reduce logistics costs, then spread globally as large developing economies opened up. However, global value chains also require participating enterprises to have large economies of scale. This is a major challenge for enterprises in countries with inadequate capital mobilization environments.

Change business strategy

Enterprises tend to focus on high value-added segments in the product value chain such as product research and development, product design, marketing and after-sales service. Segments such as manufacturing and assembly have lower value-added segments.

Therefore, in the context of the product value chain being extended and expanded globally in the integration process, multinational companies tend to outsource low value-added segments to developing countries. This is also an opportunity for developing countries to attract investment and develop partners to improve production and business levels in the short and medium term.

However, in the long term strategy, developing countries and enterprises need to develop and expand their participation in high value-added segments to improve efficiency. In the short term, it is necessary to make a breakthrough in marketing (price, sales...) through developing the brand of their products and services because brands play an increasingly important role for high-tech products and in countries with developed financial markets.

Focus on brand development

Global value chains and value-added segments provide opportunities for enterprises in countries that are only manufacturing and assembly factories to move up to higher value chains such as building their own brands to enhance their reputation in investment cooperation and increase the value of enterprises in domestic and international financial markets. In the world, economists agree that brands serve an important economic function to create added value for products and orient aggregate demand.

In Vietnam, the history of building and developing Vietnamese product brands has many ups and downs. The Vietnamese consumer goods manufacturing industry has brands that were once a source of pride such as Co Ba Soap, La Dalat cars, Da Lan toothpaste, Truc Bach beer, Thorakao cosmetics... However, some brands still exist today, some brands have "disappeared" and some brands seem to be "asleep"...

Currently, our country has over 800 thousand enterprises (about 98% are small and medium enterprises (SMEs), of which there are over 22 thousand FDI enterprises and nearly 900 state-owned enterprises (SOEs). Vietnamese enterprises have gradually built strong brands in manufacturing fields such as electronics, automobiles, agricultural products, footwear, textiles... to create added value for products not only at the domestic level but also at the global level.

However, state-owned enterprises seem to be “asleep” in developing product brands in the global value chain due to ownership, monopoly, and tenure-based thinking, causing waste of resources, affecting the quality of service to the people as well as national competitiveness.

The development and continuous innovation of enterprise structure institutions to create more added value for products and effectively serve the people is an important content in perfecting the market economic institution, contributing to effective economic integration. Therefore, the Resolution of the 13th National Party Congress requires: "Focus on perfecting the synchronous and modern market economic institution on the basis of fully complying with the laws of the market economy and deeply integrating into the international economy".

Proposed solutions for Vietnam

In order to contribute to implementing the Party's guidelines and effectively developing social capital through institutional innovation of enterprise structure in the changing trend of international trade, I would like to contribute three proposals:

Firstly, the joint stock company model: With the reality that most Vietnamese enterprises are facing challenges in economic scale due to limited access to capital, a joint stock company is a modern solution for business organization, combining the advantages of common ownership and professional management.

This innovative model has changed the business landscape, increasing access to capital, increasing scale and transparency of operations. As one of the most important institutions in global business, JSC has become the most popular business model for large-scale enterprises.

In practice, although in Vietnam the number is still limited and management is complicated, JSC is a type of company that needs to be focused on developing because it has many advantages in the market economy such as flexibility and quick adaptation to innovation...

On the other hand, it is necessary to strengthen the equitization of state-owned enterprises and commercial banks to promote financial capital resources in improving labor productivity and transparency.

Second, building and protecting brands: Enterprises need to study the global value chain and the world's manufacturing factories besides Vietnam, gradually building strategies for producing goods with their own brands to effectively exploit the product value chain, enhance reputation and competitiveness in the context of globalization. However, when using the leasing strategy, enterprises should not stray too far from their core values ​​such as the local market, technological know-how, etc. to avoid risks when the supply chain changes. Moreover, it is also necessary to have measures to protect brands in the business market.

Third, the business environment: The State needs to build a favorable business environment for enterprises in general and joint stock enterprises in particular. It is necessary to research and gradually build a legal environment to facilitate the development of joint stock companies. In the immediate future, it is necessary to improve related laws in terms of tax and financial markets...

In particular, the financial market needs to develop in the direction of a synchronous and modern market for all types and institutional structures of enterprises in order to promote the effectiveness of social resources to promote financial resources, enhance cooperation and competitiveness of the business community in the global value chain and ensure the effectiveness of the country's international economic development and cooperation. In that process, developing a digital technology ecosystem plays an important role in building a favorable development environment for modern institutional structures of enterprises to operate effectively in line with the globalization process.

Along with the Government's effectiveness in managing the financial market and the business community's constant creativity and innovation in institutional and business structures, the Made in Vietnam brand will increasingly develop in the digital economy era, contributing to improving the competitiveness of the national economy.

Source: https://baoquocte.vn/xu-the-toan-cau-moi-cua-chuoi-gia-tri-san-pham-232032.html