CPA Australia: Tech spurs V-shaped rebound for Vietnam’s small businesses

The survey canvasses the views of 4,227 small
businesses in 11 markets across the Asia-Pacific region, including Australia,
Mainland China, Malaysia and India, to understand their business strategies and
outlook. Three hundred and ten Vietnamese small businesses took part.

Vietnamese small businesses considered COVID-19
their biggest challenge last year. Eighty-one per cent of respondents reported
that it had a major negative impact on their business, the highest result in the
survey. Nevertheless, Vietnam’s small business sector has shown exceptional
resilience and adaptability. Seventy-seven per cent of its small businesses
have recovered from COVID-19 or expect to recover in 2021, which is significantly
higher than the survey average of 39 per cent.

“Vietnamese small businesses demonstrated
remarkable agility in turning risks into opportunities last year. They were the
most proactive in digitalising in response to COVID-19, with 42 per cent of
respondents stating that they began or increased online sales. It’s also
encouraging that despite a very challenging 2020, 63 per cent of small businesses
in Vietnam grew, which is the second highest of the markets surveyed,” said
Hien Nguyen, Chief Representative of North Vietnam at CPA Australia.

The solid business rebound is expected to
continue in 2021. Eighty-six per cent of respondents expect their business to
grow this year, the second highest result of the
markets surveyed. Eighty-seven per cent expect the local
economy to grow, the most positive result of the markets surveyed. This positive
outlook is reflected in the intention of Vietnam’s small businesses to increase
staff headcount (42 per cent) and to introduce new products, services or
processes to local or overseas markets (25 per cent) this year. 

“Strong growth prospects and a culture of
innovation among Vietnamese small businesses tie in with the government’s
economic target of an average annual growth rate of 6.5 per cent to 7.0 per
cent for the 2021-25 period and the focus on industrial upgrades and
transformation,” Hien
said.

The survey findings show a significant link
between using technology and strong business growth. Seventy-eight per cent of
small businesses in Vietnam reported that investment in technology in 2020 has
improved their profitability. This is the strongest response of the surveyed
markets and well above the survey average of 48 per cent.

“It’s not surprising to see that three-quarters
of Vietnam’s small businesses receive more than ten per cent of sales through new
payment technology, which puts them in third place in the survey. They were
also most likely to have invested in point of sale equipment in 2020. This
indicates that

many small businesses have proactively
responded to the pandemic by increasing their digital technology adoption,”
Thien Huynh, Chief Representative of South Vietnam at CPA Australia, said.

Government policies such as the VND 250
trillion credit support package and a friendly financing environment have
enabled Vietnamese small businesses to continue to grow. Seventy-three per cent
of small businesses indicated that they sought external funds in 2020.
Forty-eight per cent found accessing external finance easy or very easy, up
from 17 per cent in 2019. Among the businesses that sought external funds, 58
per cent used them for business growth and 56 per cent sought funds from a bank.

“Demand for external funds remains robust among
Vietnamese small businesses in 2021. Fifty-one per cent of respondents expect
to seek external finance this year and 67 per cent expect to use the funds for
business growth in 2021. Government support measures are likely to continue to
make it easier for small businesses to access external finance this year,” Thien
said.  

Although small businesses in Vietnam are optimistic,
they need to take their cybersecurity more seriously. While
46 per cent expect to be cyberattacked in 2021, only 32 per cent have reviewed
their cybersecurity in the past six months, lower than the survey average of 43
per cent.

CPA Australia recommends that Vietnamese small
businesses consider the following actions to improve their recovery prospects:

• Seek advice from a trusted adviser, such as an accounting professional.
• Enhance cybersecurity protections and
  review IT systems regularly.
• Pay attention to debt and the cost of external
  finance.
• Explore new opportunities to diversify
  and expand into new markets.
• Invest in up-to-date devices
  and relevant technologies.
• Pay attention to costs and strive for
  sustainable growth.

Download CPA Australia Asia-Pacific
Small Business Survey 2020-21