dated November 23, 2001 on development assistance for small and medium enterprises. According to Article 3 of the Decree, " Small and medium enterprises include enterprises (private enterprises, limited liability companies, joint stock companies, cooperatives or cooperative unions, state-owned enterprises or individual business households registered under Decree 02/2000/ND-CP) with registered capital not exceeding 10 billion VND or an average annual number of employees not exceeding 300 people. ".
Thus, according to Vietnamese law, regardless of the business sector, enterprises with registered capital of less than 10 billion VND or an average annual number of employees of less than 300 people are considered small and medium enterprises. An enterprise with registered capital of 20 billion VND but an average annual number of employees of less than 300 people is still considered a small and medium enterprise and vice versa. So, as long as one of the two criteria of registered capital or number of employees is satisfied, the following types of small and medium enterprises can exist in our country:
- Private enterprise
- Limited liability company
- Joint Stock Company
- Cooperative or cooperative union
- State-owned enterprise
- Individual business household
The birth of Decree 90/2001/ND-CP was the basis for policies and support measures of state agencies, domestic and foreign organizations to implement support measures for small and medium enterprises. Since then, the concept of small and medium enterprises has been understood and applied uniformly throughout the country.
2. Criteria for classifying small and medium enterprises
Most countries pay great attention to researching criteria for classifying small and medium enterprises in order to be able to distinguish groups of enterprises.
This business is clearly and most reasonably defined. However, there is no unified criterion for classifying small and medium enterprises for all countries because the socio-economic conditions of each country are different in each period, each industry and each territory. Currently, in the world and in Vietnam, there are still many controversies, debates and many different opinions when evaluating and classifying the scale of small and medium enterprises. In general,
There are two common groups of criteria often used to classify small and medium enterprises: qualitative and quantitative criteria 8 .
- The qualitative criteria group is based on basic characteristics of the enterprise such as level of specialization, number of management units, complexity of management, etc. This group of criteria has the advantage of reflecting the true nature of the problem, but is often difficult to determine in practice, so it is rarely used.
- Group of quantitative criteria such as number of employees, asset value, capital, revenue, profit. In which:
The number of workers can be average workers in the list, regular workers, actual workers.
Assets or capital can use total asset value (or capital), fixed assets, remaining asset value.
Revenue can be total revenue/year, total added value/year. Currently, there is a tendency to widely use this criterion.
The more commonly applied criteria are the number of employees, assets or capital, especially the scale of labor. Because this criterion is easy to classify and easy to investigate for both state agencies and enterprises. In Vietnam and most Southeast Asian countries, this criterion is applied.
8 Vu Kim Dung, Dong Xuan Ninh (2005), small and medium enterprise management textbook, Labor - Social Publishing House, Hanoi
Table 1.2: Criteria for identifying SMEs in some Southeast Asian countries
Water
Classify | Number of workers dynamic | Capital | Revenue | |
Thailand | Small Business | 0-50 | Under 50 million Baht | |
Medium Enterprise | 51-200 | 50-200 million Baht | ||
Philippines | Small Business | 10-99 | 1.5-15 million Peso | No matter weight |
Medium Enterprise | 100-199 | 15-60 million Peso | ||
Indonesia | Small Business | 5-19 | 0-20,000USD | 0-100,000 USD |
Medium Enterprise | 20-99 | 20,000- 100,000 USD | 100,000- 500,000USD | |
China | Small Business | 50-100 | ||
Medium Enterprise | 101-500 |
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Source: Profile of APEC SME 1990-2000
In general, the classification of enterprises according to large, medium or small scale is only relative and depends on many factors such as the level of economic development of each country; nature of industry, territory, history...
In Vietnam, in order to orient the development of small and medium enterprises, some localities or authorities have also given their views on the criteria for evaluating small and medium enterprises. The Vietnam Joint Stock Commercial Bank for Industry and Trade has classified small and medium enterprises as enterprises with capital from 5 to 10 billion VND and the number of employees from 500 to 1,000 people. According to the locality
According to the local government, Ho Chi Minh City defines a medium-sized enterprise as an enterprise with a legal capital of over 1 billion VND, over 100 employees and an annual revenue of over 10 billion VND. Enterprises that meet the above three criteria are classified as small and medium-sized enterprises. Many economists have proposed a method of classifying small and medium-sized enterprises according to two criteria: production and business capital and labor. Specifically, small enterprises with an investment level of
100 to 300 million VND and 5 to 50 employees, while medium-sized enterprises have capital of over 300 million VND and over 50 employees. 9
3. Characteristics of small and medium enterprises
The name of small and medium enterprises and the criteria for classifying small and medium enterprises themselves indicate the characteristics of this type of enterprise. Although each country and even each region has different criteria for defining small and medium enterprises, in general, SMEs have the following characteristics:
3.1. Advantages
- Diverse fields of operation: SMEs operate in many different fields, mainly in light industry, food processing industry, trade, services that require little capital and fast capital turnover. In particular, many small and medium enterprises operate in the field of handicraft production to exploit comparative advantages in each locality.
- High dynamism and flexibility: Most SMEs have low initial investment costs: low capital, small premises and simple working conditions. Moreover, these enterprises have the advantage of taking advantage of local labor and raw materials. This helps enterprises
9 Vu Kim Dung, Dong Xuan Ninh (2005), small and medium enterprise management textbook, Labor - Social Publishing House, Hanoi
Starting a business is relatively easy, and during the business process, it is possible to quickly change production methods and business products to suit market fluctuations and consumer tastes.
- Exploiting comparative advantages: Taking advantage of local resources also helps small and medium enterprises have advantages in maintaining and developing traditional industries. In fact, many Vietnamese small and medium enterprises have been successful in producing and trading traditional products, building prestige domestically and internationally.
- Compact management system: SMEs are often small-scale enterprises with a small number of employees, so the management system in SMEs is compact. Management decisions are made and implemented quickly, helping to save management costs. This is an advantage for SMEs in terms of cost and time savings.
Besides the above-mentioned strengths of SMEs, small and medium enterprises still have many limitations.
3.2. Limitations
- Limited financial resources: This characteristic makes it very difficult for SMEs to operate, especially in mobilizing capital to ensure and expand production. The supply of capital to small and medium enterprises is currently mainly through the informal financial market. Business owners often borrow capital from relatives, friends or lenders. Most SMEs, especially non-state enterprises, do not have access to official credit sources, bank credit. The reason is that the enterprises themselves are not able to meet the requirements of banks regarding project establishment procedures, mortgage procedures, etc. And another reality is that business owners
Non-state enterprises are also afraid of borrowing from banks because they are required to present complete and accurate financial reports and business results, which they do not want to make public for various reasons.
- Difficulties in machinery, equipment, and technology: This can also be considered a consequence of financial limitations. With little capital and many annual expenses, if small and medium-sized enterprises invest in machinery, equipment, and technology, they often invest in small, unsynchronized investments. In addition, due to the nature and volume of work, many small and medium-sized enterprises do not invest in these factors because they think it is unnecessary and costly. In addition, the level of use of machinery, equipment, and technology of employees, even directors and managers, is still low, so they rarely invest in high-level machinery, equipment, and technology. Many small and medium-sized enterprises have advanced technological initiatives, but due to insufficient financial capacity for research and development, they cannot form new technologies or are acquired by businesses at low prices.
- SMEs are limited in management skills and have difficulty attracting high-quality workers: Small and medium-sized enterprise owners are often engineers or technicians who set up and operate their own businesses. They are both business managers and participate in the production process, so their level of expertise in management is not high. Most business owners have not received any formal training, or have not even received any training. Small and medium-sized enterprise owners are not able to compete with large enterprises in hiring skilled workers due to financial and working environment limitations. In addition, the prejudice of workers and their relatives about this sector is still very large. Workers are rarely trained, and training due to limited funding results in low qualifications and low skills. In addition, the instability when working for SMEs, career development opportunities
Insecurity also affects the decision of skilled workers to work in this sector.
- Competitiveness and market access are relatively poor, especially in foreign markets: The reason is that Vietnamese SMEs are often newly established businesses, do not have many traditional customers and have very limited financial capacity for advertising and marketing activities. In addition, the market size of these businesses is often limited to the local area, making expansion to new markets very difficult.
III. Overview of brand building and protection.
1. Branding
Branding today is no longer a new thing for business people in general. However, there are many different views on the attributes that evaluate a brand and how to build a brand. Corporate strategists can brand their companies and products in one way or another, building a brand according to one of the three brand models presented in the previous section, but first of all, no matter which way they do it, businesses still have to build brand elements step by step. The question is: what are the most basic attributes that we need to pursue and build for the brand?
That is:
1.1. Building tangible elements or (rational) use value of the brand
- A brand is a name, even if the business does not use a name, consumers can still give it a name. A brand is a collection of symbols and expressions so that consumers can remember and feel most clearly the messages that the manufacturer wants to convey. The signs of brand recognition can be used through human senses, including: sight, smell, hearing, taste, touch and a set of those senses. Commonly used signs are Logos, fonts,
colors, jingles, symbols , and through the medium, third parties independent of the brand and the consumer.
- The brand name represents the attributes of a product or service and is the last thing that consumers call out when they remember or need one of its attributes. To avoid duplication of names or sets of representative signs to identify a brand, trademark protection laws are introduced. This helps businesses protect their uniqueness and investment in the brand. At this time, a brand is understood as a registered brand - we still call it a trademark (Trademark) and the law will be the representative to protect its uniqueness. We agree that the word "brand" used from now on will be the abbreviation for a protected brand.
Core values of a brand: are the genes that the brand owner creates for the brand. These genes are the smallest elements in the brand's attributes but are the greatest values that the brand must have. Businesses do not sell them but sell the added values developed from these genes.
- Brand quality: is the rational value that consumers can measure through experience. A brand that "talks well", communicates well and has quality that is suitable for consumers will develop and become famous quickly. Of course, this is only true and fast when the market where the brand lives is an open market. In some industries, the science, technology and manufacturing requirements for products are not high, so "talking well" and communicating well are the number one criteria for brand development.
Age of the brand: If the brand does not become a trademark, it still retains and inherits the life cycle properties of the product or service. This means that there is a birth and death of the brand. However, the brand