SMEs trying to diversify their business to struggle to survive

The sharp input cost increases have dealt a blow on enterprises, forcing many of them to scale down the production scale. As businesses have been pushed against the wall, they have to diversify business to seek the opportunity to survive.

Looking for other opportunities

The Le Thinh Production and Trade Company in HCM City has been operating in the garment industry since 1993. However, the company with great experiences still has been hurt by the great difficulties.

Le Hai, the General Director of the company, said 2011 is the difficult time for all garment companies, especially small and medium enterprises (SMEs), since the profits have become no more attractive when the input costs have increased by tens of percent. Meanwhile, the bank loans interest rates have become unbearably high, and enterprises all are facing the labor shortage.

In such circumstances, Le Thinh has decided to salvage fabric scraps to make face masks, clothes for infants, handbags and toys for children. The profit brought by the small items accounts for 5-7 percent of the total profit of the company.

Hai said that in order to survive the current difficulties, SMEs should think of looking for other business to earn money. Hai, for example, has decided to make investment in a project on breeding basa fish in the west of the southern region.

“Vietnam’s basa fish products have been favored all around the world, therefore, we have decided to jump into the field,” he said. “We provide fish to the enterprises which make basa fillet products”.

Opportunities come from difficulties

Not only trying to look for new business, diversifying products and developing material growing areas are the things that many enterprises are following.

A company operating in the entertainment industry, which is owning a chain of restaurants, cafes, and karaoke shops in HCM City has decided to farm salmon and grow vegetables and coffee in the Central Highlands.

The company’s general director said in recent years, consumers in big cities have higher requirements on food hygiene, which he sees as the big opportunity to earn money.

“After eight years of running the chain of restaurants and cafes, we have realized that in order to polish our image and brand, we need to master the growing technique and control material supplies,” he said.

“Clients would find it interesting when they are told that the cup of coffee they enjoy is made of the coffee we grow just to serve them,” he said.

Meanwhile, a seafood company can see the opportunities in selling seafood products on the domestic market. Previously, the company only made products for export. However nowadays, the products which cannot be exported because they cannot meet the standards in processing or sizes to be sold on the domestic market, which allows to slash the sale prices by 15 percent.

Previously, fish bones and heads would be thrown away after making fillets, but now they are used to make fish extract to for preparing soup.

Having realized that urbanites now do not have much time to prepare meals, the company has decided to install an instant food production line.

Truong Trong Cu, Deputy General Director of Thuan Thao Company in Phu Yen province, said that after making profit in the fields of transportation, entertainment, the company has decided to make long term investment in the real estate sector, even though the market is now gloomy. Now running a hotel and a resort, the company plans to build 91 villas next to the resort in Tuy Hoa City.

“We have big advantages in the diversified services. The clients, who use our transportation or accommodation services, would be given preferences if they use other services,” he explained.- TBKTSG

Tags: Vietnam companies, Vietnam enterprises, Vietnam SMEs