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Small businesses easily adapt in economic recession   2009-04-16 - VietNamNet/SGTT

In normal conditions, small businesses are inferior to big ones due to lower productivity and family-like management methods. However, in the current difficulties, these are their advantages as they can adapt quickly.


Flexibility can lure customers


The plastics products sold at Binh Tay market and exported to some regional countries

According to Nguyen Dang Hien, General Director of Bidrico, analysts all say that consumers have been cutting spending, but he himself has found out from the drink market that consumers have not cut purchases, they have just changed their spending habits.


“They purchase a lot of things, and purchase small quantities of each item,” Hien said. And the change in the habit has brought advantages to small producers, who can diversify products quickly in accordance with customers’ needs.


Hien said that his turnover increased by 25% in Q1 2009, which has encouraged him to make more investments in production equipment which allows him to make some kinds of new products.


While many garment companies are lacking export orders and worried about the sharp 30% fall in sales in the domestic market in Q1, some small workshops have been living well with small orders provided for supermarts and shops.


Nguyen Kim Phung, a businesswoman, specialising in selling fashionable products with specific designs and hand-made decorations to Singapore, Malaysia and Thailand, related that sales have increased by 20% since Tet in comparison with the same period of last year.


Phung said that the products prove to have soft prices, just $30-50/product, while they are all well-made. The importers are seeking to buy low-cost products in the context of lower numbers of tourists and tourists’ decreased spending.


At Tuyen’s tailoring workshop on Nguyen Dinh Chieu street, workers are still working every day, making products to be sold at Co-op mart chain. The workshop cannot provide products in big quantities, but the suits it provides have softer prices with more diversified designs.


Viet Huong, a small food producer compared with Vissan, Cau Tre or APT, has exported nearly 10 tonnes of processed food to Cambodia. Nguyen Kim Ngan, the owner of the company, said that the key now is competitive price.


“Big companies can be competitive in implementing big orders, but they are less competitive in bringing different ‘tastes’ to clients,” he said.


Taking advantage


With the prices of input materials for production like steel, plastics and chemicals down sharply in the second half of 2008, big producers have suffered as they imported materials in big quantities before for reserve. Meanwhile, small businesses, which do not have much money to store materials, benefit from that.


H, the owner of an aluminium workshop in district 6, HCM City related that the material price has dropped by 53-55% from the highest peaks, while sale prices have been lowered by 10-20% only. Therefore, the companies which did not store materials can increase their profit levels by 5-7%.


Besides, H said, the small-scale production allows businesses to save on office and apparatus expenses. The owners themselves have to work hard and save money. Therefore, small companies can offer products at low prices, which cannot be done by big companies which have to pay to retain labourers.

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