Small and medium-sized businesses are at the foundation of the Vietnam-Korea economic cooperation system

DNHN - That is the definition given by Dr Vu Tien Loc, President of the Vietnam International Arbitration Center, Chairman of the Vietnam - Korea Conference, and former President of the Vietnam Chamber of Commerce and Industry, during a sharing session with Enterprise & Integration Magazine to commemorate the 30th anniversary of diplomatic relations between Vietnam and Korea.

Cultural interaction is a vital forum

Vietnam and South Korea have maintained diplomatic connections for 30 years, although the two countries have had trade relations for much longer. In the 13th century, Prince Ly Long Tuong, the seventh son of Vietnamese King Ly Anh Tong, travelled to the Kingdom of Goryeo seeking shelter and was safeguarded and protected by the King and Goryeo people.

People-to-people interactions between the two nations have been maintained and increased up to this point, in terms of business, culture, education, sports, and so on. Vietnamese and Koreans often visit each other's countries to work, establish businesses, and marry. Currently, around 200,000 Vietnamese residents reside in Korea, whereas 200,000 Korean citizens residing in Vietnam.

When the Kingdom of Goryeo faced foreign invasion in the past, Prince Ly Long Tuong rallied the local people here to battle, helping to defeat the invaders. Korean coaches play a vital influence in Vietnamese sports such as football.

Although there have been ups and downs in bilateral ties, friendliness and collaboration remain the dominant trend, based on the two peoples' strong bond and solidarity.

The two sides foster cordial and cooperative relations, concentrating not only on political relations between the two states and between the ruling parties but also on the relationship between the two peoples. Both sides have formed Friendship Associations to bring individuals from all areas of life together. Many people-to-people exchange events are conducted at all levels in all domains of commerce, culture, society, sports, and so on.

Many activities are planned to commemorate the 30th anniversary of Vietnam-Korea relations. First and foremost, there will be a large people's forum in Vietnam. This forum will bring together people from both nations from all areas of life. This level of activity is extraordinary. The two nations' Individuals' Forum will bring together people from all walks of life, from politicians and diplomats to businesspeople, farmers, workers and intellectuals, youth and women, and so on. We have also been trying to create a series of business forums for discourse, as well as meetings with enterprises and scientists, to explore topics of development collaboration between the two nations.

Economic cooperation is the core of Vietnam-Korea relations

Including development aid (ODA), direct investment (FDI), import-export, tourism, etc., Korea is now Vietnam's top economic partner. That is the partnership that benefits both parties.

It is unconditional, equal cooperation. South Korea has a greater degree of development than Vietnam, but it does not impose any restrictions on economic and trade cooperation, unlike many other developed nations that have economic and trade cooperation links with Vietnam that are invariably accompanied by political or other demands.

The economic cooperation connection between Vietnam and Korea is very reciprocal. The gap in development level, particularly in technology and management, between Vietnam and Korea is not as large as the gap between Vietnam and other partners such as the United States, the European Union (EU), and Japan, and the economic structure of Vietnam and Korea is not one of direct competition... These qualities allow transmission and complementarity.

Specifically, the transfer of Korean technology to Vietnam is ideal for the growth of Vietnamese businesses. In the meanwhile, when acquiring cutting-edge technology from the United States or Europe, Vietnamese businesses confront several obstacles.

Possibly, for this reason, Korea is the leader in research and development investment collaboration with Vietnam, but relatively few nations invest in this cooperation with Vietnam. Samsung is an illustration. We often only hear about Samsung and large Korean investment organizations contributing to Vietnam's exports. Few people are aware that Samsung is also the market leader in Vietnam for R&D investments in supply chains. Currently, the Samsung Research Center in Hanoi is the largest R&D centre outside of Korea. We anticipate that this R&D facility will serve as a venue for Vietnam to engage in the most upstream stage of the supply chain, i.e. research and development for distribution brands.

The most important thing is that businesses work together

I think it's great that Enterprise & Integration Magazine held a seminar in Ho Chi Minh City on August 27 to help Vietnam and Korea work together on economic growth and development. I'll be there too because I think this is a very important event. Because the focus of the two-way relationship is on economic cooperation, and the most important part of that is business cooperation. The most important thing for Vietnam and Korea to be able to work together economically is for their small and medium businesses to be able to work together. This means that Korean foreign direct investment must be able to connect with the Vietnamese small and medium business community.

If it isn't connected, the two parties can only work together for a short time and it won't last. Korean businesses are closed up like oasis. They can leave Vietnam and go to another country at any time. Large Korean businesses need to put down deep roots in the Vietnamese economy if they want to stay there for a long time. Vietnam has a system of small and medium-sized businesses, supporting industries, and supporting services that will help Korean FDI businesses stay in the Vietnamese market. As a result, working with the local business community will be good for both sides. We work with them to make a network for distribution, development, getting resources together, etc. That is, the two things must try to fit together.

Vietnam is supporting the trend of linking Korea's top companies with Vietnamese small and medium businesses and Vietnamese companies that are based in Vietnam. Rearranging how Vietnam, Korea, and other countries are split up in the way supply chains are made. That is, we don't let big companies or small and medium-sized businesses from Korea or other countries use Vietnam as a place to make products with a supply chain. We'll go along with them. Samsung is leading the way in this trend. We hope that new Korean investments in Vietnam will go in that direction shortly.

The Vietnam Small and Medium Enterprises Association's Enterprise & Integration Magazine is doing a great thing by putting on the event that's coming up. We will focus on how small and medium-sized businesses (SMEs) can take advantage of the opportunities here and improve their knowledge to join the supply chain of Korean businesses.

Cooperation with the Korean business community is the key to making Korea-Vietnam economic relations work in the future.

The Vietnam-Korea Friendship Association has also set up the Vietnam-Korea Economic Development Center to connect with the network of localities and the network on the Korean side to make a way for foreign countries to connect and get help. More Korean money is being put into Vietnam. This will help change the way money flows from Korea to Vietnam shortly. 

The world has seen the Han River as a miracle. In the next 20 to 30 years, we are working very hard to show the world what a miracle the Red River is. In that journey, Korea's experience of building a strong state, making industrial policies, and growing businesses can teach Vietnam a lot about how to grow. 

Vietnam is also making a constructivist state at the moment. That is, the government directs resources and the private sector so that the country can grow quickly based on its strengths. We want to have leading private businesses that can compete with businesses in the U.S., Japan, and Europe. 

The way Koreans run their businesses can teach us not only how to grow our businesses, but also how to run them well. Large businesses that aren't well run can hurt society in many ways. How to connect big businesses with small and medium-sized businesses. Companies like Samsung, Hyundai, and others, as well as other large industrial and service groups, also work with small and medium-sized businesses.

And the "burgeoning relationship"...

When Vietnam and Korea work together, they are "in bloom." Since diplomatic relations were established between the two countries in 1992, the amount of trade between them has grown 160 times, from 500 million USD to 80.7 billion USD.

When it comes to trade, Vietnam is Korea's fourth largest partner, and Korea is Vietnam's third largest partner.

Korea is the second biggest direct investor in Vietnam out of the 72 countries that do business there.

More than 9000 projects are being done by Korean companies in 19 of the 21 economic sectors and 59 of the 63 provinces and cities. Nearly 80 billion USD worth of investment capital has been registered.

Korean companies are becoming the most important strategic investors in many parts of Vietnam. According to a survey, as many as 51% of Vietnamese businesses want to work with Korean partners. This is a very high number. Vietnamese businesses think that Korean businesses are about the same size in terms of technology, finances, and culture, so working together is very smooth.

We are speeding up the shift to digital, promoting the shift to green, and encouraging innovation. All of these are ways that Korea has done well and continues to do well when it comes to facing and competing with other countries around the world. So, the governments, agencies, and businesses of Korea and Vietnam need to work together.

On the other hand, Korea is one of the best places to start a business in the world. Korea's successes in business growth and, especially, in developing technology businesses show what success looks like. There is a warrior spirit in the way Koreans think about business. Vietnam is also trying to help start-ups with new ideas. Every Vietnamese businessman has a warrior spirit as well as a business spirit. So, working together to help young people start businesses, especially creative ones, has also become a very important part of relations between Vietnam and Korea.

I think there is still a lot of room for the two countries to work together in the future. Activities to celebrate the 30th anniversary of cooperation, like the Seminar to Promote Cooperation and Economic Development in Vietnam and Korea by Enterprise and Integration Magazine, will help us see more clearly in the fields of cooperation, strengthen connections, and look forward to the future with more "fruitful" achievements of the comprehensive strategic cooperation and friendly relationship between Vietnam and Korea.

PV