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Standard Chartered: Mid-corporates require new growth strategies

Released at: 10:51, 25/04/2019

Standard Chartered: Mid-corporates require new growth strategies

Photo: Viet Tuan (VET)

Digitalization, regionalization, and capital management are key to realizing growth ambitions, according to new Standard Chartered report.

by Hong Nhung

Mid-sized corporates in Vietnam and other ASEAN countries need to devise new strategies, from digitalization to partnerships and overseas ventures, to build growth against major shifts in their respective sectors of operations, according to a Standard Chartered thought leadership report.

The ASEAN - A region facing disruption: Positioning mid-corporates for growth in Southeast Asia report also identifies talent, culture, technology, and capital management as key enablers to support the development of these new strategies.

This conclusion is derived from examining how transformational shifts, such as trade tensions and the rise of digital channels, impact the operational model of mid-corporates (which have annual revenues between $10 and $500 million) from the manufacturing, retail and consumer, and infrastructure sectors in the region.

To increase the probability of success against challenges such as low workplace productivity (65 per cent lower than the global average) and a high dependence on external trade (77 per cent of ASEAN exports), mid-corporates in these sectors in ASEAN, including Vietnam, must adopt three key growth strategies.

The first strategy is smart operations. New technologies such as industrial IoT, 3D printing, and blockchain-enabled contracts can improve productivity on the factory floor, optimize supply chains, and enable more efficient project execution.

Secondly, solutions such as micro-segmentation, geo-targeting, and augmented reality can make touchpoints across the customer journey more targeted and personalized. They can also optimize the distribution functions to drive process efficiency and flexibility.

The final strategy is cross-border expansion. New sourcing avenues, delivery of products to new market segments, and entering into partnerships (for e.g., tapping into multi-territory infrastructure programs), can strengthen business growth.  

These strategies will also enable mature mid-corporates with an established local presence in Vietnam to expand to new regional markets to trigger their next phase of growth.

For example, in the last six months, Standard Chartered Bank Vietnam successfully supported mid-corporate clients the Hoan My Medical Corporation and the Refrigeration Electrical Engineering Corporation to issue inaugural Vietnam dong (VND) fixed-rate bonds to fund their business expansion plans.

As an established lower cost manufacturing hub, Vietnam has benefited from investments in labor-intensive sectors such as clothing and footwear. According to the Standard Chartered report, the country’s manufacturing gross value-add (nominal) is expected to grow at a compound annual growth rate (CAGR) of almost 8 per cent by 2022, to $48 billion. This requires the sector focus increasingly towards capital and technology-intensive areas to capture arising opportunities in the region.

“Vietnam continues to deliver steady growth and FDI remains a strong growth driver, with FDI-driven manufacturing likely to achieve double-digit growth this year,” said Mr. Nirukt Sapru, CEO Vietnam and ASEAN and South Asia Cluster Markets, Standard Chartered Bank. “As the country is highly open to trade, Vietnamese mid-corporate manufacturers can capitalize on this and shield themselves from headwinds by pursuing strategies such as investing in technologies and exploring new markets, which will help them move up the value chain.”

“In fact, we are seeing an increasing number of local electronics players expressing interest in venturing overseas for growth. As the only international bank present in all ten ASEAN markets and with in-depth sectoral expertise, we will continue to help these mid-corporates fulfil their ambitions for growth and expansion both in Vietnam and overseas.”

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