Rethinking the competitiveness of Vietnamese brands

To thrive in today’s global trade climate, Vietnamese brands must rethink what makes them competitive and adopt a resource-based approach, write associate professor of international business Abel D. Alonso and senior lecturer of international business Dr Oanh Vu at RMIT.

Regardless of their size, many global brands have built long-standing reputations by developing and refining their unique resources – from local materials and traditional techniques to entrepreneurial know-how.

For example, Uruguay’s Black River Caviar and the UK’s Hawkshead Relish have elevated their brands globally despite being small-sized family businesses, through creativity, innovation, and smart use of natural resources and knowledge-based or entrepreneurial skills.

Vietnam, where small and medium-sized enterprises account for over 95% of all businesses, holds similar potential. Vietnam possesses unique traits that could spearhead international success in the coming decades without heavily relying on cost advantage strategies.

But how can businesses unlock those unique traits?

About VRIN (Valuable, Rare, Inimitable and Non-Substituable) model developed by American professor Jay Barney in 1991, this model helps businesses understand their competitiveness through the notions of valuable, rare, imperfectly imitable, and non-substitutable resources.

According to Barney, when firms implement strategies that create value and are not applied by competitors, they can achieve a competitive advantage. These strategies may draw on the firm’s assets, attributes, knowledge, information, capabilities, and processes – resources that can be powerful levers if aligned with VRIN. This means firms have ‘many cards up their sleeves’ to stand out and excel, even in the face of competition.

Applying the VRIN model in the Vietnamese context

For years, industry and government advocates have called for Vietnamese companies to embrace sustainable and forward-thinking strategies, business models, and philosophies. By now, many local companies have a partial or complete alignment with VRIN principles.

One example is DACE - a local spice producer that is currently exporting its organic products worldwide after obtaining different international certifications such as USDA Organic, JAS, Naturland, and BioSuisse. By enhancing its VRIN alignment, including the certifications and producing sought-after products, the company has established its competitiveness in various lucrative markets.

Some players in Vietnam’s fashion industry have also demonstrated VRIN characteristics. For example, Viet Tien Garment Corporation has experimented with lotus and eucalyptus fibres, integrating cultural and sustainable elements that help distinguish their products.

Vietnam boasts a wide range of VRIN resources that are embedded in industries, from chocolate to coffee and fashion. Simultaneously, creativity, innovation, adaptability, and entrepreneurial flair are core to the country’s values. Successful companies that consciously or unconsciously align with VRIN principles can enhance their competitiveness and achieve sustainable competitive advantage.

At the same time, consumer demand is shifting in Vietnam’s key export markets. High-quality, traceable, and eco-conscious products are in demand – presenting new opportunities for Vietnamese brands.

To capitalize on these trends, there are some strategies. First, companies must communicate their value through realistic, relatable narratives and business approaches. Second, successful small businesses should be showcased as trailblazers of Vietnam’s evolving national competitiveness. Third, firms need to activate their resource potential in ways that align with VRIN.

A balancing act must be considered, where the production of unique and VRIN-aligned products possesses a global appeal, has a constant supply and demand, and is complemented by personalised service.

“Breakthrough from Innovation and Creativity” was the theme of this year’s National Branding Forum hosted by the Vietnam Trade Promotion Agency, with RMIT University Vietnam as the knowledge partner. Innovation, in fact, has strong connections with VRIN and companies’ strategies that go beyond simple cost advantage notions.

Innovative approaches ultimately help firms gain global recognition. Technology plays a decisive role in transforming VRIN resources into competitive products and services. However, our research shows that Vietnamese companies still face multiple challenges in adopting the necessary technologies for innovation.

As global competition intensifies and protectionism rises, Vietnamese businesses have a chance to define their edge through innovation. With the right support and strategic mindset, the Vietnamese business community has the potential to stand out for what makes it different, not just what makes it affordable.