The Covid-19 pandemic has influenced the economy over the world. In Vietnam, Covid-19 emerged on January 23, 2020, and has encountered several outbreaks across the country, which has caused negative impacts on the economy. The Covid-19 has influenced all aspects of socio-economic life, creating difficulties for all businesses, especially small and medium family businesses (SMEs family businesses). SMEs account for most of Vietnam's firms and have important roles in the economy. Based on the current situation, the chapter explores the potential impacts of the Covid-19 pandemic outbreak on SME family businesses. Moreover, we discussed the strategies of SME family businesses and the government's policies during this period.
Top1. Introduction
Since reforming the economy in 1986, Vietnam has dramatically changed from a lowest-income country to a lower-middle-income country and has become one of the most dynamic economies. Moreover, Vietnam officially became the 150th member of the World Trade Organization in 2006. Then, Vietnam has become the destination of foreign direct investment and multinational corporations with deep integration.
When the covid-19 arose, the pandemic heavily affected Vietnam's economy. Nevertheless, Asia’s economy is still top-performing, with a GDP growth of 2.9% in 2020 (World Bank, 2021). Notably, the covid-19 pandemic has had a negative impact on businesses' activities and significant effects on trade, services, and banking activities worldwide. However, only a few studies deeply and comprehensively research the effects of the covid-19 on the local economy. Meanwhile, different places affected differently by the covid-19 depend on their economic conditions. Therefore, studying the impact of the covid-19 on the locality’s economic development is necessary. According to the Vietnam Academy of Social Sciences (VASS):
Most small and medium firms in Vietnam belong to families considered an essential part of the private sector and account for a large proportion of the Vietnamese business community (Hai, 2019).
Currently, Vietnam has about 541,753 SMEs family businesses with a total registered capital of about 130 billion USD, accounting for more than 30% of the capital of all enterprises (Vinh, 2021). Every year, they contribute about 40% of the GDP, 30% to the government’s budget, 30% to exports, and attract nearly 60% of employees (Hai, 2019). Although the number is large, the number of medium-sized enterprises is only 1.6%, while the small and micro-enterprises represent a large proportion of SMEs family businesses.
Juergensen et al. (2020) indicated that SMEs are playing an important role in the economy. When covid 19 happened, SMEs are impacted in short term immediately. For long term, SMEs in different industries have various impacts, then the government should have suitable policies to help them. Moreover, Lu et al. (2020) conluded that covid 19 had a strong impact on the economy and SMEs. They have to face with a lot of difficulties during and after covid period. Thus, they need the support from the government. Furthermore, the covid-19 pandemic has put them in a problematic situation which causes many businesses to go bankrupt. The sector's revenue decreased, and firms in the service sector had the most revenue reduction, followed by industry and construction. Enterprises in the agriculture, forestry, and fishing sectors have the slightest revenue decrease. Furthermore, they also face a shortage of input materials. Currently, the domestic consumption market was also narrowed, with over two-thirds of enterprises saying that the domestic consumption market decreased sharply.
Additionally, the increased transportation and storage costs are also a concern. Therefore, the covid-19 has also caused disruptions and challenges to family businesses and the economy. Thus, the chapter’s objective will focus on the family businesses during the covid-19 situation.
The first stage of the chapter summarises the covid-19 situation in Vietnam to analyse the process of preventing a health crisis. The following section presents the economic consequences due to the covid-19. The third section discusses the family businesses during the covid-19 period. The fourth section emphasises how family businesses in Vietnam can survive in the current situation. The final section discusses the strategies used by SMEs family businesses.
Top2. The Covid-19 Situation In Vietnam
In Vietnam, the covid-19 pandemic caused by the SARS-CoV-2 virus was first confirmed on January 23, 2020. So far, through 4 outbreaks: