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Section 15. Economics
Nguyen Huu Xuyen, Ph D., National Institute of Patent and Technology Exploitation, Vietnam Tran Duc Can, Ph D., University of Economics-Technology for Industries, Vietnam Pham Hong Quat, PhD., National Agency for Technology Entrepreneurship and Commercialization Development, Vietnam
E-mail: [email protected]
SOLUTION TO DEVELOP INNOVATIVE START-UP ENTERPRISE IN VIETNAM
Abstract. Innovative start-up plays an important role for the nation economy, especially for the developing countries. In Vietnam, the start-up of innovation has become an important content in the nation economic development strategy, is concerned and developed by the govement, with the aim of creating a favorable environment for promoting and supporting the process of formation and development of the startup type. These are enterprises that can be able to apply new technologies, ideas, have innovative business models, take risks to bring new products and services to the market, accepted by the market. This paper focuses on clarifying the activity and policy Vietnam's innovation. Thereby to propose the solution for supporting and promoting to develope of innovative start-up enterprise in accordance with the conditions and circumstances of Vietnam.
Keywords: innovation, innovative startup.
1. Research overview that researched and operated in the start-up and have been
Until now, innovative start-up has attracted the attention published annually by Forbes Magazine (https://forbesvi-of many researchers in the world. A number of studies have etnam.com.vn).
focused on the success of innovative start-up at the coun- Thus, the above studies have contributed positively to
tries, such as Dan Senor and Saul Singer (2011), that have the start-up activities in Vietnam, given the concept of en-studied innovative start-up at Israel, a small country in the trepreneurship innovation, innovative start-up, the factors Middle East, has established for nearly 70 years in difficult affecting innovative start-up and given reasoning to success geographical and political conditions, no natural resources of nations based on innovation. However, the above studies and the population of only 8 million, but has achieved more have not really clarified the real situation of innovative start-than 50 times growth in 60 years; There are a number of re- up enterprise, as well as the lack of synchronous support and searches from the organizations, individuals mentioned the promotion solutions for development of innovative start-up factors affecting innovation, innovative start-up in Vietnam, enterprise in the conditions of Vietnam. such as Tech in Asia, IDG Ventures, CBInsights, The Global 2. Research method
Entrepreneurship Network (GEN), etc. In order to information for research purpose, the authors
In Vietnam, there have been a number of research or- have collected secondary data through researchs published ganizations related to innovative start-up, such as National about innovation, innovative start-up enterprises. In particu-Agency for Technology Entrepreneurship and Commercial- lar, the authors have inherited the results of the enterprise ization Development (NATEC, 2017), National Agency innovation survey, including 7.641 enterprises belonging to for Science and Technology Information (2018), National 44 provinces/cities of Vietnam that published 2018 by the Economics University (2016), ... and typical individuals National Agency for Science and Technology Information.
To clarify secondary data, the authors conducted in-depth interviews with a number of experts, entrepreneurs, manag-ers's Viettnam in the field of science and technology, start-up, innovative start-up. The information obtained is one of the important bases to offer solutions to promote for the development ofVietnam's innovative start-up activities in the context of the fourth industrial revolution. 3. Research results Firstly, about innovation in enterprises The survey results of 7,641 enterprises of the National Agency for Science and Technology Information (2018) show that, the higher the rate of innovation enterprises, the lower the ratio of using state capital. On average, in the group of enterprises with the ratio of state capital below 10%, the rate of innovation enterprises is about 84.6%; in the group of enterprises with capital ratio of 20% -50%, the rate of innovation enterprises is about 76.3%; in the group of enterprises with a ratio of 75% or more of state capital, the rate of innovation enterprises is about 73.1%.
In terms of enterprise size. In Vietnam, small and medium enterprises are divided based on the Decree No. 39/2018 / ND-CP dated March 11, 2018 of the Government. Accordingly, small enterprises in the fields of agriculture, forestry, fisheries and industry and construction sectors have the average number of employees participating in social insurance in < 100 people and the total revenue of the year is nam 50 billion VND or total capital of < 20 billion; small businesses in the field of trade and services have the average number of employees participating in social insurance < 50 people and the total revenue of < 100 billion VND in the year or total capital of < 50 billion VND. Medium enterprises in the fields of agriculture, forestry, fisheries and industry and construction sectors have the average number of employees participating in social insurance in the year <200 and the total revenue of the year is VND200 billion or total capital of ty 100 billion. And medium enterprises in the field of trade and services have the average number of employees participating in social insurance in < 100 people and total revenue of < 300 billion VND or total capital of von 100 billion VND. According to the survey results, 7,641 enterprises, including 4,929 small enterprises, 820 medium enterprises and 1,892 large enterprises of the National Agency for Science and Technology Information(2018) show that:
- Percentage of small enterprises with net revenue of VND20 billion or more, up to 60.8% is an innovative start-up enterprise, this rate in enterprises with revenue ofVND10 to 20 billion is 58.3%, and among enterprises with revenue below 10 billion VND is 53.6%. It can be seen that, in small enterprises, the higher the group of enterprise with net revenue, the more innovation enterprises are. Of the 2882 small enterprises that
having innovativion, the number of enterprises with turnover ofVND20 billion or more accounted for the maj ority (60.6%); enterprises with turnover of 10 to 20 billion VND accounted for 19.3%; The remaining businesses have revenue of less than 10 billion VND, accounting for 20.1%.
- Percentage of enterprises having net revenue of less than VND200 billion has 62.4% of innovation enterprises, this rate in enterprises with turnover of VND200 to 300 billion is 67.5% (the highest rate) and in businesses with revenue of VND300 billion or more is 66.7%. Thus, in medium enterprises, the higher the group of enterprises with net revenue, the higher the rate of innovation enterprises. Among 525 enterprises that have innovated, the number of enterprises with revenue below 200 billion VND accounted for the majority (61.0%); enterprises with revenue of VND200-300 billion, accounting for 15.4%; The remaining businesses have revenue of 300 billion or more accounted for 23.6%.
- Percentage of large enterprises with net revenue of less than VND300 billion has 64.4% of innovation enterprises, this rate in enterprises with revenue from VND300 to 400 billion is 71.1% and in businesses with revenue of VND400 billion or more is 71.7%. In large enterprises, thus, the higher the group of businesses with net revenue, the higher the rate of innovation enterprises. Among large enterprises having innovation, the number of enterprises with turnover less than 300 billion VND accounts for more than 1/3 (36.4%); enterprises with revenue ofVND300-400 billion, accounting for 10.2%; the remaining businesses with revenues of400 billion or more accounted for more than half (53.4%).
Thus, the research results show that, the higher the group of enterprises with net revenue, the higher the rate of innovation enterprises; At the same time, the percentage of enterprises having innovation is inversely proportional to the percentage innovatvion enterprises that using state capital.
Secondly, about Vietnam's innovative star-up activities.
The creative entrepreneurship has been development in recent years, these activities cannot be without the initiatives and active support of the Government. In the United States, with seven startup ecosystems among the world's top 20 ecosystems, the US Government is not only important in establishing Silicon Valley but also continues to fund many of the basic research in the region. In the UK, several positive steps have been taken to establish and nurture an entrepreneurial ecosystem. Since 2010, it began with the establishment of Tech City in London to offer tax incentives for both businessmen and investors, by 2015, the number of creative startups in London amounted to 608.110. In France, there are currently about 9.400 startups while venture capital investments increase to more than 2.2 billion euros in 2016, second only to UK in startups in Europe. The French government is investing
to attract young businesses to France and encourage investment in the necessary places. One of the goals of this direction is to create an environment that attracts startup founders, encouraging the establishment of technology incubation. In China, nearly $320 billion has been spent to provide venture capital for start-up businesses. In 2015, the Government announced the launch of a $6.5 billion investment fund to directly support the start-up ecosystem.
So far, Vietnam has about 3,000 startups. According to the statistics of Topica Founder Institute (TFI, 2017), Vietnam has received 92 investment deals with the total capital of 291 million USD, nearly doubling the number of deals and nearly 50% of the total investment capital compared to 2016 (50 deals with 205 million USD). Despite the relatively strong growth, the investment capital for innovative star-up in Vietnam being very modest compared to the region and the world, accounting for a small percentage, less than 5% compared to the region Southeast Asia (Tech in Asia, 2017). Currently, Vietnam has 40 investment funds for start-up innovation (by the end of 2017) with the participation of large corporations, organizations promoting business and individual investors, there have been nearly 50 common work area for the innovation, focusing mainly in 3 big cities, as Hanoi, Ho Chi Minh, Da Nang. Currently, there are about 30 business incubators and 10 organizations promoting business, increasing 10 technology incubations and 3 organizations promoting business (compared to 2016). Typical as: Business Incubators at Hoa Lac high technology; Ho Chi Minh City Hitech Business Incubator; Da Nang incubation; Youth Support Center; Hanoi Business Information technology Innovation Incubator, etc.
In order to develop the system of innovative start-up, the Vietnam's Government from central to local level have issued many policies to support and promote start-up innovation activities. Some typical policies such as:
- Decision No. 844/2016 / QD-TTg on supporting the development of innovativation ecosystems to 2025. Accordingly to 2025, Vietnam will support the development of 2,000 innovative start-up projects; supporting the development of 600 innovative start-up enterprises; 100 enterprises participated in the project called for investment capital from venture capitalists, mergers and acquisitions, with an estimated total value of VND2,000 billion.
- Decision No. 1667 / QD-TTg dated 30/10/2017 on approving the project "Supporting students to start-up until 2025". Accordingly to 2025: continue to promote propaganda and education to raise awareness students with knowledge and skills about innovative start-up; strengthening facilities for centers to support start-up students in universities, institutes, colleges and intermediate schools; 100% of universities, institutes, universities, 70% of colleges and intermediate
schools have at least 05 ideas and start-up projects of students who are supported with investment from the source fit or connect with businesses, venture capital funds.
- Decision No. 939 / QD-TTg dated June 30, 2017 on approving the project "Supporting women to innovative start-up in the period of2017-2025". The objective of the project is to raise the awareness ofwomen on the policies of the Party and the State on innovative start-up, promoting the realization of business ideas, contributing to the implementation of national goals on enterprise development and the National Strategy on gender equality. To 2025, 90% of the association's specialized officials at all levels will participate in implementing the project on raising awareness, methods to support women in starting a business and developing their business; 70% of women members are disseminated and raise awareness about jobs and start-ups; support 20,000 women to start businesses and start a business; coordinating and supporting the establishment of 1,200 cooperatives / cooperatives managed by women; 100,000 enterprises of newly established women are consulted and supported to develop businesses.
- Foreign technology search and transfer program to 2020 issued under Decision No. 1069 / QD-TTg datedJuly 4, 2014 of the Prime Minister, establishing the network of global experts to search advanced technologies, transfer and application in Vietnam. The focus of the program is to find source technologies, advanced technologies for creating new technology products and services that contribute to improving productivity, quality, value-added products and goods of the business Vietnam. The National Technology Innovation Fund was established under the Prime Minister's Decision No. 1342/QD-TTg ofAugust 5, 2011, the fund has a chartered capital ofVND1,000 billion from the state budget, focusing on preferential loans, loan interest support, guarantee for loans, capital support for organizations, individuals and enterprises to innovate start-up, research, transfer and perfect technology.
- Some Vietnam's provinces and cities have also issued policies suitable to their local practices, such as: Decision No. 4665 / QD-UBND dated September 5, 2018 on support projects start a business in Hanoi city until 2020; Decision No. 4181 / QD-UBND promulgated the program to support small and medium enterprises to innovate, improve competitiveness and international integration in the period of 2016-2020 in Ho Chi Minh City; Decision No. 3380 / QD-UBND promulgating the plan to support innovation innovation of Ba Ria-Vung Tau province in the period of 2016-2020; Decision No. 9098 / QD-UBND promulgating the Da Nang start-up development program; Plan No. 147/ KH-UBND on supporting the ecosystem of creative start-up in Thua Thien Hue in the period of 2016-2018; Plan No. 9239/KH-UBND on supporting start-up innovation in Dak Lak province until 2025, etc.
Moreover, based on the status of the innovation and innovative start-up activities at the sectors and localities, the Ministry of Science and Technology (2017) has made guiding, suggestions plans to implement support projects ecosystem of national innovation. For example, it is necessary for industries and localities to have a level of ecosystem at level 1: focus on promoting basic training on entrepreneurship innovation, towards students at universities and colleges; alumni have gone to school and staff at research institutes; There should be a mechanism and arrangement of human resources to advise and support legal and administrative procedures for innovative start-up enterprises, especially in matters of business registration and dissolution procedures enterprise; Investment in facilities is a place where components of innovative innovation startups meet, connect, and organize events. If possible, can be build a co-working space, or a focus area for start-up support services.
Thirdly, evaluate Vietnam's innovative start-up activities
Vietnam's innovative start-up activities have initially brought positive impacts on economic and social development through creating favorable legal corridors. Policies and measures to support innovative start-up are all derived from the needs of businesses and society. On that basis, the Vietnam's Government planned programs, projects and projects to promote appropriate creative start-up activities based on the approach of national innovation system. Therefore, the policies that have been formed not only help businesses see the factors that are related and interact with each other in the system but also see the relationship between enterprises, the relationship between producers. export, users, education and training systems, government, research organizations deploy in forming new ideas, conducting research and development activities and launching products to market, accepted by the market.
According to the 2018 Global Entrepreneurship Report by Amway Group in collaboration with Munchen University, Germany's Gesellschaft fuer Konsumfors company made in March 2018, showing that Vietnam is leading the way In the world for entrepreneurship morale, 99% of Vietnamese people are willing to sacrifice their free time to implement their own business ideas.This is a big number compared to the world. However, in recent years, the innovation activities in Vietnam have been movement, especially the creation of innovative ideas in the community is not high, the quality of human resources is still limited. Along with that, it has not promoted the best scientific and technological capacity for creative start-up activities; Inadequacies in funding, attracting investment capital for creative startups have not really been improve.
Box 1: Restrictions in Vietnam's innovative start-up activities
Vietnam's entrepreneurial ecosystem has not really developed its potential and has not achieved as the expectations.
The reasons for this situation because of the low quality of human resources for creative start-up, there is no adequate statistics on the subjects of the national creative startup ecosystem; Financial policies, investment policies to support start-up businesses have not promoted many effects, especially policies to support creative startups having not motivation the attraction involved by investors, scientists, businesses. Activities of commercializing research results to form innovative start-up businesses, especially in universities are limited.
Source: Synthesisfrom the National Scientific Conference on Innovative start-up Ecosystems, Hanoi, 2018
4. Conclusions and recommendations
To develop the innovative start-up enterprise adaping with the objectives of the Vietnam's Economic and Social Development Strategy, Vietnam's Science and Technology Development Strategy; at the same time, on the basis of flexibly applying the experiences of the number of countries around the world about start-up businesses, combined with the trend of international cooperation in science and technology in the context of the forth industrial revolution, in the future, Vietnam needs:
Firstly, supporting innovative start-up enterprises must ensure fairness and objectivity, consistent with market rules and not create unequal competition. In order to achieve this, there must be full awareness and appreciation of the role of small and medium-sized enterprises, especially small and medium-sized enterprises, which innovative start-up for the development of the economy. Gradually improve the institutional environment, create favorable conditions for businesses to access and use preferential policies of the state in production and business activities. Moreover, the support for innovative start-up businesses must ensure the role of small and medium enterprises, ensure business freedom, property ownership, and enhance commune responsibility association of business. Therefore, the Government needs to ensure the stability of policies, improve the business environment in the direction of convenience, safety, ensuring equal rights for businesses, regardless of type and economic sectors in access to resources and support policies towards simplifying administrative procedures, especially administrative procedures to enjoy incentives.
Secondly, identify feasible resources to improve the process of implementing policies to support innovative start-up enterprises. Policy making to support start-up businesses, guiding to enterprises is important but not enough if in the process of implementing policies not possible to identify appropriate resources. Therefore, in the coming time, it is necessary to review these resources, especially finance, capital structure for innovation from th government support, capital from start-up, from venture capital funds, credit in-
stitutions and other capital sources. Moreover, in order to effectively implement policies to support innovative start-up businesses, it is necessary to review the sources of support for start-up businesses, helping start-up businesses remove difficulties towels, stimulating the creation of creative ideas, supporting the process of conducting research and technology development with fiting market demand. In addition, it is necessary to strengthen inspection of programs, projects to support enterprises, including start-up innovation enterprises to have timely assessments and adjusttments to the situation of implementation and efficiency of policies to help innovative start-up businesses.
Thirdly, stimulating, motivating the formation of ideas through entrepreneurship and innovation competitions in universities. The idea of starting a business can be formed through training programs, through entrepreneurship competitions, through the passion of students, faculty, scientists in the school. This activity has had a strong and widespread development in recent years. Therefore, the promotion and promotion of annual start-up competitions in universities/ colleges towards improving quality, efficiency and high cohesion to the market, attracting investors is necessary to create many creative ideas, potentially commercialized. Innovative start-up competitions should be organized according to appropriate interactions, associated with the process of innovative start-up. The objective of organizing innovative start-up competitions is not only to exploit the results of scientific research and intellectual property of students, lecturers and scientists in universities/colleges but also promotes the process of connecting startup teams across the country to call for attract investment. Moreover, it is necessary to pilot the implementation of a human resource search program for innovative start-up businesses such as the program connecting students to internships at start-up businesses; connect, support funds and transfer from research institutes and universities to work at start-up businesses. At the same time, attracting good students and scientists from overseas Vietnam to participate in activities to support innovative start-up.
Fourthly, promote the connection of Vietnam's start-up networks with the venture capital funds the region and the world, need partly support funding for innovative start-up enterprises to take part in attend training courses at the organization that promotes reputable business abroad (Singapore, USA, Finland, UK and other countries). Continue to promote the cooperation and link between the Ministry of Science and Technology with international organizations (Uber Exchange, USA; N15, Korea; venture capital funds and other partners) to strengthen Introducing Vietnam's entrepreneurial ecosystem with international partners to attract resources, especially capital to support for innovative start-up. Moreover, the Min-
istry of Science and Technology should continue to improve the quality of annual organized activities regional links to develop innovative entrepreneurial ecosystems in Vietnam's four economic regions and joint conferences on building innovative entrepreneurial ecosystems. These activities contribute to creating opportunities for localities to link and exchange experiences about creative entrepreneurship. At the same time, promoting comparative advantages, entrepreneurial potentials, local strengths to partners, domestic and foreign investors. Actively connecting between Vietnam's networks of start-up, investment with start-up networks in the world. Along with that is to build training programs, organize startup business exchange programs for Vietnamese enterprises to have opportunities to exchange, learn, attract investment and access international markets; At the same time, support businesses and international investors to learn about Vietnam market, support them to set up businesses, develop products. In addition, the state should support establishment of a focal point to represent Vietnam's innovation in entrepreneurial ecosystems in the world.
Fifthly, promote the commercialization of research results to form innovative start-up enterprises, especially in universities and research institutes. In order to do this well, it is necessary to first review and evaluate research results that have the potential to commercialize. In order to form start-up innovation enterprises based on the results of scientific research and technological development, inventions and utility solutions, the Government/State needs to evaluate and then build build databases, or banks of research results from organizations, universities/ research institutes. This is a difficult and requires a large budget, if not well done, the research results can be distorted, even faked. Therefore, it is necessary to develop criteria for evaluating and selecting research results with potential for commercialization as a basis for forming innovative start-up enterprises. This is a force capable of rapid development of economic and social values. In order for this activity to be effective, it is necessary to link innovation activities with scientific studies of research institutes, universities, inventions, creative ideas of students, citizen. At the same time, it is necessary to build centers / organizations to support startups for students in regions/ universities and training institutions, to form start-up support funds for students from socialization funding.
In addition, it is necessary to support start-up businesses to access, find information, investigate and survey the market of output products; Supporting the reception of incentives from the state in the early stages of innovative entrepreneur-ship, especially financial support has important implications for the success of startups. In start-ups, the state often participates in the initial stage to provide financial support through non-refundable grants for research, technology completion
and hiring experts. Therefore, it is necessary to create favorable enjoy incentives not only at the initial stage but at all stages
conditions for innovative start-up businesses to access and of the startup process.
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