Lessons from Vietnam: What Indian SMEs Must Learn to Compete Globally

As India aspires to become a leading global manufacturing hub, it’s not China but Vietnam that increasingly offers the most compelling model of success for small and medium enterprises (SMEs). Over the past decade, Vietnam has quietly cemented its place in global value chains (GVCs), attracting consistent foreign direct investment (FDI) and integrating its SMEs into the global fabric of electronics, garments, seafood and industrial components.

While India’s demographic advantage and digital momentum are undeniable, the Vietnamese experience offers real, actionable lessons especially for Indian SMEs seeking to scale beyond domestic boundaries.

Vietnam’s Policy Backbone: Coordinated, Incentivised and Focused

Vietnam’s SME evolution has been underpinned by coherent industrial policies, tight FDI-SME linkages and cluster-based development. Export processing zones across provinces like Bac Ninh, Binh Duong and Ho Chi Minh City have allowed plug-and-play setups for MNCs and their Tier-1 and Tier-2 vendors. Crucially, the Vietnamese government actively aligns FDI with local SME development by offering tax incentives for sourcing from domestic vendors and facilitating post-investment support programs.

In 2023, Apple moved a portion of its iPad and MacBook manufacturing to Vietnam. Companies like Foxconn, Pegatron and Luxshare followed suit. What made this possible wasn’t just cost it was infrastructure readiness and the availability of SMEs capable of matching global standards.

India’s Production Linked Incentive (PLI) schemes are a major step in this direction and have attracted close to ₹2 lakh crore in commitments by 2025. However, execution gaps remain, particularly in connecting MSMEs to anchor manufacturers, especially in electronics, auto components and textiles. This disconnect often stems from fragmented supply clusters, regulatory complexity, and limited compliance support.

What Indian SMEs Can Do Differently

Rather than waiting for large institutional overhauls, Indian SMEs must lead from the front on digitisation, compliance readiness, and global market alignment. Vietnamese SMEs have shown that small firms can meet global buyer expectations when supported by targeted policy, robust digital tools and long-term partnerships.

By studying how Vietnamese companies evolved from modest enterprises into export-ready suppliers, Indian SMEs can apply these learnings to their own sectors. The following case studies illustrate that journey.

Case 1: Saigon Precision Co. Ltd (SPC)
Global Link: Canon, Brother, Panasonic
Sector: Precision mechanical components

Saigon Precision started as a small supplier and gradually scaled by aligning its production processes to Japanese quality expectations particularly Just-In-Time delivery and zero-defect tolerance.
Now a subsidiary of Misumi Group, SPC supplies mechanical parts to Japanese and ASEAN manufacturers across sectors.
Indian SMEs in auto components or electronics can emulate SPC by adopting lean practices, joining Indo-Japan SME forums, and investing in certifications like ISO 9001 and 5S. Partnering with MNC-led local vendor programs could provide an accelerated path into regional value chains.

Case 2: Minh Phu Seafood Corporation
Global Link: Walmart, Sysco, Carrefour, Aeon
Sector: Processed seafood exports

Minh Phu began as a regional seafood processor and transformed into a global supplier by investing in traceability systems, automated packaging and ESG practices demanded by U.S. and EU retailers.
Its breakthrough came when it integrated end-to-end cold chain logistics and adopted international certifications such as HACCP and ASC.
Indian agrifood or seafood exporters can replicate this model by focusing on farm-to-fork traceability, batch records and meeting certification standards through APEDA and Marine Products Export Development Authority (MPEDA) support.

Case 3: Viet Tien Garment Corporation
Global Link: Tommy Hilfiger, Calvin Klein, Uniqlo
Sector: Apparel manufacturing

Viet Tien transitioned from a state-run unit to a global supplier through compliance-led transformation, adopting WRAP, ISO 14001 and Lean Manufacturing practices.
The company benefited from Vietnam’s Free Trade Agreements, exporting tariff-free to the EU and Japan.
Indian textile SMEs can draw from this by actively engaging with India’s FTAs with UAE, Australia and ASEAN. Participation in Apparel Export Promotion Council (AEPC) meets and digitisation of compliance documentation could bridge the credibility gap with global fashion buyers.

Case 4: CNC Tech Co. Ltd
Global Link: Intel, Bosch, Sanmina
Sector: Cable manufacturing and injection moulding

CNC Tech was founded in 2008 and emerged as a trusted vendor for high-precision components by aligning with Intel Vietnam’s localisation program, which connects SMEs to global value chains.
The company refined its processes through external audits, technical training, and gradual capacity upgrades.
Indian SMEs looking to supply to MNCs like Apple, GE, or Hyundai can explore similar ecosystem engagement via Make in India programs or state-level electronics manufacturing clusters. Regional SME alliances can also help bid for integrated contracts.

Case 5: MISA JSC
Global Link: Supports 250,000+ SMEs
Sector: ERP & SaaS tools for SMEs

MISA provides tailored accounting, payroll, and inventory solutions to SMEs across Vietnam. During COVID-19, it enabled many businesses to digitise and maintain continuity.
Their low-cost, scalable software helped standardise SME data for credit access, vendor onboarding, and compliance.
Indian SaaS startups and services SMEs can explore vertical SaaS for niche clusters like Surat diamonds or Ludhiana hosiery. For manufacturers, adopting tools like Vyapar or Marg ERP especially with support from MeitY’s Digital MSME Scheme can reduce friction and improve discoverability.

The Real Takeaway

The success of Vietnamese SMEs is not a product of isolated excellence it’s a result of institutional scaffolding, sustained compliance training and close coordination between FDI and local capacity-building. Vietnamese trade offices often co-develop quality frameworks with global buyers and local SMEs, enabling faster onboarding and better retention in supply chains.

Indian SMEs can unlock similar pathways by advocating for vendor development programs, using digital infrastructure like ONDC and TReDS for visibility and finance, and integrating certification training under cluster development programs.

India’s Window of Opportunity

Vietnam’s rise isn’t inevitable and India’s potential isn’t diminished. But the path to global integration demands execution excellence. Government schemes exist, but the leverage lies in their grassroots deployment. Vietnamese SMEs have shown that scale is not a barrier discipline and collaboration are the differentiators.

India’s SMEs now have digital tools, trade windows, and sectoral momentum. What they need is the discipline to meet global benchmarks, the willingness to build partnerships and the readiness to step onto the global stage not as low-cost suppliers, but as credible, compliant and competitive peers.

Vietnam may be smaller in size, but in global value chains, readiness matters more than reach. For Indian SMEs, the time to act is now.