Role of MSMEs in Viet Nam’s food environments

In 2023, researchers from the CGIAR Research Initiative on Sustainable Healthy Diets through Food Systems Transformation (SHiFT) conducted a survey to learn about the role of micro, small, and medium enterprises (MSMEs) in the food environment in three locations in Viet Nam: an urban area of Hanoi (Dong Da district), a peri-urban area of Hanoi (Dong Anh district), and a more rural town (Moc Chau district). The survey objective was to learn about the types of businesses that could provide more of the components of a sustainable healthy diet to consumers. Conducted in May and June, the main survey collected data from 1,627 businesses out of 5,832 total MSMEs selling food in the sampled areas of those districts.

The survey findings can help us think about the role of MSMEs in improving food system outcomes. Here, we summarize some of the most important messages from reports we developed on the data:

1. Consumers tend to purchase most of the components of a sustainable healthy diet from MSMEs. Defining the components of a sustainable healthy diet as the foods categorized as “healthy” by the Global Diet Quality Score, we find that low-fat dairy is the only type of purchased food that is not typically obtained by consumers from MSMEs. Just under half of consumers purchase low-fat dairy from MSMEs; for all other food categories, consumers who purchase the food buy it from MSMEs between 85 and 97 percent of the time.
2. As is commonly found in the literature on MSMEs, a majority of the MSMEs surveyed are owned by women. Women are far more likely to own businesses that have no other employees; among those businesses, 89 percent are women-owned, and 80 percent are food vendors (rather than retail shops, restaurants, or coffee shops).
3. Many of the vendors represented in our data obtain their products through short value chains, whether they manage a stall or act as mobile vendors. Nearly 40 percent of them are either farmers themselves or buy directly from farmers. There is also variation in location; for example, more than half of all MSMEs in Dong Anh are either producing or buying their main products directly from the farm, while less than 20 percent of those in Dong Da do the same. Some of this difference is attributable to the distribution of MSMEs, as there are far more restaurants and coffee shops in Dong Da than the other two districts.
4. A relatively small share of all MSMEs report ever having challenges in obtaining the components of a sustainable healthy diet that they sell, and fewer indicate they would have a difficult time obtaining more of these products if they could sell more. The share of businesses reporting challenges is slightly larger in Moc Chau than in the urban or peri-urban areas, but it does not exceed 15 percent of all MSMEs. Overall, fewer than 10 percent of MSMEs would have a difficult time obtaining more of those products if they could sell them. These findings suggest that supply is not a constraint to improving diets in these areas of Viet Nam.
5. Although MSMEs are clearly able to sell more components of sustainable healthy diets, their business practices could be improved in general, particularly for vendors and all types of shops selling at least some foods. Fewer than 10 percent of these types of MSMEs have written budgets, and about the same percentage record sales or purchases. Out of all surveyed MSMEs, 30 percent do not know what food they make the most profit on, and fewer than half save for business emergencies. Many businesses offer personal credit to their customers, yet only 75 percent of shops and fewer than half of vendors record what is owed to them and by whom. Not surprisingly, very few of the MSMEs in the sample report having received a formal loan, which may be partly driven by the fact that they do not keep very good records.
6. Toward the end of the survey, almost half of the MSMEs stated they were interested in selling more healthy food products, with quite a bit of variation by location and outlet type. MSMEs in Dong Anh were less interested (only 30 percent) than MSMEs in the other two locations (just over half). Interest was much higher among respondents at coffee shops and restaurants (more than 60 percent) than among other food shops and vendors (around 40 percent).

In sum, these findings both provide new information about many of the businesses that sell the components of sustainable healthy diets to Vietnamese consumers, and offer guidance about how interventions might take place within the system to increase sales of these foods. MSMEs are not constrained by supply, but they may be limited by their own business practices and, for some, by the desire to sell more. Therefore, any interventions to sell more healthy foods should target MSMEs that either have the desire to sell more of them or have characteristics like those in our data that want to sell more. Improving business skills could also help MSMEs selling healthy foods realize better outcomes, strengthening their ability to sell more.

The International Food Policy Research Institute and the Alliance of Bioversity International and CIAT lead SHiFT in close collaboration with Wageningen University and Research and with contributions from the International Potato Center. SHiFT combines high-quality nutritional and social science research capacity with development partnerships to generate innovative, robust solutions that contribute to healthier, more sustainable dietary choices and consumption of sustainable healthy diets. It builds on CGIAR’s unparalleled track record of agricultural research for development, including ten years of work on food systems and nutrition under the CGIAR Research Program on Agriculture for Nutrition and Health.

This blog was written by Alan de Brauw, Senior Research Fellow at the International Food Policy Research Institute and Leader of SHiFT’s Work Package 2 on Micro, small, and medium enterprises and the informal sector. 

Header image: Vendors sell vegetables to customers at the Cho Hom Market in Hanoi, Viet Nam. Photo by UN Women Asia and the Pacific from Flickr.