Development of domestic suppliers of electronics in viet nam the case sudy of canon viet nams strategy

DEVELOPMENT OF DOMESTIC SUPPLIERS OF ELECTRONICS IN
VIETNAM: THE CASE STUDY OF CANON VIETNAM’S STRATEGY

___________________________

A DISSERTATION
Presented to the Faculty of the Graduate School
Southern Luzon State University, Lucban, Quezon, Philippines
in Collaboration with
Thai Nguyen University, Socialist Republic of Vietnam

___________________________

In Partial Fulfillment
of the Requirements for the Degree
Doctor of Business Administration

___________________________

By
TRAN XUAN NGOC (RONALDO)
December 2013
i


APPROVAL SHEET

The Dissertation of

TRAN XUAN NGOC
entitled

DEVELOPMENT OF DOMESTIC SUPPLIERS OF ELECTRONICS IN
VIETNAM: THE CASE STUDY OF CANON VIETNAM’S STRATEGY
Submitted in Partial Fulfilment of the Requirements for the Degree
DOCTOR OF BUSINESS ADMINISTRATION
A program offered by Southern Luzon State University,
Republic of the Philippines in collaboration with
Thai Nguyen University, Socialist Republic of Vietnam
has been approved by Oral Examination Committee

MELCHOR MELO O. PLACINO, PhD
Expert

EDWIN P. BERNAL, DBA
Expert

WALBERTO A. MACARAAN, EdD
Expert

ALICE T. VALERIO, PhD
External Panel

CECILIA N. GASCON, PhD
Chairman
Endorsed by:

Recommended by:

EDUARDO T. BAGTANG, DBM
Adviser

APOLONIA A. ESPINOSA, PhD
Dean

Accepted in Partial Fulfilment of the Requirements for the Degree
Doctor of Business Administration

_____________________
Date

WALBERTO A. MACARAAN, EdD
Vice President for Academic Affairs
ii


CERTIFICATE OF ORIGINALITY

iii


ACKNOWLEDGMENT

Firstly, I am particularly grateful to my dissertation committee: Dr.
Cecilia N. Gascon, Dr. Walberto A. Macaraan, Dr. Edwin P. Bernal, Dr. Milo
O. Placino, Dr. Alice T. Valerio, and special thanks to my adviser, Dr. Eduardo
T. Bagtang, It is only with their precious assistance, support and guidance that
I was able to fulfill my dissertation. They shared valuable time from their busy
schedules to help and give me critical comments and suggestions.
I gratefully acknowledge Southern Luzon State University, Thai Nguyen
University, Thai Nguyen University of Agriculture and Forestry, International
School - Thai Nguyen University, International Training Center of Thai Nguyen

University of Agriculture and Forestry, and the staff. I have greatly benefited
from good study facilities, materials, and dynamic academic environment.
I want to express my deep gratitude to Hanoi People's committee,
Hanoi Vocational College of High Technology who supported my studies.
I am greatly indebted to the researchers and all my colleagues who
have helped me to overcome many difficulties and for sharing their views and
insights on this dissertation as well.
Finally, I wish to thank my family members for their spiritual
encouragement and material support. My gratitude also goes to all those who
may not have participated directly in the accomplishment of this humble
research output but their works have been essential to the success of my
dissertation.
Tran Xuan Ngoc
iv


DEDICATION

This dissertation is dedicated to:
My great teacher, Dr. Eduardo T. Bagtang, whose support and
guidance has inspired me to be able to fulfill my dissertation,
Hanoi People's committee, Hanoi Vocational College of High
Technology, my second magnificent home with hope and support,
My great parents, who never stop giving moral support and even
sacrificed themselves in countless ways,
My dearest wife, Hanh Nguyen, my loving companion for the rest of my
life,
My beloved kids: Phuong Uyen, and Bao Chau, whom I shall love
forever,
My beloved brothers and sisters who have always stood by me when

things look bleak,
To all my family, the symbol of love and giving,
My friends and my colleagues who constantly encourage and support
me,
All the people in my life who have touched my heart,
I dedicate this research.

v


TABLE OF CONTENTS
PAGE
TITLE PAGE ………………………………………………………………..

i

APPROVAL SHEET ……………………………………………………….

ii

CERTIFICATE OF ORIGINALITY ………………………………………..

iii

ACKNOWLEDGEMENT …………………………………………………..

iv

DEDICATION ………………………………………………………………

v

TABLE OF CONTENTS …………………………………………………..

vi

LIST OF TABLES ………………………………………………………….

viii

LIST OF FIGURES ………………………………………………………...

xiii

LIST OF APPENDICES …………………………………………………...

xiv

ABSTRACT …………………………………………………………………

xv

CHAPTER
I

II

III

INTRODUCTION ……………………………………………

1

Background of the Study …………………………………..

1

Statement of the Problem ………………………………….

5

Objectives of the Study …………………………………….

5

Hypothesis of the Study ……………………………………

8

Significance of the Study …………………………………..

8

Scope and Limitations of the Study ………………………

10

Definition of Terms ………………………………………….

11

REVIEW OF LITERATURE ……………………………….

15

Conceptual Framework ………………………………….…

117

METHODOLOGY
Locale of the Study …………………………………………

118

Research Design ……………………………………………

119

Populations, Sample & Sampling Technique ……………

122

Research Instrument ……………………………………….

123

Data Treatment and Processing Method ……….…….….

124

Statistical Treatment ………………………........…….……

124

vi


IV

RESULTS AND DISCUSSIONS ………………………….

129

Extent of Profile of Canon Vietnam ……………………….

129

Extent of Autonomy of Subsidiary Company ….…………

145

Extent of Knowledge Transfer from Subsidiary
Company to Local Suppliers ………………………………

164

Case Studies of Four Canon’s Local Suppliers …………

187

Extent of Competitive Advantage of Canon Vietnam …..

200

Extent of Implementation of Government Policies ……...

218

Extent of Factors Affecting the Capacity Development

230

of Local Suppliers …………………………………………..

V

SUMMARY, CONCLUSION AND RECOMMENDATION
Summary …………….………………………………………

253

Conclusions …………………………………………………

256

Recommendations …………………………………………

258

REFERENCES ………………………...…………………………………..

271

APPENDICES ……………………………………………………………...

279

CURRICULUM VITAE …………………………………………………….

289

vii


LIST OF TABLES
TABLE
1

PAGE
The Development of the Electronics Industry and its
Supplier Industries in ASEAN Countries

4

2

Number of Local Suppliers

30

3

Profile of Local Suppliers

31

4

Transferred Knowledge Between Canon and Local
Suppliers

63

5

Localization of Canon’s Electronics

83

6

The Situation of the Electronics Industry and its Supplier
Industries in ASEAN Countries

116

7

Factor Loading

125

8

Comparison Between the Perceptions of Managers of
Canon Vietnam and Managers of Suppliers as to Profile of
the Canon Vietnam Affecting the Capacity Development of
Local Suppliers

129

Comparison Between the Perceptions of Managers of
Canon Vietnam and Managers of Suppliers on the Extent
of Profile of Canon Vietnam Affecting Domestic Electronic
Suppliers

137

Comparison Between the Perceptions of Managers of
Canon Vietnam and Staff as to Extent of Profile Affecting
the Capacity Development of Local Suppliers

138

Comparison Between the Perceptions of Managers of
Suppliers and Employees as to Extent of Profile Affecting
the Capacity Development of Local Suppliers

139

Comparison Between the Perceptions of the Canon
Vietnam Employees and Suppliers’ Employees as to
Profile of Canon Vietnam Affecting the Capacity
Development of Local Suppliers

142

Comparison Between the Perceptions of Staff of Canon
Vietnam and Employees of Suppliers on the Extent of
Profile of Canon Vietnam Affecting Domestic Electronic
Suppliers

144

9

10

11

12

13

viii


TABLE
14

15

16

17

18

19

20

21

22

23

24

PAGE
Mean Difference of the Perceptions of the Managers and
Staff of both Canon and Suppliers on the Extent of Profile
Affecting the Capacity of Domestic Suppliers

144

Comparison Between the Perceptions of Managers of
Canon & Managers of Suppliers on the Extent of
Autonomy Affecting Capacity Development of Suppliers

145

Comparison Between the Perceptions of Managers of
Canon & Managers of Suppliers on the Extent of
Autonomy Affecting Capacity Development of Suppliers

157

Comparison Between Perceptions of Canon Managers and
Staff on the Extent of Autonomy Affecting Capacity
Development of Local Suppliers

158

Comparison Between the Perceptions of the Managers of
Suppliers and their Staff on the Extent of Autonomy
Affecting Capacity Development of Local Suppliers

159

Comparison Between the Perceptions of Employees of
Canon and Suppliers on the Extent of Autonomy of Canon
Vietnam Affecting Capacity Development of Local
Suppliers

160

Comparison Between the Perceptions of Canon
Employees & Employees of Suppliers on the Extent of

Autonomy of Canon Vietnam Affecting Capacity
Development of Local Suppliers

162

Mean Difference of the Perceptions of the Managers and
Staff of both Canon and Suppliers on the Extent of
Autonomy Affecting the Capacity of Domestic Suppliers

163

Comparison Between the Perceptions of Canon Managers
and Managers of Suppliers on the Extent of Knowledge
Transfer Affecting the Capacity Development of Local
Suppliers

164

Comparison Between the Perceptions of Canon Managers
and Managers of Suppliers on the Extent of Knowledge
Transfer Affecting the Local Suppliers’ Capacity
Development

171

Comparison Between the Perceptions of Canon Managers
and Staff on the Extent of Knowledge Transfer of Canon
Vietnam Affecting the Capacity Development of Local
Suppliers

172

ix


TABLE
25

26

27

28

29

30

31

32

33

34

PAGE
Comparison Between the Perceptions of Suppliers’
Managers and Staff on the Extent of Knowledge Transfer
Affecting Local Suppliers’ Capacity Development

173

Comparison between the Perceptions of Employees of
Canon & Employees of Suppliers on the Extent of
Knowledge Transfer Affecting the Capacity Development
of Local Suppliers

175

Comparison Between the Perceptions of Canon
Employees & Employees of Suppliers on the Extent of
Knowledge Transfer Affecting Capacity Development of
Local Suppliers

181

Mean Difference of the Perceptions of the Managers and
Employees of both Canon Vietnam and Suppliers on the
Extent of Knowledge Transfer Affecting the Capacity of
Local Suppliers

182

Comparison Between the Perceptions of Canon Managers
& Managers of Suppliers on the Extent of Competitive
Advantage of Canon Vietnam Affecting the Capacity
Development of Suppliers

201

Comparison Between the Perceptions of Canon Managers
& Managers of Suppliers on the Extent of Competitive
Advantage of Canon Vietnam Affecting the Capacity
Development of Suppliers

211

Comparison Between the Perceptions of Canon Managers
and Staff on the Extent of Competitive Advantage of
Canon Vietnam Affecting the Suppliers’ Capacity
Development

213

Comparison Between the Perceptions of Managers of
Suppliers and Staff on the Extent of Competitive
Advantage of Canon Vietnam Affecting Suppliers’ Capacity
Development

214

Comparison Between the Perceptions of Canon
Employees & Employees of Suppliers on the Extent of
Competitive Advantage of Canon Vietnam

215

Comparison Between the Perceptions of Canon Staff &
Staff of Suppliers on the Extent of Competitive Advantage

of Canon Vietnam

216

x


TABLE
35

36

37

38

39

40

41

42

43

44

45

PAGE
Mean Difference of the Perceptions of the Managers and
Staff of Both Canon and Suppliers on the Extent of
Competitive Advantage Affecting the Capacity of Domestic
Suppliers
Comparison Between the Perceptions of Canon Managers
& Managers of Suppliers on the Extent of Implementation
of Government Policies Affecting Capacity Development of
Local Suppliers

216

218

Comparison Between the Perceptions of Canon Managers
& Managers of Suppliers on the Extent of Assistance of the
Government Policies

224

Comparison Between the Perceptions on the Extent of
Assistance of the Government as Perceived by Canon
Managers and Canon Staff

225

Comparison Between the Perceptions of Managers of
Suppliers and Staff on the Extent of Assistance of the
Government Affecting the Capacity Development of
Suppliers

225

Comparison Between the Perceptions of Canon
Employees & Employees of Suppliers on the Extent of
Assistance of the Government Policies

226

Comparison Between the Perceptions of Canon
Employees & Employees of Suppliers on the Extent of
Assistance of Government Policies

227

Mean Difference of the Perceptions of the Managers and
Staff of Both Canon and Suppliers on the Extent of
Government Assistance Affecting the Capacity of
Domestic Suppliers

228

Comparison Between the Perceptions of Canon and
Suppliers’ Managers on the Extent of Factors Affecting the
Capacity Development of Local Suppliers

230

Comparison Between the Perceptions of Canon and
Suppliers’ Managers on the Extent of Factors Affecting the

Capacity Development of Local Suppliers

231

Comparison Between the Perceptions of Canon Vietnam
Managers and Canon Vietnam Employees on the Extent of
the Factors Affecting the Capacity Development of Local
Suppliers

232

xi


TABLE
46

47

48

49

50

51

52
53
54

55
56
57

PAGE
Comparison of the Perceptions of Managers of Suppliers
and Employees on the Extent of the Factors Affecting the
Capacity Development of Local Suppliers

233

Comparison of the Perceptions of Canon Vietnam
Employees and Employees of Suppliers on the Extent of
the Factors Affecting the Capacity Development of Local
Suppliers

234

Comparison of the Perceptions of Canon and Suppliers
Employees on the Extent of the Factors Affecting
Capacity Development of Local Suppliers

235

Comparison of the Mean Differences of Perceptions of
Canon Managers & Suppliers and Employees of Canon &
Suppliers on the Extent of the Factors Affecting the
Capacity Development of Local Suppliers

236

Mean difference of the Perceptions of the Managers and
Employees of Both Canon and Suppliers on the Extent of
the Factors Affecting the Capacity Development of
Domestic Suppliers

237

Correlation of the Factors Affecting
Development among Local Suppliers

238

the

Capacity

Reliability of the Independent Variable: Company’s Profile CP

241

Reliability of the Independent Variable: Autonomy of
Company - AC

242

Reliability of the Independent Variable: Knowledge
Transfer –KT

243

Reliability of the Independent Variable: Competitive
Advantages - CA

243

Reliability of the Independent Variable: Government
Policies - GP

244

The reliability of the Control Variable:
Development of Local Suppliers – CDLS

245

Capability

58

Statistical Description of the Scale

246

59

Variables Entered/Removed

250

60

Model Summary

250
xii


LIST OF FIGURES
FIGURE
1

PAGE
Vietnam’s Import Value of Electronic Components,
Electronic and Computer Items

20

2

Performance Results of Canon Vietnam

28

3

Absorptive Capacity

61

4

Environment Change and Canon Response

70

5

Definition of Supporting Industries

75

6

Porter’s Diamond

90

7

“Supplier Industries” Concept of Japan

96

8

“Players” Network of the “Game Theory”

100

9

“Players” Network in Supplier Industries

101

10

Expanded “Players” Network in Supplier Industries in a
Country

101

11

Production Process of Electronic Products

104

12

Export Value of Vietnam’s Electronics Components and
Computer Units

107

Vietnam’s Import Value of Electronic Components,
Electronic and Computer Items

109

Conceptual Paradigm

117

13

14

xiii


LIST OF APPENDICES
APPENDIX

PAGE

A

Canon’s Evaluation on Supplier Capabilities ..

280

B

Characteristics of Newly Established Enterprises

281

C

CVN Organization

282

D

Questionnaire 1: For Canon Vietnam

283

E

Questionnaire 2: For Suppliers

286

`

xiv


ABSTRACT
Title of Research

: DEVELOPMENT OF DOMESTIC SUPPLIERS OF
ELECTRONICS IN VIETNAM: THE CASE STUDY
OF CANON VIETNAM’S STRATEGY

Researcher

: TRAN XUAN NGOC (RONALDO)

Degree Conferred

: DOCTOR OF BUSINESS ADMINISTRATION

Name and Address
of Institution

: Southern Luzon State University Lucban, Quezon,
Philippines and Thai Nguyen University, Socialist
Republic of Vietnam

Adviser

: Dr. Eduardo T. Bagtang

Year Written
: 2013
______________________________________________________________

The study was conducted

to determine the extent of the factors that

can help develop the capacity of local or domestic electronic suppliers in
Vietnam. Specifically, the study was focused on the extent of autonomy,
knowledge transfer strategies, comparative advantage and government
services of local suppliers.

A total of 250 respondents were identified, 6 managers of Canon
Vietnam, 4 managers of local suppliers, 100 staff members of Canon Vietnam
and 144 staff members of local suppliers

that were randomly selected.

Structured questionnaire was used in gathering data. Secondary data were
obtained from the Ministry of Industry, Ministry of Finance and Ministry of
Security to determine the profile of the companies. The SPSS program was
used in processing the data. The t-Test was used to determine the significant
differences regarding the perception of managers and staff on the factors that
affect the development capacity of local electronic suppliers while Pearson
correlation was used to determine the relationship between the variables.
xv


Cronbach’s Alpha coefficient was also used to test the reliability of the derived
model for capability building to be adapted by the local electronics suppliers.
Findings showed that both the managers and suppliers of Canon
agree that the profile of Canon Vietnam affects the development capability of
domestic suppliers with a mean of 3.59 while the employees of Canon and
suppliers were uncertain with a mean of 3.14. This finding implies that there is
a gap in the operation at the local level hence there is need for Canon
Vietnam to strengthen or expand their operation in the local areas to be able
to reach out to their clients.
On the extent of autonomy, it was found out that there was no
significant difference regarding the perceptions between the managers of
Canon, managers of suppliers, employees of Canon and employees of
suppliers.

Managers have a total average weighted mean of 4.3 while

employees have obtained 4.21 where they both agree .Likewise, it is noted
that organizational structure and research & development found out to have
the lowest mean.
As to the extent of knowledge transfer, it was found out that there is no
significant difference regarding the perceptions between the managers of
Canon, managers of suppliers, employees of Canon and employees of
suppliers.
As to the extent of comparative advantage, it was found out that there
is no significant difference of the perceptions between the managers of
Canon, managers of suppliers, employees of Canon and employees of
suppliers.
xvi


With respect to the extent of government policies and assistance, it
was found out that there is no significant difference regarding the perceptions
between the managers of Canon, managers of suppliers, employees of
Canon and employees of suppliers.
As regards the extent of influence of the factors on the capacity
development of local suppliers, it was found out that there is no significant
difference of the perceptions between the managers of Canon, managers of
suppliers, employees of Canon and employees of suppliers. Hence, profile,
autonomy, knowledge transfer, comparative advantage and government
policies had affected the capacity development of local suppliers.
The results of correlation coefficient was highly significant among
competitive advantage ,autonomy, knowledge transfer, government policies
and company profile indicating that

all the factors included in the study

influenced capacity development of local suppliers; hence, model 4 of the
Canon Vietnam strategy shall be adopted by other suppliers.
Finally, this study found out that there were identified gaps on profile
such as organizational structure and company culture ; autonomy research &
development and financial management ; knowledge transfer

impacting

responsiveness and absorptive capacity; competitive advantage affecting
production capacity and product design ; and government policies focusing
more on the enhancement of the Central Management Unit ; hence, all the
identified gaps are recommended for capacity enhancement among the local
suppliers of Canon Vietnam.

xvii


1
Chapter I
INTRODUCTION

After 25 years of reform, Vietnam's economy has grown stronger and
since then has been steadily being integrated deeper into regional as well as
global economies. Likewise, a number of industries have experienced fast
growth like the first Vietnam businesses that have been involved in the global
supply chain Vietnam is now an emerging market that is very attractive to
international investors ,multinational stakeholders and economic researchers.
Experience has proven that the emerging markets could bring

businesses the most important investment opportunities and growth. The
emerging markets are the places to test the concept, model, and existing
theories of business growth and progress. At the same time, these very
markets also create opportunities for research and the development of new
theories in the field of business administration.
The topic "Developing Domestic Suppliers of Electronics in Vietnam:
The Case of Canon Vietnam’s Strategy” is indeed vital, meaningful and useful
for managers of multinational companies in the electronic field in terms of
attracting investors that are now operating in Vietnam. The owners of the
firms who are currently providing electronic domestic products are now
Vietnam’s policymakers.

Background of the Study

Amongst the emerging markets, Vietnam is a very classic example of
the great and profound changes in attracting foreign investments to a


2
developing domestic industry. However, the industrialization of Vietnam today
faces huge challenges.

It must survive under the conditions of trading

liberalization with other countries all over the world. The competitiveness of
the Vietnamese industrial products in general is weak, especially those in
manufacturing machinery, equipment, components and materials. It seems
that the most basic weakness of Vietnam's industry stems from the weakness
of supporting industries. This involves the "survival" of Vietnam industries,
which is closely associated with whether the economy of Vietnam can be

internationally competitive enough to develop. On the other hand, the
weaknesses of the fundamental facility have contributed to the deficit of the
trading balance in Vietnam because the country itself has to import a lot of
components and raw materials for export production which therefore can
invariably cost more if it aims to improve the export capacity of the products.
As a result, if Vietnam boosts exports, the faster the demand for inputs
increases, the sooner it will lead to trade deficit which eventually might be
harder for the country to take.
Currently, the development of the domestic market is fraught with
spontaneity and lacks sustainability. Even though micro to small businesses
are common in Vietnam, they are not developed enough for international
export purposes. For those businesses which suit the international export
market which are few, as the majority belongs to small and medium
businesses, those of which are uneducated due to the poor condition of
fundamental and technical facilities and which lack developmental strategies,
capacity are in fact the ones which are in a weak position to deal with the
international market on the whole. The implementation of regional and


3
international commitments regarding Vietnam is still passive at this time. The
major businesses are still expecting an extension of protectorate to remain
afloat. The slow application of international standards in production and trade
has caused some businesses in Vietnam difficulties when joining the
production cycle within the local market.
Within the manufacturing industry, electronics is highly representative
of a developing country with a large population like that of Vietnam. In the
context of scientific and technological progress and globalization today, the
present status of the electronics industry in Vietnam has revealed a number of
problems. On the domestic scene, the supply businesses in Vietnam are in a

much weaker position than firms with foreign capital investment. On the other
hand, the electronic products of Vietnam are put under a huge competitive
pressure from China. In terms of the value chain, the electronics industry in
Vietnam mainly assembles consumer products, focusing on the stages with
minimal value attached. Very few companies produce detailed parts and
accessories in electronics. Foreign investors in this sector are mainly exportoriented, not oriented to promote connectivity supporting industries within the
country to create a shift in the value chain. This limits the ability to develop
this sector and likewise limits the impact of technological transfers as well as
the scalability to attract FDI. The assembling phase is mainly focused toward
cheap labor, but this is not an advantage to maintain the long-term economic
health of the country.


4

Table 1
The Development of the Electronics Industry and its Supplier Industries in ASEAN Countries
Country

Starting time

Key Products

Scale

Thailand

1960s

Computer and Accessories

Audio-Visual Products
Refrigeration
Office Equipment

620 companies with 521
FDIs 300.000 labor

Malaysia

In the middle of
1960s

Singapore

1960s

Consumer Electronics
Premium Accessories
Audio-Visual Accessories
Specialized Electronics
Telecommunications
Computer
Hi-Tech Accessories

900 companies
Two thirds FDIs, especially
Japanese
250 companies
150.000 labor

Philippines

Early 1970s

Specialized Electronics
Consumer Electronics
Computer Accessories
Terminals
Semi-Conductors

590 companies
72% FDIs- 30% Japanese
350.000 labor

Indonesia

Early 1970s

100 companies
Two thirds FDIs with
majority of Japanese

Major Export Markets
- Turnover in 2001: US$23
billion
- ASEAN: 22%,
The US: 20%
EU 17%
Japan 16%

- Turnover in 2001: US$70
billion
60% for export
Japan 36%
The US 34%, ASEAN and Asia:
31%
Turnover in 2003: US$10 billion
95% for export

Turnover in 2003: 9 US$billion
95% for export

Source: Compiled from reports by the Ministry of Industry and Commerce, Vietnam Electronic Industries Association, Viettronics


5

Statement of the Problem
The recent state of the electronics industry in Vietnam has revealed
problems of competition regarding local suppliers compared to foreign
suppliers. Local suppliers in Vietnam are in a much weaker position when
compared to foreign suppliers.
Foreign investors import the majority of the components in electronic
products; hence, the local suppliers can no longer compete with them despite
having cheaper labor costs to produce these components.

This situation

limits the development of the Electronic Industry in Vietnam.
To assist the local suppliers in Vietnam to remain competitive there is a

fundamental need to develop their capabilities. Hence this study is primarily
aimed to determine the gaps for capacity development amongst the local
electronics suppliers through the Canon Vietnam Strategy.
Specifically, the study will seek to find out the following issues of
concern:
1. What is the extent of critical factors that affect the capacity
development regarding local suppliers?
2. What are the factors associated with the capacity development
concerning local suppliers?

Objectives of the Study
The overall objective of the study is to determine the factors that can
help develop the capabilities of local or domestic suppliers in Vietnam.
Specifically, the study aims to determine the current operation of Canon
Vietnam’s following objectives:


6

1. To determine the profile of Canon Vietnam as perceived by Managers
of Canon Vietnam, Managers of Suppliers and their Employees in
terms of the following:
1.1. Company Culture
1.2. Organizational Structure
1.3. Operation Scale
1.4. Local Operational Duration
1.5. Number of Local Suppliers
2. To determine the extent of autonomy of Canon Vietnam as perceived
by Managers of Canon Vietnam, Managers of Suppliers and their
Employees in terms of the following:

2.1. R&D
2.2. Financial Management
2.3. Marketing Strategy
2.4. Production Strategy
2.5. Production Process
2.6. Supplier Selection
3. To determine the extent of the knowledge transfer from subsidiary
companies to local suppliers as perceived by Managers of Canon
Vietnam, Managers of Suppliers and their Employees in terms of:
3.1. Absorptive Capacity
3.2. Responsiveness
3.3. "Hands-on" Approach in Skills Development Knowledge Transfer


7

4. To determine the extent of the competitive advantages of the Canon
subsidiaries that can help develop local suppliers as perceived by
Managers of Canon Vietnam, Managers of Suppliers and their
Employees.
4.1. Production Capacity
4.2. Capacity of Design and New Developments
4.3. Production Technology
4.4. Qualifications of the Management
4.5. Price Policy
5. To determine the extent of Government policies towards the
development of the local suppliers’ capabilities as perceived by
Managers of Canon Vietnam, Managers of Suppliers and their
Employees.
5.1. Protection of Domestic Production (import tax…)

5.2. Priority for the Electronics Industry (incentives, production tax…)
5.3. Central Management Unit
5.4. Setting Up of Standards regarding Quality and Components
5.5. Reducing the Gap between Policies and Implementation
6. To determine the extent of the factors that affect capacity development
of local suppliers as perceived by Managers of Canon Vietnam,
Managers of Suppliers and their Employees
7. To determine the degree relationship of the profile, autonomy,
knowledge transfer, competitive advantage, government policies and
capacity development.


8

Hypotheses of the Study
This study aims is to test the following hypotheses:
H1. There is no significant difference in the perceptions of the
managers of Canon Vietnam, Managers of Local Suppliers, Employees of
Canon Vietnam and Employees of Local Suppliers along
a. Company profile
b. Autonomy
c. Knowledge Transfer
d. Competitive Advantage
e. Government Policies
H2. There is no significant relationship between capacity buildings of
local electronics suppliers with regard to the following factors:
a. Company Profile
b. Autonomy
c. Knowledge Transfer
d. Competitive Advantage

e. Government Policies

Significance of the Study
The results of this study will help local suppliers determine the needs of
multinational companies, adjust their operation strategies, improve capacity
and strengthen their competitiveness.
Likewise, in consideration of how the strategies of Canon will be
implemented, the results are vital for practical purposes in order that the
business sector will be able to provide insights on how subsidiary companies