Dual Transition and the Overlooked “Small Value-Added” Opportunities for SMEs
Nguyen Dang Tuan Minh
The digital and green transition of small and medium-sized enterprises (SMEs) does not begin with mega-projects. Instead, it is driven by small, practical, and decentralized improvements—such as accounting software, inventory management systems, and digital payment solutions.
It is precisely these “small value-added” improvements that determine the survival of SMEs, yet they remain largely overlooked by both the market and policymakers.
Amid the wave of digital transformation and green transition, accompanied by ambitious slogans such as Industry 4.0, artificial intelligence, net zero, green transformation, digital transformation, and the circular economy, SMEs are grappling with a very different reality. They struggle to cover payroll, secure orders, and reduce production costs, leaving them with the capacity to pursue only small-scale transformation in order to adapt.
In practice, most SMEs cannot access breakthrough technologies. Instead, they begin with solutions that are affordable, incremental, and quick to implement: accounting software, inventory and sales management systems, e-commerce platforms, cloud services, collaboration tools, electronic invoicing, and digital payment solutions.
More recently, they have begun to explore data and artificial intelligence, though primarily through practical applications such as customer service chatbots, marketing content generation, basic demand forecasting, and cash flow analysis.
At the same time, a wave of green transition has arrived. SMEs are now compelled to consider issues such as energy consumption, greenhouse gas emissions, waste management, product life-cycle traceability, and the environmental standards required by the supply chains in which they participate. As with digital transformation, SMEs do not need grand “green mega-projects”; they need small-scale solutions that help them measure, optimize, and save resources—from monitoring electricity consumption and recording emissions data to adjusting production processes in ways that reduce material waste.
As these two waves converge, the demand for transformation that creates small incremental value within SMEs has become increasingly evident. The question, however, is whether policies and the market are creating the conditions that allow SMEs to both reduce costs and transform, rather than being excluded from supply chains because they lack data, transparency, or compliance with green standards.
The Current State of the Dual Transition: Policy Has Opened the Door, but SMEs Remain Stuck
Globally, surveys conducted by the OECD, the World Economic Forum (WEF), and APEC show that SMEs accelerated their digital transformation following the COVID-19 pandemic. Many businesses have become accustomed to remote working, online sales, cloud computing, and digital collaboration tools. A significant proportion also plans to increase spending on cybersecurity, cloud infrastructure, data capabilities, and even artificial intelligence over the next one to two years.
Nevertheless, many SMEs remain trapped at the stage of basic digitalization. They may have social media accounts, use accounting software, or rely on online meeting platforms, yet they often lack a data strategy, possess limited capacity for data-driven decision-making, and have not adopted automation or AI in a systematic way. Around 40% of European SMEs consider themselves not yet prepared for the next stage of digital transformation—a clear warning sign.
The situation is even more challenging when it comes to the green transition. Numerous studies in Europe indicate that SMEs account for approximately 60% of emissions generated by the business sector, yet they are also the least equipped to address the issue, lacking capital, expertise, and the tools needed to measure and manage emissions.
Despite mounting pressure from net-zero commitments, supply-chain requirements, and new environmental regulations, most SMEs have progressed little beyond raising awareness and have yet to implement green practices in a broad or consistent manner.
Vietnamese SMEs face many of the same challenges, along with several additional ones. On the policy front, the government has employed three major levers to stimulate the B2B technology market serving SMEs.
The first is a series of digital transformation support programs, featuring "Make in Vietnam" digital platforms tailored for SMEs. These initiatives have enabled hundreds of thousands of businesses to access learning resources, while tens of thousands have received training and advisory support.
The second is a new legal framework and incentive policies for the digital industry, setting ambitious targets for the number of digital technology enterprises, the share of the digital economy, and mechanisms that support SMEs in purchasing and piloting new technologies.
The third is digital finance, with lending models based on operational data that integrate electronic invoices, cash flow information, and inventory data to assess creditworthiness more quickly and with less reliance on collateral.
At the same time, programs and policy resolutions promoting green transition, sustainable growth, net-zero commitments, and the circular economy are gradually being incorporated into Vietnam’s policy framework at both the national and local levels.
SMEs operating in export-oriented industries—including agriculture, food processing, textiles, and footwear—are increasingly feeling pressure from requirements related to traceability, environmental standards, and ESG reporting imposed by international customers.
Investments ranging from a few hundred million to several billion Vietnamese dong for digital or green transformation are too small for banks and investment funds to regard as major technology projects, yet they remain too risky for the cash flow of small businesses.
Even so, the majority of Vietnamese SMEs have only begun to scratch the surface of digital and green transformation. More than 60% report difficulties related to technology investment costs, while over half struggle with entrenched operating practices and shortages of qualified internal personnel.
Access to finance also remains limited. SMEs obtain bank credit at significantly lower rates than large enterprises, while the SME financing gap is estimated at tens of billions of US dollars. Within this gap, small and fragmented technology upgrading projects are often absorbed into broader working capital needs and therefore receive little dedicated support.
Meanwhile, the green transition remains largely confined to awareness-building and a limited number of pilot initiatives undertaken by more proactive businesses. Most SMEs have yet to embark on the transition and, in many cases, do not even share a common language for measuring emissions, energy use, or waste.
Three Critical Gaps Holding Back Small-Scale Transformation
Faced with the pressures of digital and green transformation, most SMEs struggle to begin with manageable, small-scale projects because of three critical gaps.
The first is the financing gap for digital and green technology projects that generate small incremental value. Investments ranging from a few hundred million to several billion Vietnamese dong—for management systems, semi-automated production lines, energy monitoring solutions, or product traceability platforms—are too small for banks and investment funds to classify as major technology projects, yet they still pose significant risks to the cash flow of small businesses.
Today's financial market is largely designed to support short-term operating loans or large-scale investment projects. As a result, there is very little room for specialized financing products that support small digital and green transformation initiatives through repayment structures tied to cash flow and the value they generate.
The second is the capability gap - specifically, the ability to absorb new technologies and translate business needs into concrete projects. Most SMEs do not employ digital transformation managers, environmental specialists, or dedicated data teams. They recognize the pressure, understand the trends, and hear about concepts such as net zero, AI, and ESG, but often lack the capacity to translate these pressures into a clear list of priorities and an actionable implementation roadmap.
At the same time, technology providers and green service companies rarely have a deep enough understanding of the operational realities of individual industries, business models, or regional contexts. This mismatch prevents many promising collaborations from ever materializing.
The third gap lies in the design of B2B technology products and intermediary services. Most existing solutions are still packaged around the traditional model of selling software or selling equipment, with little consideration given to financing models or alignment with actual operational outcomes.
Meanwhile, the role of intermediary organizations - those capable of assessing a company's digital and green maturity, designing a transformation roadmap, breaking it down into micro-projects, and bringing together technology providers and financiers - has yet to be recognized as an essential component of the market.
These three gaps explain why the SME sector, despite its enormous demand for technology transfer to support the dual transition, continues to be underserved.
The Opportunity to Build a Market for Small-Scale Dual Transition
Ironically, these very gaps also reveal a significant opportunity. For SMEs, the dual transition - digital and green—is not two separate agendas. Digital technologies enable businesses to measure and optimize the use of resources, energy, and emissions. Green transformation, in turn, creates stronger incentives for firms to invest in data systems and better management practices. Many international organizations have described these two transitions as twins for SMEs: digital helps businesses see more clearly; green helps them go further.
For technology companies and B2B startups, this represents a market for small but intelligent solutions: integrated management systems capable of monitoring both business operations and environmental indicators; warehouse management and traceability platforms that generate sufficient data to satisfy both customer requirements and banking assessments; AI tools that help small businesses understand and optimize energy costs while recommending cost-saving scenarios; or simple dashboards that enable business owners to monitor revenue, expenses, inventory, and electricity, water, and raw material consumption from a single screen.
When designed effectively, each of these solutions can reduce operating costs by 4–15 percent in certain industries while simultaneously lowering operational risks and opening access to new markets.
For financial institutions and digital finance platforms, the dual transition creates opportunities to integrate technology, data, and sustainability into financing products. By leveraging accounting systems, electronic invoices, energy consumption records, and traceability data, banks can assess creditworthiness more accurately and develop specialized loan products for digital and green technology investments.
When loan repayments are directly linked to the cost savings or additional value generated by technology, a model based on shared risks and shared rewards can become viable for SMEs.
For intermediary organizations - including business incubators, innovation centers, SME support organizations, and industry associations—the opportunity lies in becoming architects of practical dual-transition roadmaps tailored to small businesses. Their work is highly concrete: classifying firms according to their digital and green maturity, identifying the most appropriate
next small step
, connecting them with suitable technology providers, co-designing financing models with banks or investment funds, and monitoring outcomes so that all stakeholders can continue to learn and improve.
If we truly place SMEs - and their demand for small value-added technology transfer - at the center of our digital and green strategies, then the challenge is no longer how to deliver a handful of impressive pilot projects. Instead, it becomes how to enable hundreds of thousands of small steps to take place continuously, safely, measurably, and with opportunities for shared learning.
If successful, we will not only solve the individual challenges faced by each enterprise but also gradually build an entirely new market: a market for small value-added technology transfer serving SMEs in the context of the dual transition. This would become the true foundation of an innovative, green, and digital economy, rather than merely a collection of symbolic success stories.
The Risk of Inequality if the System Is Poorly Designed
The greater the opportunity, the greater the challenge.
The first challenge is the speed of change. Digital transformation, green transition, data, artificial intelligence, and regulatory compliance are all advancing simultaneously rather than sequentially.
Within only a few years, a small enterprise participating in a global supply chain may be required to adopt electronic invoicing, submit digital reports, join procurement platforms, provide product traceability, comply with environmental standards, and even demonstrate a credible emissions reduction plan. Given their limited resources, many businesses will inevitably feel as though they have been pushed into a corner.
The second challenge is inequality in capabilities. SMEs that are already familiar with digital tools, employ younger workforces, or simply have someone who can "speak the language of technology" will enjoy a considerable advantage throughout the dual transition. By contrast, businesses that lack digital skills, financial resources, younger employees, or foreign language capabilities will have to work much harder merely to avoid falling behind. Without appropriate support mechanisms, the productivity, cost, quality, decision-making speed, and supply-chain responsiveness of these two groups will continue to diverge.
The third challenge is the risk of creating an unequal economy. At the upper tier are businesses—even relatively small ones—that have already achieved a reasonable level of digitalization and are steadily progressing toward data-driven management, automation, greener operations, greater transparency, and easier access to finance.
At the lower tier lies a vast number of micro-enterprises and household businesses that still rely primarily on Zalo, Facebook, Excel spreadsheets, and handwritten notebooks. They must struggle with daily operating expenses while simultaneously adapting to an expanding set of compliance requirements, often without anyone to guide them through the process.
If policies, support programs, and emerging B2B business models continue to focus primarily on the upper tier, we may produce a handful of impressive success stories without establishing a solid foundation for the broader economy.
Finally, there is the challenge of designing both policy and markets around the logic of small value-added improvements.
Today's support ecosystem—from science and technology funds and innovation funds to digital transformation programs, banks, and investment funds—is largely designed around projects with impressive proposals, large performance indicators, and compelling narratives.
Yet the most important work involved in the dual transition for SMEs often consists of far more modest activities: improving a single business process, digitizing one operational stage, piloting a small software application, replacing one piece of equipment, or installing one sensor. None of these actions appears particularly remarkable, but when accumulated over time, they can transform the productivity of an entire economy.
If we genuinely regard SMEs - and their demand for small value-added technology transfer - as the centerpiece of our digital and green strategies, then the challenge is no longer how to create a few large demonstration projects. Rather, it is how to enable hundreds of thousands of incremental improvements to take place continuously, safely, measurably, and with opportunities for mutual learning.
Ultimately, this is a story about ecosystem design - one in which technology, finance, intermediary capabilities, and public policy work together as an integrated system rather than operating in parallel, as they largely do today