Start Tel Aviv 2015

Last year we had the Startup Israel competition in Hanoi; it’s now been rebranded to Start Tel Aviv 2015 so things are a little bit different. The Israeli Ministry of Foreign Affairs and Tel Aviv Global & Tourism are holding a competition to send one founder of the winning startup to Israel from September 6-12.

Startup extraordinaire and Indiegogo evangelist Oren Simanian was in Hanoi on May 14, 2015 to announce the program’s launch to a crowd at Hub.IT. Mr. Simian engaged the crowd, pushed the audience out of their comfort zone, and gave some actionable advice to aspiring and current entrepreneurs alike.

From a document distributed at the event:

“Start Tel Aviv is an international competition held by The Israeli Ministry of Foreign Affairs and Tel Aviv Global & Tourism. In this competition startups from 20 different countries will compete for the opportunity of a 5-day intense startup experience in Tel Aviv to learn from the ecosystem in the city. This list the fourth annual competition, formerly known as Bizcamp Tel Aviv and this is the first time Vietnam is invited to join.

Start Tel Aviv will take place during the DLD Tel Aviv Innovation Festival, and participants will have the opportunity to meet the coolest and smartest companies, techies, startups, designers, artists, scientists, investors, and cultural drivers from Israel and abroad.

The DLD Tel Aviv Innovation Festival, a global gathering of innovators and entrepreneurs from around the world, is held throughout Tel Aviv in mid-September. The Festival is comprised of a long list of events, conferences, meet-ups, mingles and gatherings, all focusing on different sides of digital, technological, social and urban innovation.

Some of the participating countries this year are Norway, UK, Germany, Spain, Finland, Italy, Korea, India, Japan, and Russia.

As a part of Start Tel Aviv 2015 as well as a continuation of the successful Startup Israel 2014, the Embassy of Israel in Vietnam in collaboration with Ministry of Science and Technology of Vietnam and Business Studies Assistance Center (BSA) will organize a startup competition to find out a winner for Start Tel Aviv 2015.

Only 01 founder member of the winning startup will go to Israel for the study tour in September 2015.

  1. Criteria
  • Age of submitting founder: 25-35
  • Sectors: information and communications technology
  • Stage of startup: seed stage
  • Participants are responsible for reserving their intellectual  property rights to the submitted products
  • Founder member of the startup need to be fluent in English

2. How to Apply

  • An application in both English and Vietnamese includes the general information about the startup and thorough business plans in PDF
  • A video clip in English, no more than 2-3 minute long, explaining why their company should be picked to go to Israel
  • After screening of application and video clips, the finalists will have interviews (in English) with a board of judges including representatives from the Embassy, the Ministry and BSA in Hanoi. The final interview stage consists of presentation and Q&A session with judges.
  • Application need to be sent by email only to the following address: political@hanoi.mfa.gov.il
  • Deadline for submission: June 7, 2015 (only shortlisted applicants will be contacted)

*Please note that participants shall cover their own expense if they need to travel to Hanoi for the final interview.

Fore more information, please contact:

Ms. Phan Thuy Trang, Email: political@hanoi.mfa.gov.il

or visit http://embassies.gov.il/hanoi or http://facebook.com/israelinvietnam

Mr. Simanian gave some pointed and salient advice to the crowd, and even brought some members up on stage to quiz them in front of everyone else.

Below, points have been paraphrased from Mr. Simanian’s remarks at the event:

First, be ready. Leave the door open, don’t close yourself off to opportunities. Find a way to be better, faster, and cheaper than any of your competitors. The team and team development are a priority.

Keep your pitches short, keep your description to one page. Entrepreneurs need to get best out of every interaction. Don’t waste other people’s time. The world is flat, you need to use digital connections. Be a nice annoying person—for example, when following up, add another piece of the puzzle to help people understand what you are doing. Remember, no one works for you… so use creative ways to find a connection with the person you want to reach. Make your pitch one page, get it ready, so when you get the right contact then you are ready to go.

Most things will fail—it’s part of success so find a partner and fail. Enjoy your way but focus on the what, why, and how of things. What/who are you competing with?

Adopt more branding. Look to the Israeli Army’s Unit 8200 branding or Israel’s “Startup Nation” moniker, which was established six years ago. So start a brand; create a brand to improve the start up ecosystem—establish a unique selling proposition (USP). Figure out what’s unique in Vietnam. Build a brand around something new, and create it.

Try to find an academic correlation between your product and team—it helps establish credibility. Network! Find Vietnamese outside of Vietnam and try to connect with them. If you’re missing the know-how then find someone who has it; there is a huge Vietnamese community overseas.

Build your minimum viable product (MVP) so you can meet the market when ready. Timing is crucial; don’t pull trigger too early. Find connection on social media— on Facebook or LinkedIn. The world is flat so it’s easier than ever to raise money. Israel is a beta test market with 8 million people so most products/services are targeting the US. Go outside of Vietnam. Visit a different country. You need to understand how people around the world feel, so visit new countries.

Don’t be shy—it’s called chutzpah in Hebrew. Every “no” is an opportunity for education—find out why. Don’t be afraid to fail; this is life. Even if you fail, you will have expanded your tool box and gained more confidence. So start and fail. Start; don’t talk too much about it. Approach people to make it international. Before, startups used to raise money from friends, families, and fools. Now it’s friends, family, and Facebook. Use your network and be open to feedback. Think what is next. Think what you will be if you do well–and then do it.

Start with a feature killer. Don’t get distracted, but be flexible. Build it and ship it.

The Takeaway

Mr. Simanian had a great quote during his presentation: “Stop reading, put down the book, and do something.” We’d like to add, “and if you fail then try again.”

Thanks to Oren Simanian and the Israeli Embassy in Hanoi for their support of the startup community in Vietnam. If you’d like to know more about Oren Simanian then you can find his TED Talk here.

Building Vietnam’s Innovation Economy

On May 12, 2015, representatives from Google, Uber, 21st Century Fox, Cisco Systems and other multi-national corporations (MNCs) came together to discuss digital trade and cross-border data flows in Vietnam’s capital city of Hanoi. The event was organized by the American Chamber of Commerce Vietnam, the Vietnam Chamber of Commerce and Industry (VCCI), and the US Chamber of Commerce. Of course, the Trans-Pacific Partnership (TPP) was front and center throughout the daylong event but there were also a series of interesting topics throughout the panel sessions, some of which were named “Building Blocks for Innovation” and “Best Practices for Promoting the Economy and Protecting Consumers.” During these panels, company representatives spoke about attitudes and policies toward operating in Vietnam.

For example, Google’s Country Lead for Public Policy and Government Affairs, Alex Long, shared some insight into the Vietnamese market: there is 300% more language learning content that is consumed on YouTube in Vietnam compared to the average rate globally, showing the strong desire that Vietnamese have for Google’s services. Google has 13 data centers around the world including one in nearby Singapore. Thus, its interests are global so Google seeks to maintain a virtuous cycle where there is more demand for online services, more innovation in online services, more investment in online services, and therefore more online services in general. (In short, Google loves content–both in terms of volume and quality.)

On a local level, activating this “virtuous cycle” can work in a few ways:

  1. Policy advocacy (through events and working with public sector partners)
  2. Pilots—increasing access (Project Loon, for example.)
  3. Peering/caching (allowing locally and regularly-accessed content to be consumed more efficiently)

However, sometimes basic training needs to be put in place to get users to the point where they can use digital tools effectively. So in 2014 Google worked with organizations like Vietnam E-commerce and Information Technology Agency (VECITA) and VCCI to conduct trainings for 500 small businesses in Vietnam. Ultimately, the goal is to get Vietnamese companies to expand abroad so digital marketing is a way for Vietnamese companies to do that without setting up an overseas office. For example, one tool that Vietnamese companies can use is Google’s Global Market Finder.

One example of a Vietnamese company that went beyond Vietnam (and was present at the event) is Topica Edtech Group, which was founded in 2007 and is now operating in three countries: The Philippines and Thailand (besides Vietnam). The company will launch into the Indonesian market in September 2015 and will be exploring cloud computing solutions within the next six months. Nguyen Khoi, a product director at the company revealed that the first step for Topica was to train people how to use computers even before educating them through their service–again highlighting the need for basic training. Mr. Khoi also shared that he thought the perception of online education in Vietnam was changing and thus Topica Edtech Group may be one of the first in a new wave of Vietnamese startups to expand abroad as a result of positive interest in the field.

At the other end of the company spectrum, Uber Vietnam’s General Manager, Dang Viet Dung had some great advice for startup teams: “Make sure your product is kicking ass.”

He told the audience to “focus on your product first” and ask some basic questions:

  1. Is it good?
  2. Is it intuitive (especially for B2C)

“Often entrepreneurs believe that they need funding—no, get the product right.”

Mr. Dung said to focus on the following steps on the way to success:

  1. Invest in a product
  2. Find a mentor—open up your network, have allies

Mr. Dung also shared information about the recent cable breaks in Vietnam: Normally, the ETA in Hanoi is four minutes and 12 seconds. That means that the time from when a user orders an Uber vehicle to when it pulls up in front of him/her is, on average, four minutes and twelve seconds.

However, the ETA delta goes up during cable breaks which results in the Uber user experience being diluted. Mr. Dung also shared that Uber has had more than 25,000 failed credit card sign ups in Vietnam—the highest in Southeast Asia. Commenting further on recent reports about controversial Uber activities in Ho Chi Minh City, Mr. Dung said the incidents in Ho Chi Minh City related to “paper versus digital” contractual misunderstanding. Mr. Dung also pointed out that Uber is pioneering transparency since all payments are digital so they can be tracked; so instead of skirting tax responsibilities, as some have suggested, Uber is actually helping to increase the tax base.

So, according to Mr. Dung, Uber:

  1. Allows governments to trace transactions
  2. Allows the tax base to get bigger

In relation to Uber, Vietnam will continue to be a growing market and Uber will continue to make the service more affordable. However, the service will stay cash-free so as to not dilute the customer experience. [Update 08/2015: Uber will now be accepting cash payments by end of the year.] Uber is currently available in over 310 cities in 60 countries in the world but when Dung joined Uber in September 2014, Uber was in “just” 180 cities and 32 countries. For Mr. Dung, Uber introduces dynamic quality, feedback, safety—all while optimizing supply (vehicles) and demand (riders). He pointed to the average utilization rate of a private car, 5%; for a taxi, 25%; but for an Uber car it can be between 60% and 80%. Thus, Uber helps reduce traffic, an issue in Hanoi and other cities.

During Mr. Dung’s panel, he said that Vietnam has “one of the biggest startup scenes in Southeast Asia.” There certainly has been a lot of interest in startups in Vietnam since late 2013, from both the private and public sectors. Phan Hong Quat, Director General of the National Agency for Technology Entrepreneurship and Commercialization Development (NATEC), under the Ministry of Science and Technology (MOST), spoke a bit about the origin and mission of NATEC, which was formed four years ago.

NATEC is supporting SME in difficult fields and is working to simplify the process for investment certificate with the Ministry of Home Affairs. The challenge that NATEC is finding a solution to is how to encourage investors to come in and support the developing industry; one initiative that the MOST pioneered is Vietnam Silicon Valley (VSB).

Modeled after Y-Combinator (YC), a seed fund in the US, VSB seeks to replicate a model that is accepted and successful in the US. VSB provides seed money to startups in exchange for up to 10% equity. Last October VSB had its inaugural Demo Day. Through its network of mentors, it seeks to help to close the gap in the startup communities in Ho Chi Minh City, Hanoi and growing scene in Danang–especially for outsourcing companies which rely on reliable and open technologies.

[NATEC was the main organizer for TechFest Vietnam, a three-day festival which was held last weekend from May 15 to May 17; the main purpose of the event was to foster international connections for startups in Vietnam. We’ll be doing a follow up to the event soon.]

On the topic of reliable and open technologies, MasterCard’s Indochina Chief Representative and Vietnam Country Manager, Arn Vogel, stated that technology allows better customer service—whether it’s e-commerce or payment facilitation and Vietnamese companies need to be able to talk to the world, especially in order to verify payments. In terms of payments, we are transitioning from 16 digits to tokenization—and verification is crucial; a company can only do that if the transaction is on its network or has access to it. Mobile payments are on the way in Vietnam; there are 130 mobile phone subscribers per 100 people and the internet is ubiquitous. However, facing different data protection laws, MasterCard and others can’t offer hosted services–which affects consumers because they can’t use their credit cards. Mr. Vogel stated that there are about 20 payment facilitators operating in Vietnam and they can all play a role to work together to change the payments landscape.

Overall, one of the key takeaways of the event was that digital tools are not just for information technology (IT) companies but for all potential fields, i.e., all successful businesses use the internet. Cross-border data flows are not just important for IT access but are necessary to use the best technology available. A major point driven by more than one speaker during the event was that the “Digital Economy” is actually the general economy and that any attempts to restrict the flow of data would impede the flow of trade as well.

Adam Schlosser, Director of U.S. Chamber of Commerce, stated that the TPP helps companies of all sizes but Vietnam stands to gain the most out of the trade agreement. According to some estimates, as Mr. Schlosser stated,  it could provide the Vietnamese economy a $46 billion boost by 2025. It would also favorably affect tariffs, market caps, and digital products and services to help facilitate free trade across borders. Jack Lambert, Economic Officer at the US Embassy in Hanoi, reiterated that with the TPP, the biggest opportunities of growth and jobs are for Vietnamese SME but they can’t compete unless they have access to the world and data.

During opening remarks, Vice-Chair of the American Chamber of Commerce, Virginia Foote, noted that the digital economy and global transformation is well underway. And more than a few speakers touched upon how Information and Communications Technology (ICT) has driven the Vietnamese economy in the last 20 years and will continue to have a greater effect in the next 20 years. And nations like South Korea, Israel, Sweden, and others can help to show Vietnam new models and tools in order to create its own digital economy with its own “Vietnamese” style. (One of Vietnam’s strengths is that it has a young population that loves working with technology, so it should be leveraged.)

Above all, the event provided key insight into how multi-national corporations and other entities in the public sector view the future in Vietnam. Throughout Vietnam, there are more than 16,000 foreign companies operating across a variety of industries. Through collaboration, local and international partners in Vietnam can work together to create an ecosystem innovation can flourish; one that is full of promising and fast-growing companies or in other words, building Vietnam’s innovation economy.

Note: If you’d like to know more information about the event, including key leadership opinions stated at the event, then sign up for our newsletter.

Feedback Loops

If you’ve ever been traveling through Vietnam, then one aspect that is noticeably different between the north and the south is the customer service. For example, when ordering a bottle of beer at a restaurant, the server will usually open it for customers in the south—while in the north, the server might not even bring a bottle opener with the bottle. A few weeks ago, over dinner with some Saigonese friends in Hanoi, the discussion touched upon the better customer service in the south. Not even two minutes later, the waitress (politely) informed us that she felt she was walking around our table too much so we should consolidate our future requests for her convenience. On another occasion, at a cafe/restaurant frequented by tourists in Hanoi’s Hoan Kiem district, your author requested ice water; the waitress brought over cold water sans ice. After inquiring about the lack of ice in the glass, the waitress cheerfully responded, “I think the water is cold enough for you.”

Among the major reasons why customer service (among other things) does not change is simply that customers are used to bad service (they don’t know better), they don’t complain to someone who can do something about it (a manager or owner), they don’t want to complain (for fear of causing trouble for the worker), or they assume it will be futile to complain. This issue consistently rears its ugly head (for tourists, but also for locals) with taxi drivers who know “special” ways to get to the destination, pretend to get lost, or simply don’t know how to get to the destination. Usually, these drivers are from the countryside who flock to big cities after a holiday. Sometimes, taxi drivers will acknowledge where a fare wants to go and will then proceed to “phone a friend” for guidance (and sometimes more than once). At other times, drivers may try to take advantage of the confusion over the local currency by returning less change to a customer than required. Or a driver might not even want to drive to a particular destination if it is “too close” or won’t provide for a “high-enough” fare. (Before Tet in Hanoi, your author experienced some taxi drivers bypassing the meter and establishing “on-demand” pricing.)

However, with the arrival of sharing economy services in Vietnam such as Uber, GrabTaxi, EasyTaxi, they introduce more accountability, systems efficiencies, and feedback loops to allow service enhancements in the future. Or, as Uber Vietnam put it recently, “less congestion, more job opportunities, safer transportation, transparency, accountability and affordability for riders.” Could a similar impact be made in Vietnamese companies via new and innovative technologies (such as mobile apps)? If so, how would progress be measured?

Set Ways

For a team-building session at a major Vietnamese corporation, the management team watches a new TED talk every Monday. The company’s managing director shares some thoughts on the presentation and then opens it up to the rest of the office; almost always, the response is silence. Why?

After discussion with some foreigners who have experience working with Vietnamese—as well as Vietnamese, there may be a variety of reasons for the lack of engagement:

1. Afraid of giving the wrong answer and losing face;

2. Afraid of not giving the “right” answer and being embarrassed by his/her superior;

3. Afraid of giving the correct answer and looking “too” good in front of colleagues (thus painting a bullseye on his/her back); and

4. Not knowing the answer.

This scene presents a sort of “crisis of confidence.” Often, loyalty is valued over competency, making the critical resource of talent in even greater short of supply. And despite money being the ultimate objective for many Vietnamese workers, even bonus systems can sometimes fail. For example, in one Vietnamese company, the underdog team achieved a bonus (approximately $15 for hitting 120% of their target goal) which upset the atmosphere in the office since other units were expecting to win the cash bonus.

Whether it’s a rating system, or a new way to train workers, or standard training, many plans are tough to fully implement in Vietnam. For example, even a new trainer in a reputable gym requires six months before s/he is “good” and a year before s/he can handle any disruption. Long before then, competitors are offering “sweet” packages because the trainer has had a “brand experience.” The same goes for some of Vietnam’s own cafe/restaurant brands; this phenomenon isn’t new—ask any aspiring software developer in Vietnam, especially in the gaming industry. Training and retaining quality employees can be hard (especially when some Vietnamese companies want experienced workers for low pay), but the alternative is keeping the status quo.

Focused Efforts

The greater issue beyond motivating individual employees is that organizations need to establish a baseline pulse to gauge progress in six, 12, 18, 24 months. For example, what KPIs will be used? What will be your targets? How to increase the self-confidence of the workers? How to smartly increase pay to be on par with market rates (and inflation)?

Timeline: What’s the priority? How to identify current employees with the right mindset/attitude? What do you do first?

There can be a variety of initiatives:

  • Hiring process—establish an independent panel/screening to be selective—improving the way to hire
  • HR reorganization/operations—converging departments into a holistic unit
  • Branding/PR—attracting quality talent, connecting with consumers
  • Training programs—preparing the workforce for advancement in the company (meritocracy); promoting a culture of career advancement; and english tutoring components for managers
  • Intrapreneurship/empowerment of workers—expanding into new businesses and retaining the best talent
  • Welfare—raising morale, giving workers more than monetary reasons to stay

Unfortunately, some Vietnamese companies would prefer “quick fixes” which they would like to use within a three month timeline or sooner. Thus, even if core members of a leaderboard recognize that there is a deep cultural issue, they may not be able to do anything because of on-boarding policies and the need to close ranks (even if they describe some of the talent as “terrible.”)

More often than not, companies here can move too slowly, but on the other side of the spectrum they move too fast without thinking (but believe they are on the cutting edge). An example of this is retooling restaurants weeks before opening and consolidating marketing teams across different subsidiaries into a single unit–and then dismissing half the staff.

Creating a New Culture

The challenge is in the implementation, always. True transformation is never really an option unless it comes from the top and has buy-in at all levels, which is rarely the case. Why? Because Vietnamese companies are already very thrifty, there are set alliances in place, and any international hires on staff have usually been unable to implement recommendations that anyone has put forth to enact change.

Then, what should be done? There are a few options:

1. Organizational change

2. Physical building transformation (if necessary)

3. Team-building

Competition is increasing in ASEAN and around the world; what role will Vietnam and its people take on in the global economy in this century? It’s up to the Vietnamese to decide but for sure it will require a combination of innovation, commitment, and investment in areas even as simple as:

  • Empowering workers
  • Eliminating obfuscation
  • Enacting small cultural changes
  • Eradicating fear-based management

But perhaps most important of all is to establish feedback loops, which allows us to gauge goal realization (or lack thereof) in organizations (and in society). Ultimately, feedback loops allow what works to take off, and what is ineffective to be passed over by management.

Forty Years Later

This week we are at the end of a six-day holiday: Hung Vuong Day (Hung Vuong, i.e., “Hung King” is to celebrate the history and lineage of Vietnamese kings.) on April 28; Reunification Day (also called Victory Day or Liberation Day in Vietnam) on April 30; and International Worker’s Day on May 1, also known as “May Day.” It’s the first big holiday break since the Tet holiday (Lunar New Year, a nine-day holiday) back in February. (Originally, the current holiday vacation was requested to be eight days, but only six days were granted.) Signage proclaiming and celebrating these three special days are all over Hanoi, citizens have their flags out in front of their homes, and nationalist songs are broadcast on public address systems in the streets. During significant year anniversaries (30th, 35th, 40th, etc.) parades are held in Ho Chi Minh City to celebrate the north “releasing” the south and the veterans that led the way.

In general, the atmosphere in Vietnam is quieter between Christmas and the Lunar New Year (one-to-two months). Things pick up between the Lunar New Year and this current holiday, but slow down again as we enter this break—in effect, another “reset.” The last day before the holiday, April 27, was the deadline to push through agreements before the exodus to places like Ha Long Bay, Co To, and Cat Ba islands.

As with Tet, many workers return to their home provinces and the streets in major cities become a bit quieter with less traffic (and less honking but not less dangerous, unfortunately). However, some work still goes on: directly and anecdotally, some construction workers on residential projects, service workers in cafes and bars, and factory workers in Bac Ninh all maintained their posts. The next big holiday is in September when Vietnam celebrates its Independence day on September 2. Thus, there are four solid months where business can proceed, unimpeded by long stretches of holiday. At the same time, Ho Chi Minh City’s rainy season begins, which can slow down travel around town due to flooding, and the weather in Hanoi heats up considerably (also slowing down the pace of things) since the city experiences proper seasons without snow.

This year is the 40th anniversary of Reunification Day, when North Vietnamese forces (NVA) captured Saigon and the Second Indochina War ended. In the US, April 30, 1975 is largely viewed as the final day of a tragic chapter in American foreign policy in Vietnam. For the more than one million Viet-Kieu (and their children) in the US, every April brings renewed memories of hardship, sacrifice, loss—and perseverance in a new land. There is no doubt that the war was a dark period for relations between the two governments at great expense of its peoples, some of which continues today. However, more than 40 years after Operation Frequent Wind, Vietnamese attitudes toward the US and capitalism may raise a few eyebrows.

New Attitudes

According to Pew Research, 76% of Vietnamese expressed a favorable opinion of the US during a 2014 poll. Almost nine-in-ten young people (as well as more educated people) were fond of the US. Of those who lived through the Second Indochina War (the Vietnam War as it is called in the US), six-in-ten over the age of 50 held a favorable view of the US. Perhaps the most surprising figure from the poll was that 95% of Vietnamese respondents believe “that people are better off in a free market economy, even if some people are rich and some are poor.” That’s not a typo; ninety-five percent of Vietnamese believe that people are better off in a free market economy (perhaps because the poll respondents picture themselves as the rich ones).

In fact, it’s not uncommon to hear from successful Vietnamese (with direct or close relations to VVIPs) that “making money is not bad… as long as you don’t hurt anybody.” Now, for those who have not spent much time in Vietnam, it may be surprising that there are so many “pro-American” attitudes in a one-party state, especially in the capital.

But spend some time working with Saigonese and doing business with Hanoians and the Pew Research results aren’t that hard to believe at all. For one, Vietnamese love and voraciously consume American culture. Furious 7, Avengers: Age of Ultron, Jurassic World, and Terminator Genisys are all films that have been screened or will be screened in Vietnam. Along with KPOP, Vietnamese youth listen to a variety of American music artists such as Taylor Swift, Bruno Mars, Maroon 5, and Katy Perry. American flag backpacks (as a fashion statement) are an occasional sight in the streets of Ho Chi Minh City (formerly and still known as Saigon). Last autumn in Hanoi there was even a American-style prom organized and American-style wedding requests aren’t that uncommon. (In fact there is even an American ordained minister who has performed a ceremonial wedding in Hanoi.)

In terms of American products, the Apple iPhone 6 is perhaps the most desired phone in Vietnam. Getting a gold iPhone 6 Plus is even better. Workers will spend two, three, or more months of their salaries just to have it and show off that they are able to afford one. Silicon Valley is the envy of many Vietnamese entrepreneurs in the tech industry. Even the Ministry of Science and Technology (MOST) initiated a Vietnam Silicon Valley program in 2013. And later this month the National Agency for Technology Entrepreneurship and Commercialization Development (NATEC), a division of MOST, is the main organizer for TechFest Vietnam, a three-day festival which will be held from May 15-17 at Vietnam National University in Hanoi.

And if you were to directly engage and question Vietnamese about the American War (as they know/learn about it), they would most likely respond with “No problem, it was not me and you who were fighting each other.” With two-thirds of Vietnam’s 90 million population being under the age of 30, that is not a surprising response at all. Other Vietnamese have described the US to your author as a “big and strong country,” a “rich country,” and even as “number one” in casual discussions over beer or coffee. (Of course, there are ideologues and “politically correct” apparatchiks to encounter as well.)

One Direction

But it’s not just people-to-people ties that are being forged; there are ever-growing official ties between the two countries as well. Coincidentally, this year is also the 20th anniversary of normal relations between the US and Vietnam. Looking forward, the US intends to be Vietnams’s largest trading partner (having traded $35 billion in total goods last year, the US is already Vietnam’s largest export market), and the TPP will only reinforce the relationship between the two countries even more. However, the intertwined paths of these two countries started long ago, and came to a salient point shortly after the end of the Second World War.

Thirty years before the Fall of Saigon in 1975, Ho Chi Minh stood in Ba Dinh square in Hanoi and read the Declaration of Independence of the Democratic Republic of Vietnam; it contained a familiar passage: “All men are created equal. They are endowed by their Creator with certain inalienable rights, among these are Life, Liberty, and the pursuit of Happiness.” “Uncle Ho,” as he also known, has another particularly famous saying that Americans might identify with: “Nothing is more precious than Independence and Liberty.” The American Founding Fathers would almost certainly agree with that sentiment.

Forty years later, Vietnam has transitioned from a war-torn economy to a manufacturing center and serves as an integral part of the global supply chain. Beginning with Doi Moi (“Renovation”) in 1986, the Vietnamese economy has become increasingly integrated with the world economy. There have been and will be other significant milestones as well: the US embargo against Vietnam ended in 1994, Vietnam ascended into the WTO in 2007, the TPP will most likely be implemented this year, and by 2018 all tariffs will be reduced to zero as part of ASEAN integration in the region–not to mention a host of other trade promotion vehicles that Vietnam is involved in at various stages. To some, the changes in Vietnam since 40 or even 20 years ago may be surprising, but as someone who heads a department in a ministry recently stated, “the world is changing so we too must change with the world.”

Samsung’s Vision in Vietnam

On April 22, several Vietnamese leaders of Samsung as well as former Vietnamese and South Korean ambassadors came together during a workshop at Hanoi’s University of Industry to share elements of success, future opportunities, and advice from their own careers with approximately 300 students.

The guests of honor included Mr. Han Myoung Sup: President, Samsung Complex Vietnam; Mr. Ha Chan Ho: Strategic Advisor, Samsung Vietnam and Former South Korean Ambassador to Vietnam; Mr. Lee Cheol Ku, Vice President of Human Resources, Samsung Vietnam; and Mr. Phạm Tiến Vân, Former Vietnamese Ambassador to South Korea. The theme of the workshop was “Building Vision” which communicated three basic tenets to the university students:

  1. Work Hard
  2. Ask “Why”
  3. Attitude is Everything

These three points were emphasized at different times during the workshop but the guest speakers also implored the students to think and dream big and to travel outside of Vietnam. In particular, Mr. Han Myoung Sup told the audience that Vietnam is an important part of the global economy. Later, Mr. Phạm Tiến Vân reminded the students that even though resources are limited, creation (and innovation) has no limit so they should try to make a difference, i.e., become “Creation Heroes.” He pointed out that South Korea went from a war-torn economy to becoming a developed nation and economic powerhouse within several decades–and that Vietnam should follow a similar path. (During the 1960s South Korea was considered among the poorest countries in the world.) Indeed, Samsung’s $11 billion investment in high technology (and in human capital) in Vietnam will be one of the keys to developing the country further in the future.

Samsung and Vietnam

Apart from other Samsung affiliates’ investment capital, currently, Samsung Electronics’ investments in Vietnam include:

  • $2.5 billion in factories in the northern province of Bac Ninh (producing cellphones, smartphones, tablets, and vacuum cleaners);
  • $5 billion in a hi-tech assembly plant in the northern province of Thai Nguyen (in Yen Binh Industrial Park); and
  • ~$1.4 billion in plant in Ho Chi Minh City.

Furthermore, Samsung Vietnam’s research center is located in Hanoi, making Vietnam an essential part of Samsung’s global supply chain. But Samsung is also an integral part of Vietnam’s economy as its largest foreign investor; last year, Samsung products made up 18% of Vietnam’s total export turnover.

Investing in Vietnam is appealing for Samsung because its new manufacturing facilities benefit from corporate tax breaks for the first four years of operations, and then half the normal rate for the following nine years, depending on meeting certain criteria. These tax breaks plus the lower cost of labor in Vietnam (compared to China, where Samsung is shifting its manufacturing from) will allow Samsung to remain competitive against rivals such as Apple and Xiaomi. But it also means that Samsung will have to keep its Vietnamese production facilities adequately staffed (in part by events like the “Building Vision” workshop) in order to meet the global demand of its products. Today, about one out of three Samsung phones are made in Vietnam.

Working at Samsung

Samsung branded magazines were distributed to the students, which featured facts about operations, profiles of current employees (including salary information), and other relevant information that might be of interest to students and future Samsung employees, allowing for an in-depth summary of what the work culture is like.

During the Q&A portion, a student asked for advice for interviewing with Samsung. Samsung Vietnam Vice President Lee Cheol Ku had the following advice for the student:

  1. Introduce yourself in English or Korean;
  2. Promote your strengths and touch upon your weak points; and
  3. Make the case for why Samsung should hire you.

Once hired, a good attitude, positive thinking, and confidence will surely accelerate any career, but especially so at Samsung (according to representatives). (And if a candidate is not found competitive, the speakers advised to try and apply again.) Samsung representatives said that the company considers each worker to be a “genius” and provides a fair playing field for advancement if an employee does a good job. It advertised a realistically attainable monthly wage for “fresh staff” (university hires) of 9.7 million VND (approximately $450—the monthly minimum wage in Vietnam is approximately $150) at the workshop and stated that it needs high-quality people who work hard and can be promoted quickly (thereby earning the higher stated wages).

By the end of next month, Samsung is looking to fill 2,000 student positions. Already, 18,000 candidates have applied (with 1,600 applicants from the University of Industry).

Constructive Vision

Economies like South Korea’s provide a road map for how a developing country can turn itself into a global leader (the other notable example being Japan). Sony, LG, Toyota, Hyundai, and Samsung are all prime examples of innovative companies that emerged as a result of necessary investments in high technology, complementary skills, and long term choices. (And, by the way, Intel, Microsoft, and LG have all collectively invested several billions of dollars in Vietnam as well.)

In general, Vietnamese workers are quick learners when properly incentivized and they are natural entrepreneurs. Companies like Samsung are leading the way to positively impact the human resources standards in Vietnam as well as to position themselves for optimal competitive advantages. However, in the not-too-distant future, attempts at a Vietnamese “Samsung,” or a Vietnamese “Xiaomi,” or a Vietnamese “Nintendo” may emerge to challenge these established players. Vietnam is already amassing vast amounts of IT outsourcing knowledge as it continues to build its low-tech manufacturing capabilities–and now multi-nationals are training its workforce on how to assemble hi-tech components. For some Vietnamese, it may only be a matter of time before the opportunity cost to start their own company becomes too great.

In the meantime, the advice given at the workshop isn’t just suitable for students—it’s apt for anyone in business (and would be good to record and share on YouTube with other students throughout Vietnam). Trade barriers continue to fall as competition increases around the world, especially in Southeast Asia. At the end of this year ASEAN integration begins, which will bring with it zero percent tariffs for most products throughout the region by 2018. No one can say for sure what the landscape will be like then–but the best way to predict the future is by creating it. Without a doubt, Samsung will continue to play a critical role in the Vietnamese ecosystem for years to come as it continues to invest billions into the rapidly-developing country.

Vietnam Expo 2015

Last week we stopped by to check out the 25th annual Vietnam Expo which was held from April 15-18 at the Vietnam Fair Exhibition Center (VEFAC) in Hanoi. The event was hosted by Vietnam’s Ministry of Industry and Trade (MOIT) and directed by the Vietnam Trade Promotion Agency (VIETRADE). Additionally, there were a number of sponsors, organizers, and overseas partners which resulted in 28 countries and territories participating in the event, according to official numbers.

The various exhibitors were spread across three different halls whereas VietBuild Hanoi (the last event we attended at the same location) was spread across both indoor and outdoor areas. Most of the foreign exhibitors seemed to be Korean and Chinese, which was confirmed by official literature. Even though there were more Chinese exhibitors, the Korean exhibitors were organized into their own sections (they had a dedicated area in the main building) which effectively promoted Korean businesses and Korean-Vietnamese economic interests. Surprisingly, there was only one listed Japanese company on the official Vietnam Expo 2015 literature. Furthermore, Cuban exhibitors had a strong showing at the expo, closely followed by Czech companies.

Additionally, there were Russian-origin products, e.g., digital testers for food and other uses. Recently, Prime Minister Medvedev visited Vietnam and announced a new trade deal between the Russian Federation and Vietnam so perhaps there will be more Russian exhibitors at the next Expo. With EU and US sanctions against Russia, this new deal between Russia and Vietnam could prove beneficial to Vietnamese exporters and Russian consumers (and vice versa).

Overall, a variety of beauty and skin care products were on display, mostly of Korean origin as well as some Chinese fashion/clothing trends that were showcased. There were two Korean products that interested us: one was a handmade wooden iPhone 6 case produced in ROK (but could be produced for a much lower cost in Vietnam); and the other was a mobile device charger that doubled as an advertising platform. However, both items seem like they would be better suited in other (developed) markets.

Engaging Exhibitors

We spoke to exhibitors from Nepal, Iran, the Czech Republic, Korea, China, Cuba, DPRK, and Germany, among others. Some had mixed feelings about the Expo; for example, a leather producer from India (but based in China) had paid a Chinese agent $6,000 under the false pretense that the Expo was exclusively for leather (the Indian businessman sold only wholesale). He arrived at the Expo on the first day to find that there were a variety of other goods that were exhibited as well. His attempts to reach his Chinese agent were unsuccessful and the exhibitor left the Expo the next day. This exhibitor described meeting other exhibitors who had been misled, as well as having met other exhibitors who had paid about $1,000 for a similar sized booth.

We met with some exhibitors who expressed confusion about the consumer goods that were present at the event as they had been under the impression that it was to be an industry event (for purchasing and sourcing rather than end-users) which partly reiterated the Indian businessman’s experience. Strangely, there was a large, but mostly empty, Algerian section at the Expo–due to logistical issues as we later found out; we met an Algerian representative who told us that the items for her booth experienced some transportation challenges so she was unable to fill up part of the Algerian section at the event.

We saw individual provinces that were promoted for investment, both by representation of the province (e.g., Quang Nam) and as part of a larger campaign. Furthermore, we met with representatives from more than one company who provided services for Vietnamese companies looking to enter outside markets. Basically, these companies could provide turn-key services for setting up in foreign markets (their respective domestic markets). The majority of the people whom we spoke to—both foreigners and Vietnamese–indicated that they felt there was a lot of opportunity in the Vietnamese market for foreign products as well as opportunity to export Vietnamese products abroad.

At the same time, it seemed difficult for some of the exhibitors to translate the opportunity in the Vietnamese market into success. Some exhibitors had signs in the front of their booths advertising the search for a (new) local partner while others freely expressed their desire to replace their current local partners. Within the first few minutes, exhibitors readily opened up about the challenges of not only attending the Expo but about doing business in Vietnam.

Of three exhibitors whom we spoke to and were actively seeking a new local partner, two of them already had Vietnamese agents. The local Vietnamese agents were described to us as “negative” and “untrustworthy” on two separate occasions. For example, when one exhibitor had informed his local agent of his intended plans to go to the Vietnam Expo, the Vietnamese agent told the foreign exhibitor, “No need, it’s a waste of time.” (Instead of looking forward to seeing his partner.)

In another instance, a different exhibitor shared with us that he suspected his Vietnamese agent was using the foreign brand to command a premium for lower quality parts (substitutes) and that while their organization felt there was a lot of potential in Vietnam, it wasn’t reflected in the small amount of sales coming from the Vietnamese market. (These opinions are from a company that has been operating in China since 1996 so they are not new to entering foreign markets.)

Still, the lack of easily-located quality partners in developing markets is both a hindrance and nothing new. However, with the Expo’s theme of “Cooperation towards the ASEAN Economic Community” (which begins at the end of this year), it remains more important for potential Vietnamese partners to realize the long-term benefits of introducing foreign products, techniques, technology, and other goods and services that Vietnam will need to continue developing into the 21st century.

Key Takeaways

Based on our experiences at the event (over a two-day period), there were several clear and recurring themes:

-The Expo is advertised internationally (to exhibitors) as an industry event—and promoted in other ways as a consumer event;

-Many foreign exhibitors expressed interest in deepening ties with Vietnam and doing more business here;

-It’s a two-way street: many Vietnamese products are suitable for foreign markets—or at least several exhibitors believe so and have formed companies around this thesis; and

-The quality of local agents for newly-entered foreign companies in the Vietnamese market can be greatly improved—but it is challenging to find quality partners.

If you are interested in linking up with a potential Vietnamese partner or would like to learn more about the Vietnam Expo 2015 event then get in touch with us at info@gktagroup.com. The next Vietnam Expo event will be held from April 6-9, 2016.

 

Michelle Phan and Vietnam

“I am first a creator, but my ongoing objective is to leverage my personal success, to help mentor new and existing talent, and further help them achieve their goals.” —Michelle Phan

Michelle Phan is many things; an entrepreneur, a Vietnamese-American, a role model, a success story, and a phenomenon. Coming from humble beginnings, in 2007 she was rejected by Lancome for a makeup artist position because she had no prior sales experience. Instead, Phan turned to blogging and after two readers requested that she make a video tutorial, she obliged and a week later the video had 40,000 views. Today, Phan’s legacy so far is defined by $120 million in annual sales and 100 employees with brands like ipsy (offering a monthly makeup subscription) and her ICON Network (formerly “FAWN” or For All Women Network). Above all, Michelle Phan seems like she hasn’t reached her peak; just recently she was compared to and proclaimed as the next Oprah—all at the age of 27.

While Phan certainly hasn’t shied away from her roots, she also hasn’t seemed ready to take a plunge into business ventures in Vietnam. Phan’s first scheduled time in Vietnam was in November, 2010 (though she was not able to make it) and by her own account, the last (and first) time she visited Vietnam was in August, 2012. Recently, she celebrated her birthday in Japan, where she seems to prefer spending her time in Asia. However, she might be currently missing out on some very big opportunities in Vietnam.

[Update: Michelle Phan appeared at an event in Ho Chi Minh City on May 12, 2015.]

Investing in Vietnam would allow Phan to tap into one of the fastest growing markets (annual growth between 5 and 6 percent) in the world where Phan has clear and demonstrated cultural and heritage ties. Vietnam is part of the group dubbed “New Wealth Builders” which will outnumber mature markets after 2020. Already, the number of super rich (defined by having net worths over $30 million) in Vietnam has increased to over 100 in 2013 from only 34 in 2003. In short, many people are becoming successful as a result of the growing economy here and the growing middle class is continuously demanding newer and higher-quality products, fueled by their increased purchasing power.

Foray into Vietnam

Exactly how Phan should enter the market here is debatable. Vietnam is a complex market—each region (north, south, central, etc.) has its own quirks and consumer styles. However, there are over 90 million people, almost two-thirds of which are under the age of 40 and about a million babies are born here every year. The common area and interest is in two parts: foreign products are preferred in Vietnam, and young Vietnamese are already familiar with “vlogs” or video blogging—something that Phan pioneered in the US.

More importantly, Phan could be a role model for the country’s youth, especially its girls. In local advertising, White, Korean, or Japanese women are mainly present in ads—bombarding the youth with carefully crafted forms of “acceptable” beauty. But in Phan, young and impressionable Vietnamese women can see something else: themselves, i.e., someone who looks like them, who is successful, and who overcame a variety of challenges that they can directly relate to (gambling and/or absent father figure, sharing sleeping surfaces with siblings, financial troubles, rejection, etc.).

Phan’s makeup tutorials and other media can ultimately inspire and build confidence in young women. And in Vietnam that confidence can take several forms—both in the ability to do something (or try something new) but also to ask clarifying questions without the fear of looking foolish in front of colleagues (a significant problem in workplaces). And it can also provide something that money can’t buy: hope.

Cultural Trends

Even though KPOP, Korean soap operas, and other aspects of Korean culture have huge influence in today’s Vietnam, many young Vietnamese love American cultural products. American flag-themed fabrics can be seen in the streets of Ho Chi Minh City along with “Je t’aime Paris” apparel. Things are more toned down up north but in general, blonde-haired and blue-eyed people are often seen as the archetype of beauty and they are consistently showered with compliments when traversing the city streets in Vietnam.

For many Vietnamese, having white skin is one of their ultimate desires (meanwhile countless White people are trying to become a darker color via tanning—both naturally and artificially). There are entire product lines that are dedicated to skin whitening creams and bleaching lotions—a very different approach to beauty care than some westerners might be used to. In the streets, female motorbike drivers will go to great lengths by covering their entire bodies in order to prevent even a single ray of sunlight from reaching their skin (even in the blistering summer heat). There just aren’t many Vietnamese (role) models who are able to balance their local roots with international expectations (with the exception of some niche Viet Kieu singers) and transcend cultural boundaries.

Again, Phan is different; she is American and Vietnamese and she can help to bridge the cultural and understanding gap between people in both countries—imagine her appearing in a travel blog while going through Vietnam. It would help put Vietnam on the map for her legions of fans (whom she refers to as “Dreamers”). Right now the interest between the two countries is in one direction: toward the US for study (more than 16,000 Vietnamese students are currently studying in the US).

Additionally, Michelle, with her model/foreigner boyfriend would be a surefire hit in Vietnam. Husband and wife/DJ duo Matt (of Poreotics) “Dumbo” and Tessa Nguyen are an example of a cross-cultural couple who has found success in Vietnam (mostly based in Ho Chi Minh City). (They spin regularly at Ace Club in Ho Chi Minh City.)

A Rising Brand

As profiled in Forbes’ 30 Under 30 recently, “She’s also got a line of makeup at L’Oréal, a music venture that promotes artists on social media and a deal with reality-TV giant Endemol for an online lifestyle channel. ‘I feel like this is just the beginning,’ she says.” Indeed, Michelle Pham is just getting started: imagine the brand and licensing opportunities when she gets married, has a baby, and her firstborn goes to school for the first time, etc.

Her “name and fame” would allow her to take smart risks in Vietnam to extend her brand. In the future, the Icon Network could be the roadmap for young Vietnamese: lifestyle, personal interest, comedy, and other advice all intersecting together in unison. Some adventurous Vietnamese YouTubers have started to push boundaries here in cyberspace like An Nguy, DamTV, and Mie Nguyen, but a unifying platform (like Icon Network) does not yet exist.

(What’s the alternative? The most famous private television channel in Vietnam is scaling back its programming and some new experiments like Can Ho So 69 have been tried but have proven to be too risqué for mass consumption.)

Thus, Phan could make an impact here and leverage the Vietnamese diaspora in France, Australia, Eastern Europe, and so on. In other words, first establish a brand in Vietnam and then expand outward again, tapping into those existing networks between Vietnamese and Viet Kieu. An alternative is to form a following then expand into other areas such as fashion— and Vietnam already a has robust textiles and manufacturing industries. Michelle Phan already disrupted the cosmetics industry–what’s next for her?

Into Vietnam

Ipsy (or something like it) in Vietnam can find the right niche (via clever experimentation since most e-commerce here is COD). If not, then Birchbox, Loot Crate, Barkbox, or any other monthly subscription service (most likely after proving it can be done in China) will be the first to break into this and other emerging markets (already Bethany Mota has visited India, a one billion plus consumer market). That’s not to say that Michelle Phan hasn’t attempted to connect more deeply with Vietnam. Em, “a reflection of Me” is Phan’s attempt to mate her culture and her personal brand. “Em” meaning “she” or “her” in Vietnamese (and other things, depending on the  context); but there’s no need to stop there—keep going until something beautiful happens.

So how exactly to build up in Vietnam?

  • Start small: aptly translate YouTube videos for Vietnamese or release special videos for the Vietnamese market (which means videos 30 seconds to one minute in length—any longer and there’s not enough patience/attention span);
  • Make more regular visits to Vietnam (and bring your boyfriend);
  • Expand the Icon Network into Asia, especially Vietnam. There are a number of successful YouTube VJs here but you can also hand-select and cultivate suitable talent;
  • Good quality and affordable makeup is hard to find in Vietnam; explore localization options for ipsy;
  • Develop service learning, social enterprise, or impact investing opportunities—the dollar goes much further in Asia and being a good citizen is good marketing; and
  • Mentor new and existing talent in Vietnam; there’s a lot of talent here. Young Vietnamese people are in the middle of changing times between tradition and modernity and feel like their generation is unlike any other. Start with the 2014 Graduate of the Year.

Vietbuild Hanoi 2015

Today is the last day of the 2015 Vietbuild Home International Exhibition, a place to showcase new products, new technologies, and to check out new trends in the Vietnamese construction industry. The fair, held from March 25-29, is located at the Giang Vo Exhibition Center in Hanoi’s Ba Dinh district (184 Giang Vo, to be precise). More than 1,000 booths were spread over five areas to represent over 400 local, international, and joint-venture companies.

We stopped by the exhibition twice over the course of the four day event to get a feel for both the direction of the construction industry and for current customer expectations in Vietnam. At times, the exhibition felt more like a nightclub with the loud Vinahouse music playing as well as the “PG” (promotions girls).  Some of the larger and more popular booths were set up by companies like EurowindowViglacera, and Austdoor. In addition to products, several real estate developments were on display such as V-Green City Pho Noi and Cam An – Hoi An. Furthermore, there were some crowded safety booths, which is good considering the generally lax attitude toward safety on many construction sites; we’re glad to see that safety considerations are becoming a higher priority.

Overall, there was a strong showing of reputable foreign products such as Stanley Tools and DeWalt; as well as products from South Korea, Germany, China, and others at the fair. For smart home options, there were several companies, including brands from Portugal and the Czech Republic. However, there were also a portion of products that would have a hard time finding traction in the west. Eastern and western tastes can be very different, i.e., what is considered “good design,” “fashionable,” or “stylish” in one part of the world would be seen as falling flat in another. Vietnamese (and Asian, to an extent) preferences, in general, tend to gravitate toward ornate, flashy, or imposing furniture, art, and, design (or frugality for items that very few people will see). For example, we witnessed plenty of oversized wooden furniture at the exhibition, as well as showers with multi-colored and changing LED lighting installed in the unit itself; a “karaoke shower,” if you will.

As we continued to walk around, at one point we caught a glimpse of 18th century aristocracy via a local company’s booth representing the Renaissance brand. The closest product to the other side of the spectrum was a “futuristic” nano spray which could render an item waterproof if appropriately applied—product demonstrators were using hair dryers, light bulbs, and other appliances that had been coated with the spray under water in a fish tank. According to the salesman, a can sells for approximately $50 and a coating will last between one and three years. While certainly a useful technology, the spray has the high potential to be misapplied, misunderstood, or misused–especially when using electrical products under water.

One section that caught our eye was the CNC machining and laser engraving area where small Buddha statues and other traditional-looking pieces of art were being crafted in front of us. It was interesting to see the numerous companies that are operating in this space, and even more curious that they were choosing to (re)produce traditional art pieces instead of contemporary ones. Tourists beware: that “old wood carving” (you’ll buy thinking that an old grandfather in a remote village somewhere spent years carving) could have actually been made by a computer-controlled machine the day before.

Vietnamese Homes and Expectations

The basic shape of Vietnamese homes (also known as “tube houses”) is credited to older tax codes resulting in the standard shape of ~3 stories tall by 5 meters by 13 meters deep (15ft wide, 40ft long). Many Vietnamese homes have a retail business (with fewer numbers having a business office) on the ground floor. Some newer houses can still use these dimensions as an archetype, but for those who can afford it, bigger is always better—especially in Asia.

Still, space is at a premium, especially with two, three, or more generations under the same roof (traditional Vietnamese children don’t move out until they marry and the eldest child must care for his/her parents). Additionally, taste, like art, is highly subjective; what looks or sounds “good” to one person may not to another. However, if you want to sell in a particular market then you need to understand the local culture and sell things the local consumers want. At the same time, you can also risk damaging or diluting your brand image just to make a quick sale. Thus, educating consumers about your product or service—and continuing to drive a consistent message—is the best way to establish your brand as a market leader in the long term. However, it can and will be capital and time intensive.

For example, new homeowners don’t care that the unit they are being handed over is dirty (e.g., paint spots on the floor and all over the baseboard), has shoddy installation (e.g., door trim not flush with the walls), and generally represents poor craftsmanship (e.g., gaps, crooked lights, and cheap materials). Why? Because once they take possession of the unit, they invest additional millions or billions (VND) to renovate the (sometimes) brand new unit.

(And why should trade workers and their managers care if clients don’t demand higher standards? These low standards only work as long as the requirements are low—they definitely aren’t suitable for smart homes.)

In apartment buildings, this renovation can mean that even the original front door is replaced with some drab steel cover and, of course, bars are added to the windows for security purposes. However, this isn’t the norm in much more expensive serviced residences. Yet, when we visited Lotte Center Hanoi last year about a month before it opened, the most technologically advanced equipment in a serviced unit was a motion sensor near the front door to turn a single light on/off upon entering/exiting. We covered the opportunity in this space in last week’s post.

Last week, we went to a brand new apartment to check out a recently finished two bedroom unit in the center of Hanoi; overall, the space was poorly utilized. For example, the “master” bedroom had a tiny balcony but no bathroom. The other bedroom had its own bathroom but there was a two square meter hole in the wall (near the ceiling) leading outside. The original door on the unit was for a flimsy deck door so there was little privacy. The other residents on that floor had all replaced their doors with a heavy wood door with a gray metal security gate to cover it (from different vendors). And, of course, security bars could be seen in front of the windows—an after market addition. Ultimately, it was hard to tell whether it was a hallway in a new apartment building or in a new prison.

Current and New Opportunities

Home security remains a huge opportunity in the Vietnamese market. As mentioned, Vietnamese homes usually have barred windows as well as shudders. There is at least one heavy-duty gate on the front door and if there is another then it’s a different style (metal gate or metal roller). Any walls might have barbed wire or broken glass perched on top and some deck spaces will be fully enclosed with metal bars. This security conscious approach to their homes is partly the result of a cash-bashed society, but it’s also because Vietnamese consumers tend to follow the pack: “if my neighbor does it, then I must also do it or do it even better.” Think of it like a hyper “Keeping up with the Jones’” mentality.

Companies like Dropcam provide the perfect option for Vietnamese consumers, who can check up on their homes while they are away or can be alerted when there is unauthorized movement. Beyond security, other smart home products could be successful in Vietnam as well including Philips Hue and the Sonos line up. But how can consumers want something they don’t know about?

Events like Vietbuild remain a great opportunity for demonstrating products—and in markets like Vietnam’s where educating consumers about a nascent industry is required, there is no substitute for seeing how a product works (instead of hearing about it). This is a country where the majority of e-commerce payments are handled COD once a consumer has had the ability to check out the product in front of his/her house before paying the delivery driver. Seeing is believing when it comes to new technology, and especially in Vietnam where consumers are suspicious about product quality as it still has room for improvement.

The next Vietbuild expo will be held in Danang from April 22-April 26.

Raising the Bar Across Vietnam

Currently, Ho Chi Minh City has a number of transformative and boundary-pushing new construction projects in various stages of completion. This pipeline of towering skyscrapers is fueled by creative architectural exploration which will help to redefine Ho Chi Minh City’s skyline for years to come. Many of these projects present developers with the opportunity of implementing evolving and emerging technologies into their respective visions. Therefore, high-tech, eco-friendly, renewable, innovative, and ergonomical designs, spaces, and solutions should all be seriously considered and employed where possible by project stakeholders, thereby raising the bar across Vietnam.

According to Asia Property Report, a “large group of Vietnamese shoppers said that they value security and cleanliness of a shopping centre, rather than putting a premium on prices and top foreign brand names, unlike their other Southeast Asian neighbours.”

Additionally, CBRE reports: “Luxury and high-end products will be sought-after, especially in Hanoi… [so] domestic retailers need to reassess and renovate themselves in order to compete with the new entrants [due to ASEAN integration in 2015 and beyond.]”

Furthermore, Cushman & Wakefield projects that, in 2015, “incentives will remain high as supply build-up pushes up vacancy.” How will developers differentiate their offerings from an increasing real estate inventory? LEED and LOTUS ratings help provide guidelines for green buildings, but there are additional options for homeowners, businesses, and developers.

These and other ongoing projects are in the middle of changing standards, expectations, and technologies here in Vietnam. Homeowners and other building occupants—especially those who are new to the idea of smart technologies—might have questions about different options.

  • What is it?
  • Why does it matter?
  • How will I benefit from it?

Well, ask yourself these questions first: is your home a smart home? (Swap out “home” with “workplace” or “school” since these technologies can cross boundaries in our lives.)

For example, is your home energy efficient? Can you control lights, TV, music, or the temperature from your smartphone? Are you breathing clean air and drinking filtered water? Not just cleaner air than what’s outside, but the best air in the world. Not just safer drinking water than your neighbors, but the safest in the world. (And yes, air and water can help distinguish a smart home from other homes: you can send your children to a better school but you can’t buy better ozone for them, at least not outside.)

Basically, our homes are made up of different systems: security, lighting, temperature, A/V—all of which can be automated, integrated, and controlled in different ways. We integrate these technologies together to form a single seamless point of control. “Technology integration” is the design, implementation, or programming of automation, integration, and control systems (such as LutronCrestron, and AMX) in residential and commercial settings. To date, we have operated as integrators, consultants, and advisors to companies and individual clients in HCMC and Hanoi since 2011.

These different technologies allow a homeowner or end user to control most systems via his/her Apple iPhone, iPad, or other smart device, i.e., control lighting, motorized shades, temperature, audio, and video distribution systems all with simple button presses. Any of these technology platforms can be utilized as a standalone product as well, including individual room solutions depending on a client’s budget. In short, a smart home means having one of the best homes; safe, luxurious, and unique. It goes beyond the basics in a tasteful and elegant way.

Imagine coming home: you walk up the steps and once you are inside, you press the “Welcome” button on the nearest keypad to the main entrance. Immediately, certain lights (we call these “presets”) begin turning on—accents, down lights, and chandeliers. At the same time, automated shades begin raising to reveal the full-length windows and the stunning view behind them.

As you move beyond the foyer and into the living room, your favorite art pieces are softly lit and soothing music is playing through the in-ceiling speakers—all automated, of course. Your focus turns to the faint scent of fresh herbs so you stop by the kitchen to see what’s on the menu for tonight before continuing on to the study, your inner sanctum. The study is a toasty 28 centigrade, just as you set it from your smart phone even before leaving the office. Time to wrap up those last few emails before dinner.

After dinner, you decide to watch a movie; as you walk into your living room, it dawns on you that it could double as a Bang & Olufsen show room: BeoVision Avant, BeoSound 5, and BeoLab 5 models are the first objects that catch your eye.

Sitting on the couch, you try to decide what to watch. Thanks to a VPN, you have the option of Netflix so House of Cards comes to mind. You remember that your building began offering Nevaya’s services the month before so you browse the selection of new releases. It’s nice to unwind with a glass of wine, so you settle on your favorite comedy.

Halfway through the movie, your phone rings: it’s a friend who wants to meet up for a drink. “Sure, let’s meet downtown in 20 minutes,” you respond. Reaching for your glass of wine, you take one last sip before heading toward the front door.

Before leaving, you press the “Goodbye” button on the keypad next to the front door. Within seconds all the lights in common areas turn off. Whatever audio or video zones were active before are now silent. Within a few minutes all the lights, music, and video zones are off and while you are already on the way to meet your friend.

These are some of the most visible benefits of smart technologies—but it gets better once you notice the energy savings on your monthly utility bills.

A Smarter Work Environment

Time is money; the new year is coming up and you have to report back the year’s financial reports via teleconference. As ASEAN integration proceeds, Vietnamese companies will have to interface more often with foreign companies and their workers. As future workers in a dedicated teleconferencing room, students are able to schedule e-meetings with experts in other cities or even work together with students in other countries.

Imagine that you are at work, early in the morning. The sky is clear so the sun’s rays are strong as they enter the window next to your desk. Sensors in the ceiling are able to detect the amount of sunlight coming in from the window. Since the office is on one of the upper floors, there is a clear line of sight. However, the shades automatically lower to reduce the amount of overwhelming sunlight.

As the day enters the afternoon, the shades slowly raise as the sun begins to set. Soon, lights begin to turn on once the natural light in the space reaches the lower limit. The shades are fully raised when the team decides to call it a day as they head out to share dinner.

The temperature, lights, and shades are all operating on “Away” mode now. Occupancy sensors in the main common areas allow lighting where and when it is needed, thereby keep operating costs low.

Education for the 21st century

The professor goes up to the lectern in the front of the classroom. She presses a button soon the bright blue light of a projector appears on the smart board behind her. The projector has several sources: she can show a documentary from the DVD player, pull up a webpage from the computer in the lectern, or show a document on the digital camera. Her students pay attention—will it be a movie today? Or a new and interesting interactive experience?

Technologies That Help You

There may be a number of sub-systems in a building: HVAC, Power/Lighting, Building Energy Management, Security, etc. Together, they actively communicate to make sure a building operates as leanly as possible, depending on how many people are active inside. While each company that specializes in a certain technology has different national origin, they all have one share aspect in common: they are among the best in the world.

AMX is an American company—its technology has been used in celebrity homes, corporate boardrooms, and even the White House. AMX specializes in meeting technology which is suitable for hotels, convention centers, and other spaces.

Lutron, an American company founded in 1961, has been a pioneer in lighting, shading, and temperature solutions. Today, the company holds over 2700 patents. In Vietnam, Lutron products have been used in the Park Hyatt, in the Summit Lounge at the Sofitel Plaza, at the JW Marriott, and in villas throughout the country.

Nevaya, a British company, to promote a cloud-based IPTV solution ideal for hotel operators and serviced residences in Vietnam and Asia. Let’s say that you want to watch a movie. Well, with Nevaya’s IPTV services you can do exactly that. Best of all, basic services are included in your service fee that you pay to the company that manages your serviced residence.

OnControls, an American company, offers room control solutions that are hosted in the cloud. This advantage allows the cost of room control to be lowered since the hardware footprint is less and changes can be easily made from the web portal.

Bang & Olufsen, a Danish brand, complements any luxury housing as it has done for the past 90 years. Its products are distinct showcases of quality, design, and art.

IQAir is a Swiss family owned company with 50 years of history in air purification. All IQAir products are made in Switzerland, conform to the strictest standards, and are considered the leading edge in their respective categories.

BWT, a German company, is Europe`s number one water technology company. The company has proven expertise in both domestic and industrial water technology. Here in Vietnam, the company concentrates on small (domestic, small office, restaurant, etc.) installations.

All of these technologies are available today—in Hanoi, Ho Chi Minh City, Da Nang or any other location. By the way, other technologies will soon arrive as well to help eliminate skills, craftsmanship, and corruption challenges.

Impacting the Environment Around Us

Five-star luxury in your home—did you think it was possible 20 or 10 years ago in Vietnam? You can make it happen today. A smart home allows you to express yourself and it allows you to simplify your life by providing convenience, safety and peace of mind. You can either help set the trend or play catch up in the future. You drive a nice car, you have a cool phone, but what about your home?

Set your life apart from your friends’ and family’s home. Make your own style; we can help you do that. Experience a comfortable temperature all year round in your home. No wet and dry season—always the perfect humidity indoors. Have a Smart Home, the Best Home, a Future Home.

While individuals can take it upon themselves to convert their residence into a smart home, the most efficient way to create a smart ecosystem is to incorporate units into the smart building design, or even better, to incorporate buildings into the smart city design. Ultimately, specifying and utilizing these technologies allows architects, developers, and designers to differentiate their projects from others in Vietnam and Asia (and provides homeowners/residents/occupants with a new level of technological and luxurious living). Everybody wins.

The Bootstrap Alley Tour in Hanoi

Last Wednesday night, a panel of local and regional judges selected Echoes as the winner of the Bootstrap Alley Tour in Hanoi and set things in motion for the multi-national team to attend the upcoming Tech in Asia Singapore startup conference on May 6 and 7. The three judges were Ronnie Wee, founder and managing partner of Incuvest (based in Singapore); Quan Nguyen, venture partner at Inspire Ventures (based in Ho Chi Minh City); and Ben Liu, director of Kamia (based in Taipei).

Around 100 people squeezed into co-working space and incubator Hub.IT in Hanoi’s Hoan Kiem district for the event (as part of a ten city journey), which will lead up to the tri-annual Tech in Asia Singapore startup conference. Approximately sixty entries were trimmed down to the Top Five teams, each of which was given five minutes to make the case to win free tickets and accommodation, and a booth at the startup conference. After each pitch, the judges provided feedback and probed some of the teams’ assumptions. All entries had to be an internet, mobile, or hardware-software startup with, at minimum, a prototype ready to demo.

Advice, Experience, and Vision

Before the Top Five teams pitched, a fireside chat was held with the three visiting judges. During this segment, the judges shared their views on operating in Vietnam, the greater region, and why it’s important to think ahead. Between them, the judges have made investments in companies in Vietnam, greater Asia, and North America in spaces such as Internet of Things (IoT), education, logistics, internet services, and digital currencies.

For Ben Liu, one of the key considerations when evaluating a deal is the founder’s strategy and market, i.e., “have they convinced me that this team and this market are the best?” Teams should have a good understanding of what market comes next, and how to grow and accelerate; one of the best ways to do that is to reach out through your network and find local resources. It does not mean jumping into the market—first network, learn what you need to know and then make your move.

Ronnie Wee explained that investment decisions are based on the team and market execution—which means understanding a team’s thought process and execution plan. A team should be able to be a good regional player and understand the nuances of different markets. Look at potential partners, prove and show traction—a team’s thinking process should be clear for investors, meaning that a team has gone through and begun to identify gaps. Do research and validate your assumptions.

Quan Nguyen pointed out that a product by itself can’t stand alone: “Can you make your strategy happen? Do you have the connections?” Many startups don’t think about going abroad because a big opportunity can sometimes be scary. However, a team than can scale needs to have the ability to cross borders. Different scenarios require different plays (especially as an investor) so it’s important to have an idea where and how to exit.

Overall, the judges drove consistent points to the audience: thinking beyond your home market, building and having a network in place to form vital partnerships, and having a viable execution plan to scale the business.

The Top Five Teams

AZ Stack provides a way for developers to include peer-to-peer (P2P) calling and messaging over low bandwidth in their applications by simply adding a few lines of code. Founder Quang Mai Duy and the rest of his team are initially targeting local developers and software companies in order to gain traction.

#HotTab (meaning Hotel Tablet) was another strong contender for the top prize. Founder Sanjeev Sapkota had a vision to solve basic communication issues between hotel staff and guests via in-room tablets. The new in-room technology addresses guests needs and provides enhanced services by partnering with companies like Food Panda, GrabTaxi, TicketBox, and others.

OnOnPay is a way to top-up your mobile phone credit with the added bonus of receiving gifts, 20% more of the top-up value, lucky draws, or other rewards. Founder Sy Phong (who has experience in the telecommunications industry) is aiming to launch the service by May 2015.

GCall is a way for online retailers to provide customer service to shoppers in their own native languages. As shown on a mockup, the service itself appears on an online product’s page as a distinct icon so that a shopper can select the icon and be connected to a customer service representative (CSR). The CSR can then go ahead and help the customer with his/her purchase, which can range from answering questions to a more proactive approach.

The winning team, Echoes, presented a novel way to conduct audio tours but the tool itself can be customized to meet a variety of needs. The project, led by Josh Kopecek, originated from a Hanoi Soundwalk held in 2013. Echoes is essentially two parts: the creator web app and the consumer mobile app linking content with users. The team has several promising pilot projects in the works, including clients in Hanoi and Copenhagen, and at least one global brand has expressed interest in the technology behind Echoes.

Key Takeaways

Whether your model is a copycat or you are targeting a blue ocean, you still have to get the fundamentals down. The consensus was that the pitches were good, clear, and well rehearsed; one judge claimed that the Top Five in Hanoi were the best batch yet. Indeed, it was a great sight to see fresh faces, expats, locals, and visitors come together to witness the excitement, passion, and motivation that all the founders had for their respective products and services.

After the event, some of the teams received additional critical feedback directly from investors—advice which can be used to refine their pitches for the next time, thereby bringing them one step closer to realizing their dreams. More broadly, Wednesday’s event brought together and strengthened the open and inclusive startup community in Hanoi. Ultimately, Tech in Asia’s Bootstrap Alley Tour has helped raise the bar here in Hanoi.

The next stop on the Bootstrap Alley Tour will be in Hong Kong on March 10.