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The REMON Project

July 13, 2015/in Opportunities /by gktagroupVN

On July 2 and 3, the Final Conference of the Vietnamese-German Research Project Real Time Monitoring of Urban Transport—Solutions for Traffic Management and Urban Development in Hanoi (REMON) was held in Hanoi. During the conference, project representatives outlined their plans for going forward and listened to the concerns of the attendees, which ranged from data privacy to the methodology of the proposed actions.

Traffic in Vietnam can conjure up images of motorbikes, bicycles, buses, and luxury vehicles all vying to occupy the limited space on the road, especially in major cities. Already during rush hour, parts of Hanoi and Ho Chi Minh City are near impassable. Few experiences could be worse than being caught at a red light in Ho Chi Minh City during the rainy season, and surrounded by the drone and exhaust of a few hundred motorbikes in front and behind. (Your author has experienced this firsthand.)

And up in Hanoi, the afternoon rush hour can turn into a “Battle Royal” where buses are operated as if they were cars, cars as if they were motorbikes, and motorbikes as if there were regulations for operating a motorbike. The Vietnamese dream is to own a car—to show off success to others, to protect from the elements, and to travel comfortably.

Last year, the first Rolls-Royce Motor Cars showroom in Vietnam opened up in Hanoi. However, as we explained during coverage of the Yamaha Town Hanoi showroom, the car will never fully replace the motorbike in Vietnam, and Hanoi itself is a Motorcycle Dependent City (MDC). Still, Vietnam experiences 10% new vehicles on the road each year and congestion will only increase as more people become successful as a result of the economy. In fact, there are even events called “car washes” where an entire company will go out to celebrate the purchase of a car by one of its employees–arguably, one of the nicer effects of an increasing number of vehicles on the road, but not without short and long-term effects on the city, its people, and the environment.

So in the last three years, a team of Vietnamese and German researches has looked at this increasing traffic issue in Hanoi. The REMON Project is funded by the German Federal Ministry of Education and Research and the Ministry of Science and Technology, Vietnam and has been ongoing since May 2012 (and will run until October 2015).

According to a handout at the event, the REMON project has several key objectives:

“reduction of air pollutants and emissions;”
“reduction of energy consumption in the urban transport sector in Hanoi, Vietnam;”
“establish a real-time traffic information system in Hanoi, which helps to increase the efficiency of Hanoi’s transport system;”
reduce environmental impacts of traffic, in particular traffic jams, traffic-induced emissions and energy consumption.”

The REMON project wants to track and detect traffic conditions in real time via two methods; Floating Car Data (FCD) and Floating Phone Data (FPD) which is essentially GPS data from onboard units in vehicles but also the smartphones of the vehicle drivers as well.

The REMON project hopes to use the raw data for several applications ranging from “informing road users of the current traffic situation on each street to controlling and managing traffic as well as long-term transport and urban planning efforts and measure to solve traffic problems.”

Thus, the focus is on short-term traffic information as well as long-term transport management approaches and urban planning solutions. In other words, “the REMON project is a well-adapted, demand-oriented, collaborative research and development project between German and Vietnamese partners. It aims at establishing a traffic information system and using it for achieving an integrated urban and transport development of Hanoi.”

Ridesharing and Electric Vehicles in the Future

Uber arrived in Vietnam in June, 2014 in Ho Chi Minh City and in October in Hanoi. GrabTaxi also arrived last year in Vietnam. These services help optimize the flow of people across cities but they also have the potential to reduce future vehicles on the road considering the tough parking situation in Hanoi. For sure, once the metro comes online, it will provide a viable alternative for navigating around Hanoi (and Ho Chi Minh City).

On the other hand, electric vehicles such as bicycles, are usually associated with young people or students. At the high-end range, if Tesla Motors were to enter Vietnam it could change the perception of electric vehicles in this market. However, entering an Asian market where consumers want to have instant gratification and want to save “face” and requires developing infrastructure can be quite challenging as seen with Tesla Motors’ progress into China.

There are definitely opportunities to partner with residential and commercial developers in Vietnam to offer Powerwall (see a full Powerwall 2 review) and other devices in the portfolio that could benefit residents, customers, and others who are interested in living a high-tech, stylish, and green life. For example, establishing VIP charge/parking spots at malls, and premium parking in residential developments are some options for building a suitable brand image for Tesla Motors. Successful Vietnamese want others to acknowledge their success and want to be seen in exclusive situations so it may take some time for a mindset or attitude shift, especially from the nouveau riche, who will only increase in numbers in the future.

One thing is certain: the focus and results of the REMON project will affect all Hanoians as the impact of traffic is demonstrated in more relatable terms such as quantifiable lost productivity due to waiting in traffic (or even access to the real-time data via a mobile application as the project hopes to achieve). Along those lines, solutions for traffic challenges could emerge from a variety of areas–not only the private sector or from researchers, but also from the public via crowdsourcing campaigns. Indeed, there were many vocal and concerned commentators at the event in the audience who did not have a shortage of opinions on what should be done moving forward. In the meantime, the continued promotion of basic standards of courtesy on the roads with an emphasis on safety, utilizing signals, and respecting traffic laws can go a long way toward improving the commuting, driving, and riding experiences in cities such as Hanoi; after all, innovation and technology can help to fill in the gaps.

If you would like to know more information or would like to view the material presented then you can find it here.

Vientiane, Lao PDR

September 29, 2014/in Frontpage Article, News, Workforce /by gktagroupVN

In the 1960s Vientiane had the reputation of being the wildest city in Asia. Today, Laos–with Vientiane as its “sleepy” capital–is known as one of the most underdeveloped countries in the world. Usually, people know one of two facts about Laos: that it is land-locked or that it is the most heavily-bombed country, per-capita, in the world as a result of being a battleground for 20th century ideology. However, these quick facts don’t do the beautiful country and its warm and friendly people justice–and this basic knowledge barely scratches the surface of the complex history of Southeast Asia.

Laos shares a linked history with Vietnam but this relationship was further strengthened during French colonial times, and continued through the Second Indochina War. Even today, there are strong and deep ties between the two countries; for example, earlier this year Vietnam funded an upgrade to the Kaysone Phomvihane museum in Vientiane.

Similar to Vietnam, Lao PDR began to open its economy to the world in 1986 but maintained strict controls on its political apparatus. Despite the current political and economical situation, there is foreign investment here; a significant portion of new construction projects are implemented by either Vietnamese or Chinese companies depending on the size of the project. For existing construction, the electrical wiring indoors, while exposed, is run neatly, and the wiring in the streets are bundled together in an orderly fashion. In homes, switches and outlets are grouped together in junction boxes that are dispersed at chest level in various rooms. Anecdotally, the power might go out for a few hours once a month in the capital.

The most visible element of consumption by the upper class, luxury vehicles, are somewhat common throughout the capital and there are some nicely designed houses in a westernized sort of style dotted throughout Vientiane. The Toyota Hilux is the unofficial vehicle of Laos as it is ubiquitous throughout the capital. Furthermore, a significant number of vehicles are modified from their stock origins in some way–be it hood scoops, snake eyes, or chrome accents–so there is a growing tuner culture in Vientiane.

Unfortunately, rush hour traffic fills up portions of the city quickly and traffic jams can occur for no apparent reason, e.g., lack of a traffic collision or police checkpoint. When there isn’t heavy traffic, whirring diesel engines and turbo-chargers spooling up in SUVs are common sounds (and the drivers love to careen down roads meant to be driven on no higher than 30 or 40 KPH). Mercedes-Benz, Porsche, and other luxury vehicle brands have dealer presences in the capital; considering Lao PDR’s economic rankings, it can be surprising to see the Mercedes SLS in a showroom—and even more surprising to see it on the roads of Vientiane.

Vientiane Through Foreign and Local Eyes

Chiang Mai, Thailand and Vientiane, Lao PDR are two cities that are similar despite being in different countries; in terms of population, consumer preferences, and lifestyles they are very much aligned. Additionally, there is a strong Thai influence in regards to fashion, youth culture, news, and entertainment in Laos. The Lao PDR capital is literally across the river from northern Thailand, after all.

Even though many Thailand-based expats (farong in Thai) travel to Vientiane for visa-runs, it’s surprising that there isn’t a larger presence of foreign freelancers in Vientiane and in Laos in general. From a visa perspective, it can seem quite attractive for remote workers and there exists the support for foreign freelancers in Vientiane in the form of Toh Lao co-working space. For foreign full-time professionals, the options range from EMC to Sciaroni and Associates to DFDL (the last organization having been founded in Lao PDR). Of course, there are also some foreign banks such as VietinBank and Sacombank (Vietnamese banks) that have branches in Vientiane and there are also many foreign restaurants in the capital to represent small expat-operated businesses—Istanbul Restaurant, Soul Kitchen, and Jamil Zahid to name a few.

Many Non-Governmental Organizations (NGOs) have a large presence in Vientiane as well so there are expat support staff who regularly work with their local counterparts. In general, locals and foreigners who might meet and develop a romantic interest in each other can’t live together and sexual relations between them are forbidden–but marriage is always an option for those who find their soul mates in Lao PDR. A good way to meet people in the Vientiane business community is via weekly events such as the meetups put on by AmChamLao. In addition to the robust expat house party scene, there are the famous get-togethers at CCC bar in downtown Vientiane. Overall, Vientiane is a small place—there is a sense of a village mentality so reputation is important since “everyone knows everyone” in both the local and expat communities.

Outside of Vientiane and into the Countryside

The youth of Lao PDR’s high-society (Hi-So) in Vientiane can be found at Mark2 or Marina wearing trendy and/or revealing clothes and dancing the night away to western style arena house music from Thursday through Saturday nights. “After hours” almost always includes karaoke in some interesting but comfortable places for all sexes (since the culture is inclusive). Yet, these experiences are so far removed from the daily lives of the average Laotian.

Outside of Vientiane things quickly become poor besides a few cities like Luang Prabang, Pakse, and Suvannahkhet. Think unpaved roads, wooden huts, shoeless children, etc. However, throughout Lao PDR there exists a deeply respectful and hospitable culture with a strong beer drinking tradition; Lao people are perhaps the most laid back in Southeast Asia. The quintessential Lao experience is singing karaoke on a nearby river or body of water while drinking Beerlao. Social gatherings are important and women and men are not always separated at these events where people are sometimes sitting on the floor and are sharing food with one another. One unique aspect of Lao culture is the use of a single glass to drink beer in addition to a personal glass, which is passed around and shared among all the guests at an special event.

Other activities that Laotians enjoy include fishing, football (there already is a healthy representation of the up-to-date Germany World Cup jerseys), and petanque. Petanque in Laos is different than petanque in France (where it originated) and government ministries usually have a petanque court on site. Half the government ministries have their signs in French, and the other half in English (besides Lao)–the same goes for the road names in Vientiane.

The three most visible brands throughout Laos are Beeline, a telecommunications company; Beerlao, a product of Lao Brewing Company—a joint-venture between Carlsberg and Lao PDR; and Johnnie Walker, which is also popular in Thailand. Beerlao is on every restaurant sign as well as restaurant equipment such as standees and cash register desks—the result is a very large market share of beer consumption in Lao PDR.

A Future Focus

Officially, the Lao PDR government actively seeks investments in agriculture, hydropower, manufacturing, and tourism, according to its investment brochure. Organically, Laos experienced its first Startup Weekend ever in Vientiane in May of this year. Last week, Nana Souannavong, president of Snap International, and co-founder of Toh Lao co-working space, was gracious enough to explain to us the state of the startup ecosystem in Vientiane.

As Nana sees it, the biggest challenge ahead of the Vientiane startup community is getting people to understand what a startup is and getting people to be more entrepreneurial because they like the stability of public sector jobs. She shared with us that a generally strong curiosity among participants and a higher proportion of female entrepreneurs are the biggest strengths of the startup community in Vientiane. Those (aspiring) entrepreneurs who are passionate are the hardcore ones who stick through the multi-day events such as Startup Weekend–and they will be the ones to get the most out of the events. It gave her hope to see so many people show up to the first Startup Weekend because if no one showed up then she knew that the community wouldn’t be ready for another five years–the fact that people showed up was a huge victory for the Vientiane startup community. Nana also revealed that the winners of the May event are still working on the concept but as a side project since the team members already had a full-time focus before winning at the Startup Weekend.

While the official Lao PDR Small and Medium Enterprises (SME) office also supports startups, there will be many challenges on the way to creating and building a suitable environment for venture capital (VC) firms and angel investors to operate in—something does not exist although there are other forms of external investments. However, the legal framework does exist for foreign investors and founders in regards to equity but only outside of the retail industry. Nana’s advice to future entrepreneurs is to “think through what you are trying to do to understand the consequences.” Along those lines, her favorite quote is “life is an investment.” She should know since her company provides financial advice in money markets for local and foreign companies.

Startup Vientiane

At the Startup Weekend, there was a mix of tech and non-tech products and services being pitched but going forward there are no obvious areas for startups to form around. Y Combinator, perhaps the most prestigious startup accelerator, has a Request for Startups (RFS) feature on its website. While the list below is not a request for startups in the strictest sense, it does provide an external view on the opportunities in Vientiane and beyond after speaking to locals and longterm residents.

Opportunities for Startups:

-Targeting tourism (perhaps first via Triip.me and then expanding on original concepts specifically for Lao PDR)

-Creating accounting controls (perhaps in the form of mobile applications) for local and/or foreign SME in Lao PDR

-Products and/or services for the many NGOs in Lao PDR, e.g., tools to train local staff or tapping into external crowd funding

-Leveraging the growing consumer communities (for example, the car tuner culture) and collecting data points on them

-Helping expats to adjust to Laos by finding housing, goods, or services more easily (a better English->Lao dictionary, for example)

Perhaps when people think of Lao PDR in the future, a third fact might enter their consciousness: a growing startup hub centered around Vientiane. The people in Lao PDR have many things to offer the world–foremost among them is their hospitality and resilient attitude–this much is apparent upon crossing the border into Lao PDR. Another Startup Weekend is scheduled for later this year at Toh Lao co-working space–hopefully, the organizers will be able to build off the success of the last event and the participants will take even bigger risks to share their ideas with the community. It will be a long road indeed, but with community leaders like Nana, anything is possible.

The Changing Face of the Auto Market

September 1, 2014/1 Comment/in News /by gktagroupVN

On August 27, 2014 the first Rolls-Royce Motor Cars showroom opened up in Hanoi, the capital city of Vietnam. Two events were held at the showroom in the HCO Building at 44B Ly Thuong Kiet, next to the Melia Hotel. One event was held for members of the press from 2:00 PM to 4:00 PM and included the official ribbon-cutting ceremony. Later, from 6:00 PM to 8:00 PM, an event for VIPs and potential customers was held in private at the showroom and adjoining outdoor patio.

British First Secretary, Andrew Holt, attended the event and delivered some prepared remarks about the significance of the first Rolls-Royce Motor Cars showroom in Vietnam. Mr. Holt expressed that he was honored to be part of the Vietnam success story. In fact, the common theme throughout the press event was the “remarkable success story” of Vietnam and the “country’s ambition for the future.”

In effect, the event on Wednesday was put into motion over a year ago. In June 2013 Rolls-Royce Motor Cars announced Regal Motor Cars as its first authorized partner in Vietnam. The chairman of the authorized dealer, Rolls-Royce Motor Cars Hanoi, is Minh Doan with Trung Doan serving as the Chief Operations Officer. In the time leading up to the official showroom opening ceremony on Wednesday, the brand’s Facebook page had already accumulated over 32,000 “Likes” which, according to Mr. Holt, served as an example of how the Vietnam market was ready for an official dealership.

When directly asked about unit sales in Vietnam prior to the opening of the official dealership, Paul Harris, regional director Asia-Pacific at Rolls-Royce Motor Cars, responded that it was difficult to know exactly how many cars had been sold in Vietnam due to unofficial channels but that it was around 100 cars. Mr. Harris revealed that Rolls Royce had directly supported one car’s production from Goodwood, England, where the company’s cars are assembled by hand.

Mr. Harris reiterated that now that Vietnam has an official dealership, it is the place to go to satisfy consumer demand for the brand and Rolls-Royce Motor Cars sees the Vietnamese market growing, with great potential in the future. In terms of global demand, the Ghost is the most popular model, followed by the Wraith and the Phantom.

Finding a Suitable Vietnamese Partner

The on-boarding process for the local partner was revealed by Mr. Harris; first, potential Vietnamese partners were encouraged to apply. Rolls-Royce then assessed the candidates, and analyzed the business, the partner fit, and passion of competitive candidates. Rolls-Royce selected Mr. Minh in part because he is a Rolls-Royce owner himself and the Rolls-Royce team felt that he was in a unique position to understand the brand and to deliver the brand’s message and values to the Vietnamese market.

During the Q&A portion of the event, a member of the Vietnamese press asked Mr. Harris why Regal Motor Cars was chosen as an authorized but not exclusive dealer. Mr. Harris responded that, for Rolls-Royce Motor Cars, authorization means exclusive as it has no intention to expand to a second dealership in Vietnam. Mr. Harris wrapped up his response by explaining that Rolls-Royce Motor Cars knows that demand is here in Vietnam for significant sales and that “we and our dealer partner are happy with the sales forecast but won’t divulge numbers.”

Rolls-Royce Motor Cars, currently owned by BMW AG, is in the midst of expansion plans in the Asia-Pacific region outside of China. Last year a showroom in Osaka, Japan was opened up and a new dealer partner was announced in Manila, Philippines as well.

The “Oriental Sun” Rising in Asia

On display was an $1.8 million model, the Oriental Sun, an exclusively produced limited edition model for Vietnam. That extravagant model was sold during the second event held at the showroom at night. In many ways it’s amazing that there is even a market for such vehicles in a country where the gross national income per capita is around $2,000.

It’s not surprising that the first Rolls Royce dealership opened in Hanoi instead of Saigon. Many luxury brands pass through the capital before setting up shop in the south where the customers usually evaluate products on more criteria besides price and/or country of origin. Rolls-Royce Motor Cars would be wise to continue these custom runs of single units (in addition to its Bespoke program) so as to allow potential customers in Hanoi and the surrounding areas to further differentiate themselves from their contemporaries—especially in the northern provinces of Vietnam. After all, one measure of uniqueness is the price tag between the same or similar products.

The Vietnamese Auto Market

Rolls-Royce Motor Cars’ expectations for the Vietnam market are in line with those of other auto manufacturers. Recently, Mercedes-Benz Vietnam announced that it had sold more than 1,000 cars in the first six months of the year. These sales figures amounted to a 70% increase from the same time last year and set a new record in the company’s 19 year history in Vietnam.

In total, more than 65,000 vehicles were sold in the first six months of the year according to Vietnam Automobile Manufacturers Association. A brand new car in Vietnam can cost two-to-three times or more than a similarly equipped model in the US due to taxes and import duties. Vietnam Automobile Manufacturers Association projects that a total of 130,000 vehicles will be sold this year, compared to 110,519 in 2013.

Luxury cars are becoming more common place in cities like Hanoi and Saigon. One can spot Lamborghinis, Ferraris, Maseratis, Bentleys and the full gamut of European and Asian luxury vehicles at any time of day or night while walking in either city’s downtown. While not everyone can afford such exotics or high-end luxury vehicles, there is still much demand for and attention given to these foreign brands.

In 2013, the Vietnam Motor Show, held at the Saigon Expositions and Convention Center (SECC) in District 7, Saigon drew over 155,000 visitors over the course of four days last October and resulted in the sale of 200 cars during the event. For comparison, the New York International Auto Show (NYIAS), the oldest and biggest auto show in the US, attracts slightly more than a million people over nine days. At the Vietnam Motor Show last year, some luxury brands such as Infiniti and Lexus made their first appearances at the event. And last year more than half of all luxury sales were comprised of Mercedes Benz vehicles—a sign of the preferred auto brand by Vietnam’s elite.

For those looking to score a deal in Vietnam’s pre-owned car market there are a myriad of options available including, but not limited to:

www.banxetot.com (literally “sell good car”)
www.bonbanh.com (literally “four wheels”)
www.muabanoto.vn (literally “buy-sell car”)
www.muabanoto.net (literally “buy-sell car”)
www.choxe.net (literally “car market”)
www.anycar.vn

The Future of Auto (and Luxury Goods) Sales in Vietnam

As Vietnam’s economy grows, so too will grow the number of successful individuals who can afford the high price tags of luxury goods offered by established brands. These brands, of course, include luxury auto makers. In some ways, a car someone drives in Vietnam is more important than the home where s/he lives because everyone can see his/her car and few may see the inside of his/her home. This value placed on public appearances can lead to interesting situations where a high-end luxury vehicle may be parked in front of a modest looking house (or an attempt at an Asian castle).

Regardless, the number of people who will be able to afford these luxury vehicles and other goods in Vietnam will only increase. Auto and other luxury goods makers will need to find new ways for the nouveau riche and super rich to distinguish themselves from the hoi polloi. At the same time, the newest rich joining the ranks of the newly rich also leaves the door open for after market modifications from esteemed companies such as Brabus. Then, the only question left to answer will be where to drive such a super-charged beast? For sure not in rush hour traffic in either Hanoi or Saigon.

Still, the Vietnamese dream is to drive to work in a car. It serves as one measure that s/he has “made it” and it also helps to insulate from bad weather, pollution, and nasty injuries resulting from traffic accidents since cars are higher in the pecking order than motorbikes and other two-wheeled modes of transport.

The takeaway here should be that if rich Vietnamese can afford luxury vehicles with high sticker prices then they can probably afford whatever luxury brand you represent (and they will most likely want to buy it). The key is to set the new standard for whatever experience you are trying to create—because once you do that then most consumers and other brands will follow. Getting that first domino to tip may be tricky but the rewards will surely make it worth your while to make it happen.