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The campus at Hanoi’s University of Industry.

Samsung’s Vision in Vietnam

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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.

The marquee of Vietnam Expo 2015.

Vietnam Expo 2015

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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

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“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.

Raising the Bar Across Vietnam

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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 Lutron, Crestron, 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

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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.

 

Vietnam Today

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Vietnam means different things to different people—some of these perceptions change every day, every year, or every visit and some of them remain frozen in time.

Tradition. An untapped opportunity. A glorious past. Increasing competition. The Fatherland. Independence. Echoes of war. A bright future. A rising dragon. The party. People of the sea. Resilience. Freedom. Children of the mountains. Liberalization. Home. Happiness.

So, what is Vietnam today? This post attempts to encapsulate daily life in Vietnam as a snapshot of some of the most common sights, sounds, and experiences in the country today. Some items on this list are not exclusive to Vietnam (or even Asia) but they are still noticeable in daily life in a major city like Ho Chi Minh City or Hanoi.

Vietnam is the land of…

1. “Selfies”

If you go out one night in either Hanoi or Ho Chi Minh City, you’ll probably find people taking selfies or self-captured photos. There are certain requirements for where and when one should take a selfie, including being with a significant other, before eating, being with friends, and generally anywhere and everywhere in between. The ubiquity of smart phones in Vietnam allows for the endless flow of media experiences to be captured, shared, and commented on to form an constant feedback loop.

2. Cafes

The cafe is an important part of life for Vietnamese. They are used for a bunch of core activities including meetings, relaxing, literally sitting around, playing games (multiplayer and single player), and to communicate status. Some common drinks are cafe sua da (also known as cafe no da in the north), xinh to xoai, and tra da. The cafe culture here is strong, rich, and all-encompassing but still very different in parts of the country.

3. iPhones

Not just smartphones, but Apple iPhones. These devices are seemingly everywhere and can be seen used by celebrities as well as (some) shopkeepers and street vendors. One way that the number of iOS devices increase in the country is through family: as people upgrade their handsets to the latest models, they pass on their older models to family members. There are millions of iOS devices in Vietnam but the app marketplace is largely fragmented with third party app portals.

4.Honking

A sea of traffic, clouds of exhaust, and incessant honking. Many Vietnamese drivers seem to use the horn simply because it is there. Another large portion seem to use the horn as if were sonar by sending out “pings.” The horns here seem to be at least 30% louder than US models and we could see custom horns emerge here similar to how there are custom ringtones for phones.

5. Wi-Fi

There is no need to ask if a venue has WiFi since it’s more efficient to ask what the password is (usually 12345678 or some similar variation). Almost every cafe or restaurant provides free Wi-Fi (that works when an undersea cable isn’t damaged). The widespread availability of Wi-Fi could pose a cyber security risk in the future, especially if the lax attitude toward privacy continues here.

6. Motorbikes

Vietnam is the world’s fourth largest market for motorbikes. During rush hour, motorbikes form rivers, which larger vehicles attempt to ford or cut through with impatience. Trying to navigate an intersection with other motorbikes is probably akin to being in a mechanized phalanx. Companies like Yamaha Motors Vietnam need to position themselves carefully considering that the Vietnamese dream is to drive to work in a car.

7. New construction

Drive around Hanoi and you can hear and see the future of Vietnam. Fly into Ho Chi Minh City and you can see the cranes that dot the city from above. Some future projects will be added to an already large real estate inventory (with outrageous prices per square meter) while smarter developers will find ways to differentiate their projects via advanced automation, control, and integration technologies in buildings to benefit end-users (and ultimately, to increase ROI).

8. Recycling

“Reduce, Reuse, Recycle” here is “Resell, Reuse, Repurpose.” Empty water bottles are collected and sold to recyclers. Anything that is not completely broken or destroyed is used or repurposed until it falls apart. It’s one of the most efficient aspects of Vietnam—especially when contrasted to some western habits of instantly replacing or upgrading appliances.

9. Name Brands

Nouveau riche are rising in status and increasing in numbers. Of course they are flocking to luxury brands but some lack the sophistication that usually comes with style. As they say, “money doesn’t buy class” so there is opportunity for etiquette schooling and training, especially in the north.

10. Youth

Young people are everywhere and although there are far too many banking and finance majors, they are the future of Vietnam (as cliched as it may be). A segment of them are break dancing, popping, locking, and dropping their ways into adulthood while those studying STEM subjects seem to be diving headlong into startups and IT outsourcing. Right now, many young Vietnamese idolize KPOP stars and are hungry for American culture—but they will all eventually craft their own styles.

11. Touch

Personal space does not exist here. Touching, at times inappropriately (from western point of view), is a way to communicate (since much of Vietnamese language relies on context). Couples (not just romantic ones) can be seen walking together in a semi-drunken stagger while talking loudly, laughing, or sharing some inside joke.  Be prepared to “pinball” off some people in crowded public spaces as space is at a premium. Co-workers regularly and playfully slap each other; a sign of affection.

12. Drinking

Drinking and Vietnam go hand-in-hand. Beer Hanoi, Beer Saigon, Beer Truc Bach (the finest beer in Vietnam), Beer Halong, Beer Hue—you get the idea (those are all beer brands, by the way). Then there is ruou, rice alcohol which can come in a variety of flavors. Drinking is an occasion for bonding, building soft relationships with counterparts, and for social (and professional) lubrication.

13. Smoking

Cigarettes, traditional bongs, and hookah. Non-smokers are in for a rough time in Vietnam—there’s always someone smoking nearby (usually Marlboro or Thanh Long brands). Smoking is allowed indoors and is encouraged in nightlife spaces. The air quality already is not great in major cities like Ho Chi Minh City and Hanoi—the longterm health implications of these combinations are alarming. Purchases and installations of air and water filtration systems will become more common as Vietnamese seek to protect their children from harmful exposure to pollutants.

14. Music

Music is used to attract customers on the street, to drown out one’s senses in nightclubs, and just because someone is in the mood to blast it. Young people on the street break out into impromptu ballads or sing along with songs in unison. Overall, music here is dangerously loud and Vietnamese will pay the price for these unsafe audio levels in the form of fees to audiologists.

15. Stares

Everyone stares here, especially if you are an attractive woman, a foreigner, or are different in any way, shape, or form—in that case then they stare at you as if you are an alien. A simple smile or wave can break the ice but coming from a culture where staring is considered impolite, it can be jarring to some.

20 Years (+/-)

Twenty years ago this list would have been radically different except for a few items. Most vehicles on the roads were bicycles at that time. Imagine what a snapshot of Vietnam will be in the year 2035 with approximately 110 million people. Unrecognizable? Some parts Bangkok and other parts Hong Kong? Sustainable eco-tourism? A center for innovation in Southeast Asia?

In the early 20th century, the population of Vietnam was about 20 million. Today, Vietnam has over 90 million people. Vietnam is rapidly changing; some changes are positive and while others are unclear. What will be Vietnam’s role as we continue deeper into the 21st century? Only time will tell but one thing is certain—the pace of change here will surely increase.

A traditional Tet meal on Lunar New Year’s Eve.

Tet in Vietnam

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Hanoi is currently shut down; countless stores are closed, it’s hard to find a meal in town (in certain areas), and at times, the city almost feels as if it is under curfew. However, Hanoi is not the only city that is experiencing these conditions–across the entire country, Vietnamese are currently in the middle of celebrating Tet, which marks the transition from the Year of the Horse to the Year of the Goat. This year, the Tet holiday (Tet Nguyen Dan) is officially observed from February 15 to February 23, but the New Year’s Day is on February 19.

To foreigners, Tet is New Year’s, Christmas, and Thanksgiving all rolled into one extended holiday. It is based on the same lunar calendar that other Asian cultures, such as the Chinese, Korean, and Japanese, subscribe to. Indeed, it can be difficult to celebrate Tet as an expat or tourist unless there are existing familial or close friendly ties with people here. For Vietnamese, the holiday is a time to remember ancestors and a time to spend with young and old family members alike. During Tet, people look back on the old year and look forward to the new year. Overall, people wish each other health, happiness, and success; and hand out lucky money to children and old people. For many Vietnamese, Tet is the only vacation that they will have the entire year, which is the main reason why there are so many pilgrimages to respective hometowns (where they gather with the rest of the family to have meals together).

To historians (and some Americans), hearing the holiday’s name may remind them of the Tet Offensive, which took ARVN and American forces by surprise in 1968 during the Second Indochina War when, before going into battle, General Vo Nguyen Giap ordered the forces under his command to “Crack the Sky, Shake the Earth.” As with many national holidays, Vietnam’s flag is flown from almost every home and business, reflecting the deep nationalism and patriotism that permeates every facet of Vietnamese society. In this sense, tradition, national sovereignty, and history are all intertwined in the celebration of the Tet Nguyen Dan holiday in Vietnam.

Preparing for Tet

In the days leading up to New Year’s Eve (February 18) there are a number of preparations that must be carried out for every family. These duties range from cleaning to paying off debts to stocking up for food to celebrate the holiday during “hibernation.” There are a number of fairs that pop up throughout the country, which allow Vietnamese to shop for essentials and new items to bring in the new year. All kinds of rooms, transportation, and everything else travel-related is nearly fully booked weeks in advance. Even getting a taxi in the days before Tet becomes a challenge (and the experience reminded your author of trying to get a taxi in San Francisco before Uber and Lyft were available) and makes running simple errands take even longer than usual. Traditionally, a family must clean their home (and vehicles) and prepare Tet food—some of which can take hours to make (like banh chung). However, in recent years the widespread availability of Tet foods at local markets have allowed some families to transition away from preparing Tet foods themselves.

But really, preparation for Tet begins weeks before—perhaps even as far back as the western New Year. There’s a festive attitude and laid back mindset that seems to swallow Vietnam entirely; it is a distinct “post-Tet” and “pre-Tet” atmosphere that affects everything from meetings to schedules to business deals. As early as January people are already looking forward to Tet and many business activities will be pushed into next (lunar) year. Thus, the focus around this time before Tet is on end-of-the-year parties for workers, which begin shortly after a workday and continue late into the night (as allowed by local ordinances).

That’s not to say that Tet isn’t a busy time—it is, just from a personal orientation (and relationship—but that too can blur the line between personal and professional) rather than a professional orientation. Everyone is rushing around to wrap up last minute items and to get everything ready for Tet and the subsequent shutdown. Flowers are everywhere; in the north, orange kumquat trees are preferred, while in the south yellow flowers are associated with Tet. Interestingly enough, a week before the Tet holiday, the kitchen gods must be appeased (by releasing fish) so that a family will have a good report for the Jade Emperor; this year even US Ambassador Ted Osius and his family joined in the festivities to release fish into Hoan Kiem lake.

All over town, “Mung Dang, Mung Xuan” banners are seen in various shapes and forms; it means, “greet the party, greet the spring.” Here, spring is the first three months of the year, the first season of the year, and the new start as well as the start of prosperity for the new year. (During this time, prisoners who are eligible for good behavior are released so that they too can spend the new year with their families and to have a “new start.”)

Then, starting on the day before New Year’s Eve most shops close their doors for at least several days. There is an eerie sense of calm in usually busy areas of the city and the few motorbikes and cars on the road are sparkling clean. Daily trash pickup occur earlier than expected to accommodate the vigorous spring cleaning and the Tet fairs have all shut down, replaced by flower sellers. The first day of the new year is on the horizon.

Tet Arrives

The last meal of the year is one of the most important because it brings family, the ultimate glue of Vietnamese society, together: banh chung, the traditional Tet cake, is the most widely known Tet food but there are several other side dishes that are only prepared for Tet. If Hanoians don’t stay at home to bring in the new year with family then they go to Hoan Kiem lake (also known as Ho Guom) to see the fireworks. Another popular gathering point is My Dinh stadium, which was built several years ago as part of a sports initiative for the New Tu Liem District and where we celebrated the new year.

Vietnamese began assembling around My Dinh stadium early in the night so as midnight approached the area was full of motorbikes and cars. As the fireworks began shortly after midnight almost everyone took out their smartphones and began recording the illuminating display overhead. Those who weren’t transfixed by the fireworks were riding (at times, driving so fast that they appeared to fly) their motorcycles between the improvised lanes of spectators. Some riders honked loudly while others waved Vietnam’s flag behind them, procession style. About twenty minutes later, when the fireworks had ended, a mass exodus began and the entire area transformed into a frenzied parking lot. It is considered good luck and tradition to bring home a tree branch so several were on sale on the side of a few roads leading away from My Dinh stadium–there were also envelopes for lucky money as well as giant red balloons which had the traditional new year greeting, Chuc Mung Nam Moi (Happy New Year!), on them. Some children who were riding on the back of motorbikes wished those around them a “Happy New Year” as their parents looked on approvingly.

Superstitions dictate many activities in Vietnam so it is important to pay respect to spirits, especially ancestral ones. Some Vietnamese rush to the pagodas in the early hours of the new year in order to be the first to pay respect to ancestors, spirits, ghosts, and other otherworldly elements. For those who can wait until daylight, the pagoda is perhaps even more crowded than shortly after midnight. For us, we started the new year off with a bottle of Hanoi beer and then proceeded to go home to rest after a long and enlightening night.

The first official visitor of the new year at a house needs to be good (character, esteem, success, etc.) in order to bring the family good luck for the rest of the year. Tet is celebrated in a series of days: traditionally, the first day is for the father’s family, the second day is for the mother’s family and the third day is for teachers. Lucky money, “li xi,” is presented to older family members as a sign of respect—as well as to younger children (up to around 21, in some cases). $2 bills are given out to children (with particular attention paid to the serial numbers or other significant numbers) and all money must be in crisp, new condition. The numbers two, six, and eight are particularly auspicious numbers in Vietnam.

The Effects of Tet

Tet is a deeply family-oriented and nationwide experience. Any manager must be aware of the impact that Tet has on the country during the actual holiday but also for the schedules that it may impact. Business will mostly return to normal within 15 days after Tet but in reality the economic climate is affected for five or six weeks before and after Tet. For example, to some, it is considered bad luck to do real estate transactions in the first lunar month (until March 19). A few years ago, many stores and shops used to be closed. But now there are places that remain open for tourists and expats. Many workers look forward to the Tet bonus or “13th month salary” (and some workers even plan job changes around it) which can drive up the costs for a company–or negatively impact morale if the Tet bonus is not aligned with workers’ expectations.

Tet has its origins in the old agrarian society in Vietnam—it gave workers a chance to rest before doing hard work on the fields. However, as Vietnam has shifted to a service oriented economy, some have called to get rid of or shorten Tet because of productivity and other economic losses. Sometimes, there are some negative elements that are associated with the holiday season. For example, criminal activity can sometimes increase shortly before Tet as a result of people trying to pay off their debts. However, the real danger during Tet is the drunken driving and traffic accidents. One reason is lack of experience: people rent cars to drive to their hometowns and do not really have experience or skills to drive larger vehicles (since most of the time they are driving motorbikes).

However, good food, which is only cooked at this time of the year, can lift the spirits of everyone—-although if you are a foreigner, finding a meal can be a challenge with the exception of chains and larger retailers. But basically, it is the few days per year when everyone is nice to each other (or so we have been told by locals). Most expats leave during the holiday, but Tet in Vietnam is something that you should try to experience for yourself. The bottom is line is: do not underestimate Tet, its significance, or the impact it has on plans and travel—the impact on business here is real. But do not worry–soon, the hustle and bustle will be back, the deals and money will start flowing again, and things will be back to normal (for better or for worse).

We wish you and your family a happy, healthy, and prosperous Year of the Goat–Chuc Mung Nam Moi!

Taking a Closer Look at the IPP

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In our last post, we outlined the IPP, explained its goals, and touched upon some of the challenges ahead for the program’s stakeholders. This week we are going to take a deeper look at the IPP and the cultural, comparative, and collaborative challenges ahead for the program in Vietnam.

Last weekend we sat down with Chris Zobrist, the Senior Innovation Partnerships Expert at the IPP, and he shared his thoughts on operating in Vietnam, the potential for entrepreneurship and innovation on a local level, and how the IPP factors into the changing landscape in Vietnam.

  • Can you share a bit about yourself? What’s your background, your role in your organization, and where are you located?

CZ: I’m currently working as Senior Innovation Partnerships Expert for IPP, which is a joint program funded by the Foreign Ministry of Finland and the Ministry of Science and Technology of Vietnam.  My background is as both an entrepreneur, having started many businesses over the last 15 years, as well as an entrepreneurship educator, spending part of my time teaching entrepreneurship and developing curriculum in several universities in Vietnam.

  • What kind of opportunities do you see in Vietnam over the next five years?

CZ: Vietnam has a lot of talent, especially in engineering and software development, and there are already a few high-growth companies as well as local start-ups planting entrepreneurial seeds here.

  • What’s the best way to establish trust with Vietnamese business counterparts?

CZ: It depends a lot on the individual with whom you are trying to build a relationship, specifically in terms of their background.  Generally, the best way to get to know someone is through someone they already know and trust, as in many cultures, Vietnamese really value social capital, and this can be transferred from one person to another through a proper introduction.  Besides introductions, sharing meals, and drinking together are also good ways of building trusting relationships which is an essential element of working together.

  • What’s the biggest difference between American and Vietnamese mentalities?

CZ: Coming from a developed country that churns out high quality products as well as infrastructure (roads, public buildings, etc), Americans as well as people from other developed countries have a natural expectation to see and make things at a high standard of quality.  Vietnam is still a developing country, so many things are made with what little resources were available, and so the expectation for quality coming from domestically produced goods is not high.

  • What’s the hardest part about doing business in Vietnam?

CZ: Ensuring high quality standards.

  • Do you have a favorite quote?

CZ: “I’m all for progress, it’s change I object to.” – Mark Twain, I like this quote because it is the most apt description of the greatest challenge facing entrepreneurs and innovators in almost every context, and especially true in a country like Vietnam.

  • What are the biggest differences between Hanoi and Saigon in terms of doing business?

CZ: Saigonese are generally much more open to new people and ideas, as long as there’s a clear opportunity and logic in place.  Hanoians are much more conservative, so even if they are presented with an attractive opportunity, they will be reluctant to mobilize the needed resources to capitalize on it.

  • What are the necessary attributes to succeed in Vietnam?

CZ: Social networks and building trusting relationships are keys to success in Vietnam.

  • Do you have any advice for expats/locals who want to be entrepreneurs in Vietnam?

CZ: Entrepreneurship is a team effort, so if you want to be successful, you need to learn how to network and collaborate with others to get things done.

Entrepreneurship, Innovation, and the IPP

During our discussion, Mr. Zobrist made it clear that the IPP is looking for people who have the necessary motivation, connections, and capacity to scale a company globally. That means that local companies will eventually have to implement international accounting standards, utilize English as an official working language (especially if looking to raise funding from foreigner investors), and clearly communicate a company’s Unique Selling Proposition (USP) across markets and cultures (differentiation).

While it might sound challenging, what the IPP is seeking to achieve isn’t impossible because it’s already been done before in Japan. Mr. Zobrist pointed out that Japan went from a ravaged post-World War 2 economy to the world’s second largest economy in the 1990s. What enabled Japan to be successful in its economic transformation was a stark shift in the workforce mindset, which even facilitated new vocabulary to implement innovative solutions.

Before this paradigm shift in Japan, specific industry terms did not exist to describe small batch, high quality production to factory workers. The Japanese created their own processes with their own resources to drive economic growth in 20 years; Japanese engineers, managers, and leaders took innovative ideas, applied them to manufacturing and processes and the result was innovative products from brands such as Sony, Honda, and Toyota. Thus, the development of a new technical language was necessary, which involved a social level (individuals, units, company culture, etc.) of change in innovation, and ultimately led to a change in output of manufacturing (lean manufacturing).

Vietnam currently has a similar language challenge ahead of it; for example, the terms doanh nhân and doanh nghiệp can mean “entrepreneur” or “businessman” and are used interchangeably (and sometimes ambiguously) in Vietnamese. Along those same lines, sáng tạo means “creation” while đổi mới means “renovation” so combining the two (sáng tạo đổi mới) is the closest meaning to “innovation” (literally “creative renovation”) in Vietnamese. The language will have to evolve in order to reflect the high standards and creative thinking that are necessary to maintain a competitive advantage in the global marketplace.

An ecosystem like Vietnam’s needs both entrepreneurship and innovation in order to foster the creation of high growth and innovative companies with a global outlook. If a company chooses to keep the status quo then it will stagnate, or worse, die. Copying existing models can be valuable, yes, but not nearly as valuable as new ideas that lead to the creation of value for a large number of customers or stakeholders. High growth companies are innovative and innovation requires change–there is no getting around this fact.

New language can shape new segments of a culture and creating new and/or dedicated Vietnamese words for entrepreneurship and innovation will allow the exchange of new ideas more efficiently and also help to facilitate a change in mindset–goals that the IPP hopes to realize once its integrated system is fully operational (good inputs producing good outputs).

The IPP seeks to perfect the way of building innovation systems in order to turn them loose and harness the innovative and entrepreneurial resources here in Vietnam. Then, the IPP can develop iteratively by building and expanding on foundational knowledge (training individuals and teams who can then train other individuals and teams and so on). In short, the IPP is building a Minimum Viable Product (MVP), learning from the outcomes, and making the necessary changes (quickly and fully) in order to make the process of creating high growth and innovative companies more effective and efficient in the future.

When the first phase of IPP finished at the end of 2012 there were some major lessons that were learned, leading to a promotion of transparency, accountability, and momentum for IPP Phase 2 (which began in January). This public-private partnership, comprised of a core curriculum and fellowship program, will eventually fully integrate entrepreneurship and innovation–but this process will require time, talent, and commitment at the individual, community, and governmental levels if it is to succeed in its mission.

Toward the end of our conversation, Mr. Zobrist pointed out that the IPP will have its final evaluation in 2018 but for now, the short term focus is on capacity building and making grants available to suitable applicants in this “wilderness stage.” However, the first significant indicators of progress could be as early as the end of this year or in early 2016 as the Fast Track training draws to a close and the New Innovative Companies are eligible for external funding on Demo Day.

With approximately 200 Expressions of Interests submitted to the IPP for New Innovative Companies, we look forward to seeing what kinds of teams are selected for the IPP–and more importantly, what kinds of teams, trends, and lessons emerge from the other side of the Fast Track Training.

Thanks to Chris Zobrist for sharing his time with us.

The Innovation Partnership Program

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Can innovation and entrepreneurship be taught? Does Vietnam have the ability to produce innovative and high growth companies to take on global markets? Are there people here who have the time, talent, and commitment to make an impact in the Vietnamese ecosystem?

The governments, donors, and people behind the Innovation Partnership Program (IPP) certainly believe so and with good reason.

Well, what is the IPP?

According to the IPP website:

“Innovation Partnership Program (IPP) is an Official Development Assistance (ODA) program financed jointly by the Governments of Vietnam and Finland. IPP is in its second phase running through 2014-2018.

Working closely with key national and international partners the program aims to scale up innovation training in Vietnam and improve support mechanisms for new innovative companies targeting international markets. Besides providing seed funding and connections for the best teams in Vietnam, IPP builds the capacity of public and private stakeholders through entrepreneurship and innovation training programs.”

The IPP focuses on three different but related areas: developing people, developing companies, and developing the ecosystem.

The Fellowship Program will develop future business leaders and entrepreneurs in Vietnam who will then lead the Fast Track training for the New Innovative Companies.

The New Innovative Companies component will help high growth Vietnamese companies bring a product or service to the global marketplace via Fast Track training and expense reimbursement.

And finally, the IPP will work with Innovation System Development Teams by providing funding for organizations that will raise standards, develop new resources, and positively impact the entrepreneur ecosystem in Vietnam.

In short:

“IPP supports Vietnam’s overall goal of becoming an industrialized middle-income knowledge economy by the year 2020. The program objective is to boost sustainable economic growth in Vietnam through the increased production and export of innovative products and services.”

One can think of the IPP as a pilot program, leading the way for other actors in the local ecosystem to continue on and influence the course of Vietnam’s entrepreneur development from a global perspective. The IPP is currently in its second phase; the conceptual portion started in September and the implementation phase has been ongoing since December. The Fellowship program is scheduled to begin around April, 2015.

The Innovation Fellowship Program

The Fellowship Program will consist of 20 fellows who will be trained by top international and local talent. The fellows will focus on innovation entrepreneurship, and once trained (over the course of two months), they will lead the Fast Track Training (six months) for selected new innovative companies. Trainers from Silicon Valley and other startup communities will come to Vietnam and work with the 20 motivated young people.

In addition to the fellowship requirements, the fellows will be selected on the basis of two primary criteria:

  1. Can they learn how to be entrepreneurs and innovators?
  2. Can they take best practices from the fellowship program and teach others?

In other words, do they have the capacity and attitude to make an impact after graduating from the fellowship program?

The fellowship requires a 40 hour per week commitment and will consist of some classroom and about 80% field work. Fellows will spend most of their time figuring out what customers need and how to find/create value in fulfilling those needs. Each week, the fellows will cover a new framework and ultimately practice and reinforce the learned concepts by the end of the week. The fellows will each receive a $1,000 allowance per month for duration of the fellowship program; the goal is to focus and train a core group of people to have all the tools necessary to create successful companies in Vietnam.

The IPP is currently seeking two local trainers who, if selected, will receive two weeks of training at Stanford University in the US, in addition to a highly competitive salary for the two months of training.

New Innovative Companies

Innovation, high growth, global; these are the words used to describe the kind of companies that the IPP is looking to fund, and eventually, is looking to see created here on a consistent basis.

The New Innovative Companies to be selected will be held to milestones and operational requirements for the duration of the program. The IPP will restrict what funding is used for (which is intended to be used on salaries and training related to development) and will cover only up to 70% of total expenses incurred by the new innovative companies. If people within the new innovative company are being paid, or external consultants are used, then the fees and services must be directly related to business activities. Thus, the new innovative companies will need to show accounting records, show payroll stubs, and show that a bank transfer took place or that the fees were paid out accordingly.

Once new innovative companies are selected, they will be injected into the six-month Fast Track Program (led by the Innovation Fellows) which will culminate in a demo day with the hope that 20 or so investors will be present and ready to look at each new innovative company for potential investment. The IPP does not to take any equity share in exchange for funding (because ODA requires it). Also, there will be no corporate governance oversight by the IPP for the new innovative companies. However, the IPP will have the power to remove teams, whether it’s because of a violation or if it’s clear that a new innovative company won’t be ready to present a compelling final pitch when the fast track training is completed in December 2015 or January 2016.

Innovative System Development Team

Local or international companies that want to be involved in Vietnam’s entrepreneurship ecosystem transformation can opt to form a consortium and submit their plans for developing specific new parts or for enhancing existing parts.

According to the IPP website:

“IPP’s grants are for covering 70% of internal and external human resource costs related to the innovation project. The first phase grant is approx. €50,000 [approximately 1.2 billion VND]. The most successful teams can receive an additional grant of maximum €200,000 [approximately 4.8 billion VND].

The potential content of the projects may include, but are not limited to, development of a new incubator, creation of new services for existing incubators, planning of a new funding program in the province, adding startup services to existing technology park or initiating a regional cluster growth program.”

To that end, expansion and funding activities, and, most importantly, imagination will be critical to finding new ways to leverage the funding to provide new resources to aspiring and dedicated Vietnamese entrepreneurs.

What’s Ahead for the IPP

February 23 is the deadline to apply for the Fellowship Program, but there is no set deadline to submit an Expression of Interest for the New Innovative Company and Innovation System Developers portions. In the longterm, IPP seeks to train individual people—not just companies. The real value of IPP is in developing people–the human talent–and getting them to share their newfound knowledge with others. Building teams takes time, and even longer to reach the point of creating high-growth companies so things won’t change here overnight, but the program is a great opportunity to head in the right direction.

One huge part of the challenge ahead for all those involved with the IPP is creating a proper technical vocabulary in Vietnamese, and in the long term, a cultural shift for attitudes toward entrepreneurship and innovation within the training programs. While the IPP has a fund amount of approximately $10 million—and it will certainly go further in Vietnam than elsewhere in the west—it will be the people on the ground, in the training sessions, and taking risks to create something great who will show the world just what’s possible in Vietnam.

Vietnam 2014: Year in Review

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Firsts and Notable Events

Tomorrow is the last day of the year in the Gregorian calendar but the Year of the Horse in the Vietnamese lunar calendar extends until mid February, 2015. Overall, 2014 marked many firsts for Vietnam: the first McDonald’s opened in Ho Chi Minh City shortly before Tet (the lunar new year). The first Rolls-Royce dealership opened in Hanoi in August, and the first mobile game out of Vietnam, Flappy Bird, went viral (and is now currently only officially available on Amazon Fire TV). Notably, Lotte Center Hanoi opened on September 2, Vietnam’s Independence Day, (after five years of construction) and Formation 8 sponsored a bi-city Hackathon, demonstrating that there is continued interest in the growing startup ecosystem in Vietnam from outside investors.

More recently on Christmas Day (December 25) Hanoi received a “gift” in the form of the new airport terminal that opened for its first flight but the terminal won’t be fully operational until December 31. The four-story, 139,000 square meter Terminal 2 has cost several hundred million dollars to build and it will accommodate a growing number of travelers to Vietnam. However, not all of 2014 happenings were rosy; the falling price of oil, anti-China protests in the middle of the year, and continued reports of Vietnam’s public debt increasing were some of the more worrisome developments during the past year.

Trade Impacts: Sanctions and Price Swings

In the last six months the price of oil has dropped by 40% and it’s certainly quite a different situation from this time of the year in 2007 as oil was about to break the $100 per barrel mark. Consumers in the west will certainly enjoy going to the gas stations once again and the increased disposable income will provide short term benefits for their economies. Similarly, the price of gas in Vietnam has been falling as well, as it is regulated by the Ministry of Finance and the Ministry of Industry and Trade. We will most likely see a cycle of global oil production slowing down, new oil projects put on hold, and then the price of oil skyrocketing back up, perhaps even before the end of next year.

For 2015, Vietnam’s GDP was projected to grow 6.2% if the price of oil had stayed at $100 per barrel and for every $1 the price of a barrel of oil loses, the State budget would lose VND 1-1.2 trillion (approximately $5.1 million). Oil export revenue makes up an estimated 10.2% of the total budget revenue which is  lower than in previous years. However, the budget revenue target is VND 911.1 trillion (over $42 billion) so the change in the price of oil still impacts the budget and will continue to as the price of oil continues to fluctuate.

At the same time, EU and US sanctions against Russia (and the Russian counter-sanctions) also provide an opportunity for Vietnam to increase its exports (in particular seafood and fruit) to Russian consumers, who will still demand or need products that were readily available to them earlier this year. The complicating factor for Vietnamese exporters will be the declining value of the Russian ruble, currently in free fall (and valued at approximately half of its worth at this time last year). Still, Vietnam and Russia recently concluded negotiations for the Customs Union agreement, which is expected to increase trade between the two countries to $10 billion by 2020.

Changing Skylines and Construction Interruptions

If you’ve been to Nguyen Hue street in Saigon’s District 1 recently then you know what a eyesore the metro construction project has been there (and in District 2). Earlier this year, the cost projections for the project were revised from $1.1 billion to a staggering $2.7 billion. On the opposite side of the country, the $1 billion metro project in Hanoi hasn’t progressed much since construction began in 2012. Completion dates for both projects keep getting pushed back as well—something that will most likely continue to happen before the current projected completion dates.

Now is construction season in Hanoi, mostly due to the cooler weather and attempts to finish projects before Tet so families can spend the holiday in their new homes. However, for the neighbors of such a construction project it can mean a significant decline in the quality of life for the duration of demolition and building. Construction can begin anywhere from 5:30 to 6:30 AM every day of the week and last until 6:30 PM with a break in the middle of the day for a lunch and siesta (usually one to two hours). At night, trucks delivering supplies for the next workday can arrive at 11:00 PM, 1:00 AM, and 3:00 AM due to lack of required permits to transport the goods during the day. For residential construction in narrow alleyways, workers can block nearby entrances, leave a mess, and contribute to the local noise and air pollution with jackhammers and gas-powered pulleys (in the last six months, your author has experienced three such projects). Surprisingly, many Vietnamese don’t seem to mind the noise and delays, unless they are traffic related.

For a changing city, cranes perched across a skyline are the sight of progress. But perhaps the costs of construction projects can also be measured in psychological effects due to the disruption in daily schedules. The noise of progress is far more intruding than the sight of progress and it has lasting impacts on future generations. Still, if not construction then other sonic interruptions such as public karaoke, horn honking, or motorcycle engine revving will emerge through the city soundscape. For sure, anyone who has visited Hanoi has learned to appreciate silence in this loud, chaotic, and flowing city.

Clear Winners

In 2014, Korea and Japan deepened their relationships with Vietnam on cultural, educational, and economic levels. Additionally, Vietnam established or renegotiated a number of bi-lateral trade agreements with states such as Lao PDR, Israel, Macedonia, and others.

Additionally, Samsung selected Vietnam as the location for a $3 billion manufacturing facility. It already has a $2 billion plant here so Samsung’s selection of Vietnam shows its faith that Vietnam’s business climate will continue to meet Samsung’s future production needs; this development continues the trend of manufacturing shifting away from China. Vietnam’s largest export value for 2014 is still cellphones and components—something that has remained unchanged since last year.

Furthermore, Mercedes-Benz Vietnam had the best first-half of the year ever since setting up in Vietnam— and one could make the case that it’s the unofficial vehicle brand of Hanoi given how seemingly ubiquitous the models are throughout the city. It will be interesting to see how the brand finishes out the year once the final numbers moved are tallied. To that extent, luxury brands here continued to do well, overall (though there are emerging signs that some Vietnamese may be living beyond their means).

Last but not least, the World Cup was a huge winner in 2014, no doubt causing the loss of serious amounts of productivity over the summer as Vietnamese workers stayed up until 5:00 AM or later to catch the games in Brazil. Not everyone was a winner though, as those who gambled away their fortunes or homes were left with low spirits. Still, the World Cup was a chance for Vietnamese families and friends to get together and share the communal experience of watching the nation’s undisputed favorite sport.

Undoubtedly, 2014 was many things for Vietnam (not all of it covered in this post), but it certainly wasn’t dull. We hope that you will continue to join us in 2015 as Vietnam and Southeast Asia continue to ascend. Happy New Year to you and yours wherever you are in the world!

Cheers!