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Why waste time trying to figure out which is the correct wire when you can just run a new one?

Vietnamese Work Culture

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If you are coming to work in Vietnam from the west then it might take some time to get used to the Vietnamese way of doing things, which can be effective in its own way (it works here after all) but can also be off-putting to some people and bewildering to others. The work culture here is a mixture of indirect communication, posturing, a heavy top-down management style, and (for some workers) a “good enough” mentality when it comes to performance. Needless to say, it can be challenging to communicate your vision for how something should be done based on a client’s or your requirements.

Vietnamese workers have different professional needs than workers in the west—both in the office and on site so you might have to employ different communication techniques and different ways to motivate them in order leverage their strengths once you begin to understand how to effectively communicate with local workers. If an option, starting a new worker on a smaller project and then gradually expanding his/her scope is a good way to build his/her confidence while minimizing organizational risk. Whatever it is that you expect of a worker here, you should be able to simplify the process as much as possible or should have even attempted the process yourself beforehand to know what the pitfalls are for workers. Perceptions of good design, aesthetics, and fashion are very different here from the west—explore these arts with an open mind but be aware of the limitations in terms of technology, skill level, and approved content.

Vietnamese are generally not geared toward being creative (in part, due to the educational system of learning and for fear of losing face) when it comes to work tasks so they can experience some trouble coming up with new ways to improve processes or in creative fields such as design. Being creative may simply be too risky for them since it requires thinking about concepts, products, services, etc. in a way that hasn’t been thought of before—and it lessens the chance of success since no one has done it that new way before. Similarly, for Vietnamese workers to imagine something being done a new way via your explanation might be hard for them. Therefore, Vietnamese workers seem to fall back on “tried-and-true” ways to solve problems—which doesn’t always scale well and may be counterproductive in some cases if a step in the process has to be redone due to different (international) requirements.

However, Vietnamese are generally good at copying things, i.e., if you show them exactly how you want something done in terms of a process and the finished result then that will increase the chances of your satisfaction for the product or task end result. This method can be helpful in batch manufacturing or for installations in construction. Vietnamese workers are also able to skillfully digitally recreate and combine graphic art as a base for future modification for whatever project you might be working on but they will require guidance and input from you. (Note: If you are hiring locals then they might leave to form their own company once you train them. There’s no way you can compete with them on wages because they will have a much lower cost of living than you do.)

Coming from the west, you might notice a lot of inefficiencies in your first week or month or year in your local organization but it would be wise to refrain from actively trying to change things until you’ve proven yourself to your local colleagues and built up some goodwill. A possible first step in the right direction might be to push upper management for the dismissal of underperforming teammates especially if it’s necessary to shape a better organizational culture/fit ( however, it can be hard to fire workers due to labor laws and/or relationships).

Managing Vietnamese Workers

If you are a manager in a Vietnamese company, then try to get to know your direct reporting team as much as possible. Go to café outings as a team (the male coworkers will probably be willing to go for beers but the female coworkers generally won’t) and participate in other semi-professional bonding experiences. As long as your team performs to an acceptable level (to those you report to), and your client or manager is happy then there really isn’t a need to change much except for the professional growth of your team.

At first, it might be hard to find out the strengths and weaknesses of your team because Vietnamese are generally shy and don’t naturally “sell” themselves. One of the biggest problems here is with lack of confidence: both with confidence in their abilities to succeed and in their confidence to ask clarifying questions without looking stupid (so assumptions are made and things are shoved forward at times). Don’t be surprised if you get lame responses for why something is late or wasn’t done as asked. Patience and polite firmness (“I’m sorry but I can’t allow or do that.”) are the only ways to be effective in those situations. Your top talent on the team might be the most reserved and you’ll have loudmouths who will talk and obfuscate their way to the top if you allow them to. Figuring out who is the real deal and who is just puffing his/her chest will take some time to figure out. Don’t underestimate or write off someone here based on a first impression; once you get to know them then you will be able to discern if they are competent or if they are a liability. It could be that with the right training, a good worker can become a great one.

Great workers can be hard to find because there is generally not much appreciation for the consequences of doing something one particular way versus another. The path taken by most workers here is usually the shortest and the one with the least resistance, especially in blue collar fields. This short-term focus can be incredibly frustrating at first because it requires addressing basic elements that you can take for granted elsewhere. For example, trade workers might show up to repair something in your home and then proceed to use your kitchen knives as their tools or your dish cloths as their rags to wipe down things (if they even clean up afterwards). They might even show up hungover or drunk as well so it could make for some interesting home repair experiences. The point here is that workers require more supervision than in the west (at least for the first time going through a process) or else you will find them using your butcher knife as a shovel, your steak knife to scrape paint off steps, and your paring knife to apply some chemical goo somewhere (yes those are all real examples but skill levels vary across local organizations).

Training Vietnamese Workers

That being stated, the best way to train workers here is through positive reinforcement, i.e., focusing on the things that are done right and minimizing the focus on negative aspects unless they are mission critical, e.g., “Do it more like the way that you previously did.” Any critical feedback should be done in private and praise should be given in public. Be cognizant of age differences between you and your counterpart because if you are younger than him/her then it could result in some awkward disagreements, especially if you feel that s/he is wrong (elders are usually given authority) and vice versa. The best way to move forward in situations like those is to focus on consistent future performance and try to get everyone on board in a harmonious way. Eventually, once you bond with your teammates, you will find that they will smile more, laugh more, and may even touch your arms or shoulders more when communicating with you. Some workers may be more affectionate than others but it’s just a way of showing you are one of them especially if there are language barriers. Regardless, one thing is guaranteed: they will all nap so it might be wise to change training schedules to meet those napping needs. Napping is part of daily life here during lunchtime; the workers will either fall asleep at their desks or find a beanbag or other comfortable surface (or will even end up on the floor). As they say, “don’t knock it until you try it.”

Future Vietnamese Workforce Potential

So while the Vietnamese workforce definitely has room to improve and grow, the trend in recent years is positive because the youth here are simply great. They are bright, optimistic for the future, talented, eager to learn, and focused on improving their socio-economic conditions. It might be this current generation that can unlock the full potential of Vietnam’s human capital resources. Those who study abroad are bringing back a different mindset for problem solving to share with the local organizations here and are actively involved in helping other students who haven’t had similar opportunities. The youth are interested in working with and learning new techniques, best practices, and new skills from foreigners and are, more importantly, generally honest about the challenges ahead for today’s Vietnam.

While it won’t be easy working with locals, and projects might take longer than you originally thought, and you might have to do more than your “fair share” of responsibilities to get something done the right way… with the right team, the right attitude, and the right training anything is possible in Vietnam. And soon enough with new technologies, new skills, and new attitudes that are being adopted on a daily basis, everything will be possible in Vietnam.

Time In Vietnam

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A common sight in front of many businesses here.

A common sight in front of many businesses here.

Men playing a game in front of a temple.

Men playing a game in front of a temple.

Time on display.

Time on display.

A barge ran aground on the Mekong River.

A barge ran aground on the Mekong River.

Keep going forward and you will eventually get there or get run over.

Keep going forward and you will eventually get there or get run over.

One of the biggest differences between this part of the world and the west is how long things take to get done. If something takes x amount of time over there then expect it to take 3, 4, or 5x as long here—unless you have a well-connected local partner to fast track whatever it is you are doing in terms of paperwork or approvals. That’s for Saigon; it’s an even slower pace in Hanoi.

A simple task such as ordering at a restaurant might go a little something like this:

Person A orders.

Wait staff repeats Person A’s order.

Person A confirms.

Person B orders.

Wait staff repeats Person B’s order.

Person B confirms.

Wait staff repeats the entire table’s order.

Person A and Person B confirm.

That’s assuming the wait staff understood the orders right the first time. Getting the correct order on the table is a different matter entirely. 🙂

Even the fast food here isn’t really “fast” food (in the traditional sense) since Vietnamese families often fill various franchises around dinnertime, spending more time than required to just pop “in-and-out” for a meal. It’s a bit of a “badge of honor” to be seen in a western establishment for the average Vietnamese family because it shows they can afford eating there. Combined with the coffee culture here, people spend hours inside F&B shops chatting, talking, operating on social media, and generally being seen.

So, time has a different pace and value here than back west. If you take things here at face value then you will run the risk of wasting a lot of your time.

When working with locals, a common trend is overpromising and under delivering—especially when it comes to deadlines. You should not believe that something is done to the required specifications until you have seen it with your own eyes and have had time to review/test it.

Missing five deadlines in a three month period is a very real possibility here (a real example) and after a certain point the old adage comes to mind, “Fool me once, shame on you; fool me twice, shame on me.”

Not everyone, but many locals here are focused on short term results which is evidenced by driving norms, etiquette (try stepping off a lift and you will see), and not doing things the “right way” the first time because it would simply take too long. Problems in a process are usually due to a lack of planning until it’s almost too late and then it’s rush, rush, rush!

Needless to say, communicating effectively can be very difficult here. You can explain something via phone, text, email, in person, whatever and it still might not be done the way you expected or wanted. Sometimes, people might tell you “yes” just to get rid of you or to save face or because they don’t understand what you are asking and are trying to be polite. Try to ask someone for directions and you’ll quickly understand how pointless it can be sometimes.

Short of learning the local language, speaking slowly, and rephrasing the major points go a long way toward reducing miscommunication. Hiring an interpreter is also an option but not the best long term strategy. The longer you stay in Vietnam the more seemingly strange things will start to make sense to you—but it’s a steep learning curve unless you take the time to research Vietnamese culture and history (and that includes learning the language). Asking local friends for clarification will help you understand Vietnam as well but be careful how you phrase your inquiry less you offend them.

To add to the language barrier frustration, you might have trouble figuring out what is true and what is false since everyone’s favorite English word seems to be “yes.” For example, if you ask a local colleague to sign off on some items that s/he was to have completed already the response you get might be affirmative but the task might not actually be done. “Trust, but verify” should be the mantra for westerners operating here or else you will become mad with frustration and waste valuable time.

Time here is abundant for many people; for example, a typical lunchtime might be 1.5 to 2 hours with eating, recreation, and napping. The heat and humidity can negatively affect productivity but the cost of labor is inexpensive so productivity is not as much of a concern as it is in the west. Locals could underappreciate your time when it comes to meeting start times and having you wait around for them. However, you shouldn’t show up late to a meeting because you assumed your counterpart has a polychromic view of time as well—not all locals are the same. There are also many temptations and distractions from professional life so it can be easy to slip into some bad habits that might not be so available or accepted in the west. Balance between work and personal interests as well between stress and relaxation are essential to being successful in Vietnam (and everywhere but, especially in Saigon, it seems easier to jump off the deep end for some people).

We counted three welders on site.

We counted three welders on site.

Some Vietnamese Phrases That May Save or Waste Your Time

“You need to move slow if you want to move fast.”

Meaning: Don’t pester the person you need to get something done or else they will dig their heels in and operate even more slowly to spite your perceived meddling Let them work at their own pace—in the end it will be faster and less stressful. If you are answering to westerners for a project then this could be a problem for you.

“You need to spend money to make money.”

Meaning: Vietnamese are attracted to those who they believe are successful. It might be real, or it might be an image. It could also be a fatalistic approach to justify whatever crazy scheme is going on. Finding out what is really going on could take a lot of digging and time—better to move on or do some circular research via mutual trusted contacts.

“In the end it will be okay so if it’s not okay then it’s not the end.”

Meaning: Largely an excuse for deflecting criticism or remaining unfazed by concerns that are presented. It could be the case if there are other unknown actors (usually family) who will swoop in to save the project in the final hour. It doesn’t sound like a promising result if that is their best strategy, right?

“Don’t need.” (“Cannot.”)

Meaning: You haven’t convinced a local decision maker that your suggestion is useful. Try a different approach because repeating yourself will just waste everyone’s time.

For example, when the founders of an online food ordering website here went around trying to get local restaurants to “install a machine that would print out orders from the internet” they eventually pitched it as “a salesperson you don’t need to pay.”

That resonated with restaurant owners and led to the adoption of the machine and their success. If you get a “no” the first time, then ask a different way or provide a range of options that you are willing to work with.

“Not your job, not my responsibility.”

Meaning: You are working with the crème de la crème! Cut your losses and move on (thereby saving your time). If that is not an option then you had better get into “CYA” mode.

Different Approaches for Different Situations

Whatever the situation, if you don’t get the response you wanted then ask someone who has been in Vietnam longer than you have for some feedback—chances are they will have some good suggestions for you. At the very least, “talking out” your problem will allow you to simplify it as you explain it to someone else. If that doesn’t work then as they say, “experience is what you get when you don’t get the results you wanted.”

Remember, the challenges you will be faced with while working here will be a culmination of differences—differences of visions, standards, expectations, of course languages and culture, and ultimately, opinions. Just keep in mind that it’s all a learning experience and a valuable education for what challenges might again lie ahead in the future when working in Vietnam (and you will already have part of the solution for the next time!).

Prepare to move slowly (budget, timetable, travel plans, etc.) but don’t waste time here since you won’t be able to get it back. Above all, the more time you spend in Vietnam, the more efficient you will become as long as you maintain your high standards and don’t try to change the whole country. Always remain patient, calm, and professional throughout every situation—even when those around you are not because it’s one of the best ways to ensure that you won’t have a bad time in Vietnam. After all, you’ll have peace of mind knowing that you did the right thing.

Setting up for a marketing event in District 1.

Hanoi and Ho Chi Minh City (Saigon)

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Like many countries, Vietnam has experienced stark and monumental changes: periods of colonization, expansion, and more recently, independence and renovation (doi moi). However, throughout its history there has been a general flow of people from the original northern areas near China to the southern Mekong delta. These migration patterns have helped shape regional (north, central, south) and cultural identities on national, provincial, and municipal levels. Today, these differences are worth noting because they should influence effective communication in different parts of this heterogeneous country. Hanoi and Ho Chi Minh City are just two metropolitan areas that differ in Vietnam so if you spend some time here then you will learn just how varied it can be.

Enough Vietnamese settlers traveled south to modern day Ho Chi Minh City (which was then part of Cambodia and known as Prey Nokor) that it eventually became part of Vietnam in the 17th century. Even after the war between the north and south ended in 1975, many Northerners traveled south to seek better economic conditions since the north was still largely war torn and the south was in better condition due to American investments (prior to the renaming of Saigon to Ho Chi Minh City which both names are used interchangeably today). And even today, some young Hanoians choose to go to HCMC in search of a career after graduating from university for a variety of reasons (more opportunities, more independence from family, a change of scenery, etc.).

So how have these trends impacted the Saigonese mentality? Well, Saigonese are known to be more entrepreneurial and are known as risk takers (after all, it’s risky to become a settler in search of a better life in a different place than “home”) compared to their Hanoian counterparts. Perhaps in part due to western (French and then American) business influence in the 20th century, there is generally better customer service in HCMC than in Hanoi. In fact, wait staff may be openly hostile toward customers in Hanoi, or at least slow to respond to customers’ needs. As a result, things move faster in Saigon than in Hanoi—at least on the surface.

In terms of business, there are smaller deals in Saigon but they are more certain and quicker to be completed. In Hanoi the focus is on larger deals but there may be more uncertainty even after the deal has been signed. Why? In general, Saigonese are spenders and Hanoians are savers. If you were to find five customers in Hanoi, then you would be able to find ten customers in Saigon for the same product/service. Saigon is definitely the economic center of the country; most multi-national corporations are set up in Saigon unless they need regular contact with government liaisons at various ministries.

So while Saigon is the economic center, Hanoi is the political and cultural capital which is a reason why Hanoians are reputed to make better managers than their more market-oriented Saigonese countrymen. Hanoians are also more pensive in terms of diving below the surface of situations, meanings, and intentions—but they can also be more abrupt in a way that might be interpreted as rude. The interesting (and misinformed) advice regularly given out in Saigon is to never do business with Hanoians because they will cheat their partners at the first chance. The people in Saigon who freely give out this advice are usually Saigonese who rarely visit Hanoi or foreigners who are repeating what their Saigonese friends told them.  While it is true that Saigonese are initially more open and friendlier than those in the north, Hanoians open up once a relationship has been established.

In terms of the atmospheres between the two cities, Saigon has quite an open layout with wide boulevards–but there is a lot of traffic and rush hour can be a nightmare, especially if caught in a storm on a motorbike. There seems to be just as much traffic in Hanoi but the streets are much narrower than in Saigon—perhaps half as wide, just as chaotic, and even smoggier than Saigon. However, there are more lakes and green space in Hanoi so the city feels “greener” than Saigon, which also has a river (with the same name) that runs through it like in Hanoi (Red River).

In terms of nightlife, everything is more opulent in the south and more reserved in the north. It’s safe to say that nightlife in Saigon and Hanoi are completely different; in Saigon some venues are open until sunrise and beyond. In Hanoi most places shut down at midnight as the police make their rounds. At sunset the Saigon skyline is colorful with light displays on buildings which are mostly situated in District 1. As a side note, the first (Keangnam) and third (Lotte Center) tallest buildings are in Hanoi with the second-tallest in Saigon (Bitexco).

On the street level, there is a more European feel in Hanoi–perhaps because of the historical relationship and student exchanges Hanoi has had with Moscow and other European capitals; after reunification it was not uncommon for Vietnamese to go abroad to study in countries such as Poland, former Czechoslovakia, former Soviet Union, and France (even before reunification due to colonial influence).

The European influence seems to extend to dress in Hanoi where its citizens tend to dress up more than the casual and laidback Saigonese. They certainly have the opportunity to wear layers during the winter when it can get quite cold—and most of the traditional buildings in Hanoi are not heated. Winter in Saigon is pretty mild, even at night. Even though Hanoians are more formal in their dress, Saigonese are flashier when it comes to material possessions such as luxury vehicles and jewelry.

Some people would say that, overall, Saigon is more suitable for westerners and both cities seem to attract different kinds of expats to each—for better or worse.  To truly understand Vietnam, one must spend time in more than one city because Vietnam is so different depending on the city or region. Some differences between the cities (and other places) may be immediately obvious, but others will take time to discern especially to a newcomer.

Northerners and southerners (and others) are able to tell one another apart pretty easily in conversations. One way to determine whether someone is from the north or south is by their accent. The northerners have a heavy emphasis on the “z” sound, even pronouncing the letter “r” as a “z” and the southerners prefer the “y” sound. Throughout Vietnam there are several major accents so it’s not just a “north” and “south” dichotomy—it’s just that those are the most apparent differences within the country since most foreigners in Vietnam visit either city.

The central and other areas (highlands, coast, etc.) all have their own distinct flavors and unique qualities. After all, there are more than 50 different ethnic groups in Vietnam. Despite the differences throughout the country, Vietnamese are more similar than they are different: they are all incredibly patriotic, they have a strong sense of family (certainly more than in the west), and if you establish and keep a good relationship with a Vietnamese person then it has the potential to last for a lifetime. Above all, not every person you encounter will be representative of the generalizations (and stereotypes) of their background—there are good and bad people everywhere—so an open mind, tacit knowledge, and a contextual awareness of every situation is vital. After all, it could be the only way to truly experience and embrace Vietnam and any opportunities that might unexpectedly come your way in this surprising country.

Communicating in Vietnam

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Coming to Vietnam and doing things the way you did them back home simply won’t work. The best case scenario is that your local staff will undermine you at every opportunity, and the worst case scenario is that you will lose money, time, and an opportunity to build a relationship. Make no mistake: you will get figuratively smacked in the face if you come here with a western attitude and approach to solving problems.

Vietnam is notoriously difficult for doing business; the cards are stacked against foreigners. The laws favor locals, contracts don’t hold nearly as much value as back home, and you are a walking Euro or Dollar sign to many people here.

Many business deals in Vietnam are done in a venue: a bar, karaoke, restaurant, etc. But to get to that point any lasting relationship in Vietnam begins with a coffee meeting, usually after an introductory meeting through mutual friends in a comfortable setting.

Another route to that initial coffee meeting might be through a networking event usually run by a national Chamber of Commerce. These are relaxed settings for meeting anyone who has business interests in Vietnam. Business cards rule in Vietnam; you can get about 200 quality cards for $15 in Hanoi. You may find that at networking events people might pay more attention to your title than your company’s name. They are either sizing up decision makers as potential allies or trying to decide if you are older or younger than you look.

Vietnamese society is built on age differences and age distances. Whether someone is older or younger than you determines how you address them and how they address you. Vietnam is a patriarch-oriented society so the most revered member of every family is the grandfather.

This patriarch authority/respect is reflected in the business world by the relationship between a manager and his/her subordinates: it is a one-way downhill street. Vietnamese workers are almost wholly submissive to leaders and managers. A teacher, boss, or whoever is in a position of power is almost never challenged by their subordinates. If, as a stakeholder, you point out a potential problem don’t expect any pats on your back. The response you might get is more of an antagonistic one for pointing out problems where there were seemingly none before.

Schedules, for the most part, are guidelines unless you have a different prior experience with the schedule presenter. Furthermore, contracts don’t really mean anything either which is part of the reason why the Memorandum of Understanding (MOU) is preferred in Vietnam. A contract here is an acknowledgement of a relationship that both parties agree to put effort toward maintaining. Why? Because enforcing them is much easier said than done in this legal environment and usually, whoever is better connected wins the case if it’s brought before a judge.

For one, Vietnamese don’t like to email—they prefer texting, and in-person meetings most of all. Therefore, it can be tricky to establish a “paper trail.” Even if you get your local partner to sign off on something, it is not guaranteed because the task might not even be done. Communicate requirements via email, text, phone, in person, and demonstration and the other party will almost always say they understand. Ask if something has been done and the response will almost always be yes. But if you go and check the task’s status, then it might not have even been started yet.

The best way to spot problems is during the process not after. Don’t take deadlines or statements at face value here.  Vietnamese are generally shy—especially in groups. They won’t ask questions if they don’t understand something unless they absolutely have to—which means often things are not done correctly the first time. And no way would one Vietnamese ask another coworker for clarification of a certain process for fear of looking stupid.

Motivating local workers is a challenge: some companies try to communicate family/work life balance, reasonable hours, and opportunities for advancement (based on meeting goals) to their workers. But for the average Vietnamese company, there isn’t much training or development available other than “learn as you go,” if at all. Expect to have lots of interactions “lost in translation” unless you have an awesome interpreter or your counterpart understands your language fairly well. The challenges presented in doing business will be the culmination of differences—differences of visions, standards, expectations, languages, culture, and ultimately, opinions. At times you will be frustrated. However, it will be a learning experience and a valuable education for doing business in Vietnam. The onus will be on you to respond to misunderstandings, unreasonable requests, and perceived rudeness with grace since you are a guest in Vietnam.

Finding a trusted local partner is perhaps the biggest challenge of all in Vietnam because through him/her all things are easier. There are several circles of expats in Hanoi and Saigon: NGO, Diplomatic, English Teacher, Entrepreneur, and Startups. Find someone who has been here longer than you to help guide you toward potential trusted partners or else you may be burned on your first or second time around.

Understanding the Vietnamese mentality is a major part of making sense of the responses here. They are generally risk averse for formal businesses unless gambling is involved. If your audience has not seen something done before in Vietnam then it is not possible for that business model to exist no matter how much you try to convince them. “If it was possible then someone would have done it so since no one has done it before then it’s not possible.” That’s why there are so many copycat retail stores on the same street.

The other reason they are risk averse is because failure is shunned so much as a result of losing face. Disagree in private when possible and explain that you cannot give in on that particular position. Vietnam is not the place to point blame and determine who is rightfully responsible if you want a deal to stay on track and relations to stay positive. It will take working together to move forward for everyone’s benefit—and it needs to be a win, win, win situation or else you will lose.

Needless to say, you will save time by learning the language—although it is very hard with a western tongue. Some expats rely on their local wives or a personal assistant to translate. Try to at least be proficient with the numbers and guidebook Vietnamese.

Overall, Vietnamese are proud people—they have a long history of self-assertion and self-determination. Learning the language is one way to get a better understanding of Vietnamese. They will respect you for it and give you the benefit of the doubt more often than not if they know you took the time and effort to learn their language.

Even though Vietnam is changing and modernizing, an element of “traditional Vietnam” still exists. Keeping an open mind and keeping politics to a minimum is a pretty prudent way forward. Don’t get discouraged by setbacks or partnerships falling through—it happens everywhere. Learn from your mistakes and be better prepared for the next time in a similar situation. Above all, keep knocking on and opening doors in Vietnam to see which one fits you best—if you stay here long enough then eventually one will.

 

 

 

 

E-Commerce in Vietnam

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With a population of over 90 million, there is no doubt that the middle class in Vietnam is growing; in 2012 the middle class consisted of 8 million people and consumed $46 billion[1] up from around $20 billion in 2004.[2] Today, Vietnam is the 13th most populous country in the world—and almost one million people are born here each year.[3]

The mobile phone (and smartphone) continues to rise in Vietnam. There are approximately 140 mobile cellular subscriptions for every 100 people in Vietnam.[4] Vietnam is the second-fastest growing smartphone market with approximately 13 million iOS and Android users as of 2013. 40% of those are iOS users.[5] Mobile phones will soon overtake PCs as the most common web access.[6] According to 3rd party app store Appota, “on average, mobile users consume 4.5 hours of media daily of which 35% is on mobile devices.”

In terms of social media, Vietnam is one of Facebook’s fastest growing nations. Facebook has over 70% penetration rate for internet users which equals approximately 22 million people.[7] Furthermore, Google officially entered the Vietnamese market by establishing AdWords here in early 2013.

E-commerce is growing but consumers still prefer cash on delivery (COD) payment for online orders. For the most part, consumers are simply unwilling to use their credit cards. Of the total $700 million in e-commerce sales in 2012, only 11.8 percent of online consumers used a non-cash payment method.[8] For 2013, 74% of all online consumers had used COD as a major payment method.[9]

Why? Because consumers are suspicious about the quality of the products they have ordered and want to inspect the item before paying to make sure it’s what was advertised. Even at retail stores, buying a $15 rice cooker or $10 electric kettle may result in the floor staff taking out the item from the box and plugging it in, thereby proving to the consumer that it does indeed work.

As with much of Asia, the society here on a public level revolves around the concept of “glamour” or being able to show off that one is successful (which is closely tied to “saving face,” another HUGE deal in Vietnam—that can’t be stressed enough). This theme can take shape in several forms: ostentatiously counting money when one (usually the oldest male member at the table) goes to pay the bill at a restaurant, aggressively pushing past those already queued up to show that one doesn’t need or have time to wait around, or belittling service staff in front of others. Successful Vietnamese are willing to spend big money on luxury cars as they are often twice or thrice the price of the same or comparable model in the United States. However, wealthy Vietnamese also love a good deal and some may feel entitled to not pay the same price as everyone else (looking for special price) due to their VIP status. As for the normal folks, they will have to make do with daily deals sites.

Vietnam’s Groupon (Nhom Mua) skyrocketed in recent years, reaching over $30 million in total revenue in 2011 and over two million users in 2012—but ultimately crashed. Customers and merchants are generally wary of the group buying facilitators due to a history of mismanagement of the former leader, a large number of clones, and the customers that they drive to businesses are usually one-time consumers.

Generally, Vietnam is still a largely cash-based society so due to inflation there are some large denominations ranging from 100 to 500,000 Vietnamese dong (VND), with the latter being worth about $25.

Some figures about the local market:

  • Total Advertising Spending in Vietnam is a $770+ million industry.[10]
  • Digital Advertising Spending in Vietnam is $40+ million.[11]
  • E-Commerce spending was over $300 million by 2011[12] and has the potential to be over $2.5 billion by 2015.[13] Some estimates project that e-commerce spending can top $4 billion by next year.[14]

The challenges ahead for e-commerce in Vietnam are for consumers to be more comfortable using credit cards, the negative reputation Vietnam has for fraudulent activities in payment processing, and establishing effective trust verification and logistics systems for fulfilment as volume increases. New solutions and incentives different from those in the west will have to be proposed to Vietnamese consumers in order to entice them to embrace e-commerce more efficiently and wholly. As with most things, it boils down to trust.

For more information on the state of e-commerce in Vietnam see here: http://goo.gl/XoRroO

[1] OECD

[2] McKinsey & Company

[3] The World Bank

[4] The World Bank

[5] Appota

[6] Nielsen

[7] TechInAsia

[8] VECITA

[9] VECITA

[10] IMF

[11] Appota

[12] VECITA

[13] PwC

[14] VECITA

Why Vietnam?

/in /by

Hanoi, Vietnam

If you’re an American, then the first thought you might associate with “Vietnam” is “war.” In the last ten years and even more recently, the memories of the Vietnam War have resurfaced in the United States as American policy makers and analysts have drawn comparisons between it and operations in Iraq since 2003. However, it’s been almost 40 years since Saigon was renamed as “Ho Chi Minh City” (and even today both names are synonymous).

A hackathon in Hanoi.

Today’s Vietnam is very different than most Americans may perceive it to be. Vietnam can surprise, frustrate, humble, and charm one to wild extremes. But, there is something enchanting about this place which can take some time to begin to understand.

Across the country, modern Vietnam is rising next to traditional Vietnam.

Since Vietnam joined the World Trade Organization in 2007, the country has changed drastically and will continue to change as the middle class rises. In a way, Vietnam’s official policy is a forward-looking one, as evidenced by recent investments in e-payment gateways (POS), entrepreneurship, and infrastructure.

Hustle-and-bustle in Saigon, the city of entrepreneurs.

There are a growing number of smart phone users, growing purchasing power, and hyper-brand conscious consumers continue to fill malls and shopping centers that are as impressive as they are large (such as Vincom Mega Mall Royal City in Hanoi and Crescent Mall in Saigon).

In major cities there’s a good chance that there will be free WiFi anywhere you go.

Overall, the shift in Vietnam continues to be toward the west—consumers crave western brands, products, and experiences. As more people move into the middle class, they will be able to afford and acquire products and services that they previously could not have. Now is the ideal time for consumer brands to position themselves so that when rising middle class takes off the choice for consumers with new spending power will be clear: to buy from trusted brands.

A trendy bar in Hanoi.

Ultimately, the technology and infrastructure for consumer-centric startups to be successful is already here; for example, the economic gap between US and Vietnam is huge but there are iOS devices, WiFi infrastructure, and mobile phones everywhere.

There is growing opportunity in Vietnam and Asia in general. That’s why we’re here—because the future is here.