Vietbuild Hanoi 2015

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

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

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

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

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

Vietnamese Homes and Expectations

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

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

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

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

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

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

Current and New Opportunities

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

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

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

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