Like many of you who have been to Vietnam, the first thing I noticed when I first stepped off the plane was the seemingly infinite little problems that exist here relative to a developed country like the US. As an entrepreneur, I naturally saw each and every problem as an opportunity. I first arrived in 2006, and almost six years later, and despite my best intentions and the efforts of countless prospective entrepreneurs, both foreign and local, almost all of those problems/opportunities still exist.
E-commerce is a good example. How hard is it to setup and sell products online? Despite countless business plans and millions of dollars invested in inventory and infrastructure, on-line commerce is virtually non-existent in Vietnam.
“Why is that?” you may ask. Many people attribute it to factors such as government regulations, lack of skilled labor, or basic infrastructure like credit cards and a credit rating system. But numerous entrepreneurs spend millions of dollars trying to address these issues as well, but to no avail.
There are a few glimmers of hope, entrepreneurs in Vietnam, both local and foreign, do manage to carve out a profitable niche in the ecosystem. Companies such as VNG (formerly Vinagame), The Gioi Di Dong (Mobile World), and Nhommua have all been exemplars of high-growth start-ups akin to those we associate with Silicon Valley.
How did these companies start? Can we observe any similarities between them and similar success stories from Silicon Valley? If there are differences, what are they, and how could this better inform prospective entrepreneurs who come to Vietnam and see streets paved with entrepreneurial gold?
These are some of the questions that have been on my mind since I first landed, and I hope to share what I’ve learned with those who share an interest and passion for business.
If you have any entrepreneurial experiences or stories you’d like to share through this channel, either in the US or VN, I’d love to hear them as well. Until next time…
Image by Reeve Baily (Creative Commons)
Hi Chris, thanks for the intro. Is NhomMua similar to Groupon? Do people pay by credit card? If yes, it’s probably mostly popular in Saigon and Ha Noi only? I’d love to learn more about their business model.
Hey Chris, nice (first?) article here.
1. There’s a big lack of the breadth of ecommerce sites you’d find in the US.2. Conventional wisdom is that ecommerce isn’t possible in Vietnam right now due to lack of infrastructure (shipping, payment methods).
3. Conventional wisdom is wrong (even if the basic premises are true; the banking system is a mess), and many sites are doing commerce online in ways that may or may not be recognized as ecommerce in developed countries. They are finding ways around the above limitations.
Hi everyone, I’m a student abroad, I have just been in the US for 3 months. If you guys find my English kinda choppy, please pardon me.
to the author : I have an entrepreneurship idea that I working on it, I really want to share with you and get some feedback. Is there anyway I can contact you
@35d66e116de37b545b835bbf429ba98c:disqus : Nhommua is similar to Groupon, where a group of people can buy stuff with a cheaper price. There are some other sites that similar to groupon in VN, such as. muachung and hotdealvn.
Please take the “E” out of BailEy in the photo credit. – Reeve Baily
@Ha Le: Yes, please send me an e-mail, czobrist@cal.berkeley.edu. 🙂
@Tomo: Agreed on all points. I’ll address this in my next post. 😉
@Uyen: Yes, the “Groupon clones” as many people call them, are popular mostly in the cities. Most people pay by COD (cash on delivery), this is for a variety of reasons, which I’ll address in my next post. 🙂
@Christopher:twitter It’s great to hear that you are heavily investing in our countrymen and helping our Vietnamese citizen and business industries to grow. I am an IT professional by day and Entrepreneur by night. I am also looking to start up a networking business that will allow me to help share ideas, coach, and mentor others for free enterprise, entrepreneurship, self-development and growth. I am quiet busy so I will try to find some time to share some interesting stories with you shortly. Kind Regards, Vinh Le
What I would like to see in the next posts to be addressed:
1. Which (online) payment systems exist?
2. Some facts from those providers.3. What do big players Vat Gia, Paypal Vietnam and investors like CyberAgent Ventures think about Vietnamese market? (I remember CEO of Vat Gia stated about his and his investors plan to boost online payment)
For 1.) We should observe at the “offline” payment first before complaining about “e-commerce is non-exisistent”. How many people have credit cards, how many uses them, do we have access to data from merchants, what do they perceive in the local store and malls. If the number of the usage in “reality shopping” increases e-commerce will be a time lapse behind it. So Vietnam tries to boost e-commerce but non or little are promoting it. Where are the TV commercials, where are the merchants giving incentives to pay with credit/debit card? Online start-ups can only grow if existing offline businesses give consumers incentives to buy also online. To create trust is a big responsibility of retailers/merchants. No one would trust a start-up coming from nowhere, even in US or Europe.
For 2.) No data no insights no improvements for further actions. Just telling some stories what we personally observe doesn’t improve things. So which insights are there? A quick google search gives http://www.mof.go.jp/english/international_policy/others/sseae2004/SSEAE2004-8.pdf (Interesting, Japan’s government is observing Vietnam). And hold on IDG has also some facts http://www.idg.com.vn/PodCast/BKHCM2010/Full%20Presentation/Keynote/4.Mr.%20Madanjit%20Singh.pdf (yeaah, some facts if we can believe them 127% growth of card usage in 2007) and there is something else http://www.intellasia.net/news/articles/finance/111315548.shtml (~28.5 Mio cards, and 11k ATM cards in 2010). So there are big movements and changes since 2006.
For 3.) As stated above already, besides big players retailers and merchants effort are the inflection point for e-payment market adoption. They need to work with the big guys like Vat Gia, Paypal Vietnam and Zing. Oh there is our friend google http://www.slideshare.net/nemureshi2/1-vatgia-presentation-2011-9314579 (delicious get some facts & figures), Ohhh what is vat gia doing here http://code.google.com/p/vatgia/, Metro Cash&Carry Vietnam just deployed a credit card payment system nation wide http://www.thanhniennews.com/2010/pages/20120114-metro-cash-carry-launches-credit-card-payment.aspx gooood news!
So we stop whining and get the real facts on the table, research a bit and address the challenges we need to do. We have to give alternatives and ideas, banks and government won’t do anything until entrepreneurs, businesses give ideas and address those issues/ideas again and again.
By the way, have you think about to make difference between e-commerce and mobile commerce? As I think mobile commerce/payment is another story and has much more opportunities. What do others think? Look at South-Korea, Japan, China.
My 2 cents.