Around the world, the COVID-19 pandemic has ripped the rug out from under many businesses. As world economies crater, analysts are scrambling to further revise the already pessimistic economic outlook for 2020.
And yet, a few bright spots remain. In light of the landmark E.U.-Vietnam Free Trade Agreement (EVFTA) that will eliminate almost all tariffs over the next ten years, is Vietnam better placed to weather the storm in the long run than other regional economies?
To untangle a world buffeted by epidemics, climate change, trade wars and insecurities, we asked a panel of Vietnam’s business owners and industry experts to share their insights into the biggest trends and challenges they expect to emerge in their sectors in 2020.
What was the brightest spot in your industry, and for your team, in 2019?
Mary Tarnowka, Executive Director, AmCham Vietnam-HCMC
Mary Tarnowka will remember 2019 as the year she joined AmCham Vietnam-HCMC as Executive Director after serving three years as U.S. Consul General in Ho Chi Minh City. Taking this position allowed Mary a unique opportunity to stay in Vietnam – a country she loves – to revitalize AmCham, and continue to strengthen the economic partnership and people-to-people ties between the United States and Vietnam.
Read the full interview with Mary Tarnowka here.
For James Vuong, RealStake Founder and CEO, one of the highlights of 2019 was the huge interest from investors, angels and VCs alike, in Vietnam’s startups. Particularly at the intersection of prop-tech and fintech, where RealStake sits.
Read the full interview with James Vuong here.
At DTX Asia, says CEO Quang Thai, 2019 was the time to experiment with multiple distribution tactics. Now that the right model and the core team are in place, the online retailer is ready to scale and expand into other product categories that have synergies with their existing customer base.
Read the full interview with Quang Thai here.
For Sylvia Nguyen, Head of Hospitality at Alphanam Group, it wasn’t a singular event but the gradual growth and stabilization of the group’s hotel business that stood out in 2019. Occupancy levels remained consistently above 80% enabling the company to create jobs and training opportunities for many hospitality students.
Read the full interview with Sylvia Nguyen here.
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Given the current economic headwinds, in what ways will your industry adapt to changing conditions in 2020?
James Vuong, RealStake Founder and CEO
James Vuong warns that “winter is coming” and everyone should hunker down, preserve cash and shift into survival mode. He believes most companies are writing the year off in terms of growth and this is fine because many can’t even survive, let alone grow.
Quang Thai argues that in 2020, within the O2O model, online marketing will remain the focus. Much more expense and brainpower will go towards content creation to build more authentic and transparent brand equity.
AmCham, says Mary Tarnowka, carried out a survey to identify the key issues affecting the members, arranged a meeting with the Consul General and lead manufacturers to discuss supply chain challenges, and facilitated sharing of best practices in their committee meetings.
Like other industries affected by the economic slowdown amid the Covid-19 crisis, hospitality companies are embracing lean operations, ramping up cross-departmental trainings and focusing on limiting redundancies, admits Sylvia Nguyen.
How will the typical customer profile need to change in 2020, in your business?
AmCham will continue its mission to support over 500 corporate and 1500 business representatives throughout Vietnam and help them adapt and succeed. Focus will remain on growing the membership, explains Mary Tarnowka, and on increasing support to members in Ho Chi Minh City as well as in Central Vietnam through the chamber’s plans to establish a new chapter in Da Nang.
For hotels, Sylvia Nguyen sees potential in domestic market and in diversifying away from international tourism. With restrictions on international travel in place, Vietnam’s over-reliance on overseas travelers was thrown in sharp relief.
For RealStake, target customer segment and existing customers are one and the same: the young educated tech-savvy h.e.n.r.y. (high earning, not rich yet). James Vuong argues that his customer profile does not need to change because RealStake’s value proposition grows stronger in the downturn, for two reasons.
Quang Thai feels that digital-savvy young consumers who are very aware of social issues, from sustainability to gender equality, will rally around causes that benefit the greater good and expect brands to do the same. He hopes to see a big wave of brands demonstrating authenticity and altruistic values to connect with this generation on an emotional level in this tough time.
General economic outlook in your sector for 2020 onwards: positive, cautiously positive or negative? What sort of bounce will your industry see after the pandemic passes?
The general outlook for 2020 onwards is positive assuming the pandemic is under control within this year, argues James Vuong. Any bounce would be gradual instead of quick. When it comes to investor sentiment, it does not change overnight.
“I’m always a cautiously positive person, no matter which year I’m asked!” explains Sylvia Nguyen, who is used to managing risks in her role as a board member and an executive and is not thrown by the challenges 2020 presents.
Mary Tarnowka is cautiously optimistic about Vietnam’s ability to recover economically. She says she has been impressed by the pragmatic, yet decisive actions the Vietnamese government has taken to use its resources strategically to control the outbreak, including exhaustive efforts to trace, identify, quarantine, and test those exposed.
Quang Thai sees a positive sign in the fact that enterprises are taking aggressive actions towards creating innovative sales channels and technologies to ramp up online distribution. Because of the crisis, what would have taken years of research and development, is now implemented in a matter of days. The risk of not investing in R&D is much higher than anyone can anticipate, he argues.
Across the board, what sort of businesses and leaders do you expect to emerge from this crisis?
The sort that can be characterized as lean, adaptive and radically realistic, says James Vuong. Business models that are lean, with good unit economics, instead of those needing massive scale and capital to reach profitability.
Quang Thai’s take is that during a sensitive time such as this, consumers are more alert and take notice of businesses that are selfless and altruistic rather than stuck in their ways and narrow-minded. Therefore, businesses that are mindful of this have to take their chance to contribute and build loyalty among consumers.
Mary Tarnowka thinks that the businesses and leaders who will emerge are those with the ability to stay true to their core missions, while adapting to new ways of providing value. She says she has been proud to see so many of our members contributing to Vietnam’s COVID-19 response both through their corporate social responsibility programs, and individually.
Leaders that are detail-oriented, cautiously positive, and down to earth, says Sylvia Nguyen. The best captains are made in rough seas. The crisis requires all leaders to roll up their sleeves, step into various roles, and step up their game, believes the hotelier.