Market Launching In Vietnam The Right Way - Expansion Managers Share Their Top Tips | Vietcetera
Vietcetera Survey

Market Launching In Vietnam The Right Way - Expansion Managers Share Their Top Tips

zalo-share
copylink

Gone are the days when expansion managers would bundle Vietnam with other emerging markets in the belief that what worked in Jakarta would work, with a few tweaks, in Saigon. 

Lately, Vietnam’s ability to consistently generate business opportunities that appeal to multinationals has turned it into an investment epicenter. While some parallels can be drawn between the opening of China’s economy in the 80s and the investment gold rush Vietnam is experiencing today, the country’s highly idiosyncratic business culture and complex consumer behavior mean that for a high-level interpretation of market attributes having boots on the ground in Vietnam is a must.

International players are taking note and setting up rep offices in Saigon, Hanoi and Da Nang — signaling a positive shift in the investment climate and acknowledging Vietnam’s rising profile. With a number of new, high profile players ramping up their market entry efforts in the last few months, we ask their expansion leaders for insider tips about the hidden barriers, the rule of the game and the factors that define the success of market entry projects. 

Tung Tran, Managing Director — Vietnam, Zenyum


What market attributes make investing in Vietnam attractive to Zenyum?

Being among the fastest growing economies in Asia, Vietnam with its large, young population has a high potential. With the economy thriving, income levels are rising rapidly and Vietnam is expected to double its middle class from 13% to 26% of population in 2020, according to a report by the World Bank. 

Spending behavior has also shifted with people now spending more on lifestyle, beauty and healthcare products. All of these factors make Vietnam a very attractive market for Zenyum.

What are some challenges to your business you’ve seen in Vietnam that are specific to your industry?

Building trust and finding talent were some of the key challenges when we launched in Vietnam. Orthodontics and clear aligners are pretty new topics in Vietnam and we need to do a lot of educating about the product and build trust with our customers and partners. 

Finding the right talent is the common challenge for a new business. We need to find the people who are passionate, open to learning new skills and prepared to hustle to grow a business with a high potential. One thing I learnt is that orthodontic products are too new and unexciting to many candidates!


Now that you have boots on the ground here in Vietnam, what are some unexpected opportunities you have come across for Zenyum?

Vietnam is an amazingly dynamic and entrepreneurial society. We were surprised about the openness to new things and new opportunities. Also the strong growth of internet businesses in the last few years (ecommerce, online platforms, social media, etc) has shaped consumer behaviors facilitating the entry of new businesses such as Zenyum.

Looking back, is there anything you could have done differently or better when preparing to set up here?

Better connecting and engaging with the local startup ecosystem. Startup founders share many of the same values which enable us to create a strong community. Launching a new business is definitely not an easy job, as you need to deal with various things that you have not experienced before. Sharing knowledge and experiences is where the beauty and the power of the community lies, helping founders and launchers enormously during the set-up phase. 

Henry Bott, Chief Representative — Vietnam, Swire Group


What market attributes make investing in Vietnam attractive to Swire Group?

Vietnam is a fast-growing economy, underpinned by a young, dynamic and tech-savvy population combined with a high rate of urbanization off a low base. There are many similarities with China’s growth story over the last 30 years since the economy opened up. Swire is a diverse group of businesses — covering real estate, aviation, beverages and marine services — and is looking to expand its presence into Southeast Asia. Given the positive demographics and growth in consumer spending, Vietnam is an exciting market which ticks all the boxes.

In what ways did your market entry strategy for Vietnam differ from other SEA markets?

Swire has been in Vietnam in different guises over the last 30 years including Cathay Pacific, Swire Properties and Swire Cold Storage. Most recently, we have established a Representative Office for the private group, John Swire & Sons, to act as an outpost to explore investment opportunities on behalf of the Group’s specific operating companies. 


For example, in Southeast Asia, Swire Properties already has projects in Singapore and Jakarta, and are interested in expanding into Vietnam. The role of the Rep Office here is to conduct market research and help establish connections with prospective partners to source potential investment opportunities.

What are some challenges to your business you’ve seen in Vietnam that are specific to your industry?

I’d say, from a real estate perspective, as a new foreign player it is very challenging to get access to market intelligence and the best land sites without the right local partner. So one of the biggest challenges is finding a partner who can fill in your gaps and complement your strengths, whilst sharing similar company values and attitudes to quality and integrity. Hiring local talent was also challenging, but taking the time to find the right people was definitely worth it.

Now that you have boots on the ground here in Vietnam, what are some unexpected opportunities that you come across for Swire?

Despite predominantly focusing on business development for Swire Properties, an unexpected coincidence has been the realization that there is huge potential for our plastics recycling initiatives. Swire, in conjunction with its partners, is currently developing a state-of-the-art recycling facility for plastic waste in Hong Kong and working on a pilot study to improve plastic waste collection in Indonesia. 

From initial research in Ho Chi Minh City, it seems many of the same conditions that exist in the plastic recycling value chain in Indonesia are also evident here, and we hope to be able to collaborate with local stakeholders to promote the circular economy and improve the plastic waste situation in Vietnam.


Looking back, is there anything you could have done differently or better when preparing to set up here?

Managing my own expectations about the time and effort required to establish a Rep Office here! It is a rigorous and lengthy process but one which was made easier through good advice from a local law firm and helpful staff in the Ho Chi Minh City government departments. It was certainly satisfying to get to the end of it after six months.

Josephine Chow, Head of Expansion, ShopBack


What market attributes make investing in Vietnam attractive to ShopBack?

Vietnam has a young population, high mobile penetration rate and consumers who have a digitally mature mindset. For cashback platforms, rapid adoption of e-commerce makes Vietnam a core, high-potential market. Aside from the fast-growing digital economy, talent is another major contributing factor. The abundance of world-class engineers has prompted us to set up our tech hub in Ho Chi Minh City two years ago. 

Furthermore, we believe that our platform and offerings will meet the needs of the Vietnamese population, thus enabling us to succeed. We will continue to bring more product discovery and savings on everyday shopping to local customers, while helping local businesses advertise more cost-effectively.  

My team (the Expansion team) plays a critical role in evaluating and determining potential markets for ShopBack, and we are constantly on the lookout for new opportunities to connect with and serve more consumers. In fact, we launched in Korea in April 2020 through the acquisition of Ebates Korea, the nation’s largest online cashback platform.


In what ways did your market entry strategy for Vietnam differ from other SEA markets?

Having a localized strategy is particularly important for us because we operate in highly diverse markets. Rapid and effective localization is key to thriving in a fragmented region like Asia Pacific, where each market is significantly different in terms of maturity, consumer purchasing power, and even available merchants. 

We have built highly localized teams across the region, with employees who are most familiar with their respective markets and can roll out content and campaigns to more effectively target and engage local users. In fact, 75% of our 450 team members are based outside of Singapore, in the various markets ShopBack operates in. 

We apply a marketing and product strategy tailored to meet the needs of our users in Vietnam, and our efforts have been very well received thus far. For instance, we ran the Tet Campaign earlier this year, in line with the largest and most important celebration in Vietnamese culture. The campaign was very well received, with popular products such as traditional Vietnamese foods and garments (ao dai) seeing an increase in sales.

The team also pays close attention to the selection of merchants — we do not onboard just any merchant, but look out for those who local consumers are interested in. Today ShopBack Vietnam has over 100 merchant partners. In addition to large regional merchants like Shopee, Lazada, Booking.com, Agoda, Watsons and Aliexpress, we have also onboarded local merchants, such as Sendo, PNJ, Juno, Vascara and Fahasa.

What are some challenges to your business you’ve seen in Vietnam that are specific to your industry?

From the time we launched till now, our biggest challenge has been consumer education. Though the cashback concept has existed for decades in other countries (such as the UK and America), it is still relatively new in Southeast Asia. Before the concept of cashback was popularised in online shopping, it only existed within the credit cards or offline transactions space.

Furthermore, consumers are oftentimes wary about the idea of being ‘paid’ to shop online, even though it is completely free-of-charge to create an account and use ShopBack. It is an uphill battle where we have to first capture consumers’ attention in the crowded online retail scene and educate them about ShopBack’s service and credibility, before we can persuade them to embrace and use the service. 

Nevertheless, as the leading player in Asia Pacific, our experience has demonstrated that shoppers in this region enjoy ‘the smarter way’ of shopping and appreciate the value we give them. As such, we will leverage our strategic learnings and operational know-how to grow and scale the Vietnam business quickly in 2020 and beyond. 

Now that you have boots on the ground here in Vietnam, what are some unexpected opportunities you have come across for ShopBack?

Consumers are required to stay at home to effectively manage the spread of covid-19, and as such have turned to the internet to do their shopping. And where consumers go, brands will follow. This has forced businesses to fast-track the long-talked-about digital revolution virtually overnight whereby they have started to quickly onboard onto e-commerce marketplaces or set up their own online stores to serve customers. As such, we are seeing an increase in merchant sign-ups on ShopBack. 

ShopBack has a clear value proposition that is understood and appreciated by our merchant partners. We operate a performance-based marketing model, meaning merchants pay a pre-agreed commission only after a successful sale or transaction, and any other online and offline marketing efforts driven by ShopBack are free. This is a huge draw for brands – especially now – because they are not required to pay large sums of money upfront without a guarantee of results or conversion.

Looking back, is there anything you could have done differently or better when preparing to set up here?

In hindsight, maybe we could have spotted the opportunity to launch in Vietnam sooner!

Olivier Raussin, Co-founder & Managing Partner, FEBE Ventures


What market attributes make investing in Vietnam attractive to FEBE Ventures?

The Vietnamese ecosystem offers a uniquely fertile landscape for technology investments. The country has the 14th largest population in the world, steady GDP growth of 6-7% per year driven by consumption by an emerging middle class and robust digital economy growth (+20.5% CAGR). 

On the business side, Vietnam sees +25k new tech developers per year, strong entrepreneurial culture, balanced gender power in the workplace, supportive government policies and presence of active growth-stage VCs from developed countries such as Korea, Singapore, Japan (1B$ investment per year). Relatively low level of competition amongst business verticals, reasonable startup valuations, VC flow gap at early stages and low operating costs also speak in the country’s favor.

We believe that Vietnam is a great place to invest in outstanding founders at the beginning of their startup journey and to support them to become regional champions.

In what ways did your market entry strategy for Vietnam differ from other SEA markets that you were considering?

With Vietnam’s large population, strong culture and specific way of doing business, I decided from day one to heavily emphasize the local dimension of our “think global, act local” strategy. In addition, my two co-Partners have operated in Vietnam for almost 30 years, two of our investors are also Vietnamese, FEBE Investment Manager is Vietnamese and we have partnered with strong Vietnamese founders like Dzung Dang.


View this post on Instagram



Q: In which countries does FEBE Ventures invest? A: We invest in entrepreneurs who want to become regional leaders and we are acting on two main corridors: Southeast Asian startups that want to enter Vietnam early and Vietnamese founders who want to expand regionally. Our main geographic focus is in Vietnam, Singapore and Myanmar, where we have the experience and infrastructure/platform to support you best. But we can also be flexible! If you’re building an exciting startup in another Southeast Asian country, please get in touch!
A post shared by FEBE Ventures (@febeventures) on Nov 27, 2019 at 8:56am PST

What are some challenges to your business you’ve seen in Vietnam that are specific to your industry?

I would say scale — that’s why we have a regional strategy. We look to invest in entrepreneurs who want to become regional leaders and we are acting on two main corridors: Southeast Asian startups that want to enter Vietnam early and Vietnamese founders who want to expand regionally.

Now that you have boots on the ground here in Vietnam, what are some unexpected opportunities you have come across for FEBE?

We’re seeing many great local opportunities in education, logistics and health. Also, we have talked to many regional startups who are leaders in their home markets, and are looking for a partner to help them expand into Vietnam.

Looking back, is there anything you could have done differently or better when preparing to set up here?

Learn the language while I was younger!

Brian Wright Vias, International Development Vietnam, LaLiga


What market attributes make investing in Vietnam attractive to LaLiga?

I strongly believe that Vietnam is one of the most attractive countries in the world to invest in right now, regardless of industry. When looked at analytically, I think every macroeconomic indicator will support this notion, whether it’s GDP per capita, middle class growth, or even broader population and age demographics.

Furthermore, in recent years I believe it has gotten exponentially easier for foreign companies to do business here, both in terms of policy and local business practices. Also, on a more qualitative level, I’ve found Vietnamese businesses to be incredibly receptive to foreign participants in the market, and supremely eager for growth. All in all, there really does seem to be a perfect mix of ingredients in the pot right now, and I can’t wait to see how it all grows over the next five years. LaLiga is invested in Vietnam for the long-haul, and so am I.

For LaLiga in particular, what excites us the most about Vietnam is the immense passion there is for football in this country. There are over 39 million football fans in Vietnam, over 20 million of whom consider themselves LaLiga fans. All this ultimately makes Vietnam one of the most important countries for our global strategy.

In what ways did your market entry strategy for Vietnam differ from other SEA markets?

To marketing “purists” such as myself and those I work with, there is no doubt that each and every country requires its own tailored approach. Which is why LaLiga chose to send Country Managers to over 50 countries worldwide, a first of its kind strategy in the industry. 

Most of the time what you’ll find is that businesses operating in Asia will have headquarters in Singapore or Hong Kong, and attempt to manage countries such as Vietnam from abroad as part of a wider “Asian Expansion” strategy. And, although this may work for some, I think that most will quickly realize that Vietnam is an incredibly unique and complex market with a dauntingly diverse consumer culture, ultimately requiring its own strategic considerations. 


And so, in order to enter this market successfully, and enjoy its many advantages, I believe Vietnam must almost be considered as its very own region, with unique considerations for the north, center and south, as well as the significantly marked urban and countryside demographic dichotomy.

To be more specific, our local strategy is based on a purely Vietnamese approach, which was conceived based on our knowledge of the market and our localized objectives, not as a part of some blanket approach with standardized or regional KPIs. This then allows us to develop a wholly organic plan of action yielding a much deeper and authentic connection with our fans.

What are some challenges to your business you’ve seen in Vietnam that are specific to your industry?

The challenges we’ve encountered in Vietnam will likely be shared by almost any company upon arriving here and all have served as valuable and constructive lessons in fine-tuning our strategy. More specifically though, I’d say that the biggest challenge to overcome was knowing who to do business with. 

Upon arriving, companies will usually be met with a long list of suitors who over-promise and under-deliver, and who often operate with a very different set of ethical values and business practices. However, after the first couple of years, once you’ve established a reliable institutional and private sector network, this becomes a thing of the past.

As for challenges specific to my industry, it’s actually quite hard to come up with one, given that Vietnam is such a receptive environment for football. That said, the geographic distance from Spain can often make it harder to create a continuous exchange of resources, expertise, teams, players etc.


Now that you have boots on the ground here in Vietnam, what are some unexpected opportunities you have come across for LaLiga?

In the world of business, you never really know which lunch, meeting, or friendly introduction will change the course of your strategy. Which is another important reason to have a physical presence in any market you wish to do business in. 

This is also why I think it’s crucial to be open-minded when accepting business meeting invitations, and curious during casual introductions, even when there may not seem to be much of an overlap. I’ve had countless projects come to fruition through meetings and introductions that on paper didn’t seem to justify the time spent engaging in them.

Since many of these new projects are still in the works, I’ll have to get back to you with more details, but we’ll definitely be making some big announcements in the weeks to come.

Looking back, is there anything you could have done differently or better when preparing to set up here?

As any business operating in a foreign country, we’ve encountered difficulties and had a few setbacks, but with each one of them also came the wisdom of understanding why something didn’t work, ultimately leaving us much better equipped for the future.

An example of a specific element I may have considered differently is the immense significance of Ho Chi Minh City as a part of our overall strategy. Fortunately though, we’re happy to say that we now have a full-time presence in this great city.

Related Content:

[Article] The Future Of Education — Learning Beyond The Pandemic

[Article] Opinion | Vietnam Will Emerge As A World Leader

zalo-share
copylink

Comments

Please to send a comment