As part of our continued coverage of trends in Vietnam, the latest theme that has continued to dominate headlines is coworking. Buoyed by an emergence of local brands and the entrance of global brands such as WeWork, Vietnam’s coworking market continues to rank as one of the most robust in the world. Yet despite the coverage, most Vietnamese companies continue to have their doubts about the concept’s suitability for the Vietnamese workforce.
Vietcetera reached out to the founders and general managers from three coworking space brands in Ho Chi Minh City. Read our three experts’ thoughts on what’s happening in 2019 in co-working and their predictions for the year ahead.
1. Chris Edwards, General Manager of Kafnu
What trends stand out in your industry this year?
We believe that shared workspace will continue to grow as it has changed from being a fad to being a norm, and the workforce has become more mobile. Users of workspace increasingly seek more than a work desk; they want to belong to a community.
In some markets, the growth of shared workspace is primarily driven by corporates rather than freelancers. These spaces are also starting to pop up in new locations such as shopping malls. As competition heats up with more entries of operators, shared workspace will strive to offer layering of services and perks to entice and retain users.
What was the most meaningful moment for your company so far this year?
We kicked off 2019 with the opening of our first branch – Kafnu Alexandria – in Sydney, Australia. In June, we entered Vietnam to open the first Kafnu in Ho Chi Minh City (HCMC), also the first in Southeast Asia. We are very excited about Kafnu HCMC as it has great potential and grows in tandem with one of Asia’s fastest emerging markets.
What do you foresee as the key trends in coworking in Vietnam being in 2020 and beyond?
Recent reports ranked HCMC among the world’s top 50 fastest growing co-working markets in the world. The demand for co-working space is largely driven by the growth in start-ups, the need for cost-effective and flexible spaces to meet the needs of a growing business.
The co-working space sector will continue to grow in Vietnam, and competition will heat up. Global co-working space operators have started to enter the country, posing a threat to smaller operators as they fight for members and limited space in key cities. Analysts are expecting the industry to consolidate as a result.
Many co-working space operators are looking to enhance their services, providing start-ups with business advice, financing support, or business facilities to stay competitive. This bodes well for start-ups in their development phases.
With the changing demographics of the talent pool and emergence of SMEs in Vietnam, how does this change the demands for a working space?
In a market with over 90 percent of enterprises classified as small- to medium-sized (SMEs), and where more than 30 percent of the population is young (under 34 years old), coworking spaces prove to be the ideal solution to house start-ups and SMEs. These less traditional workspaces offer a unique work environment that attracts talent to join organisations that choose to base themselves at shared workspaces. Being based in a coworking space helps to bolster the image of these companies, which are seen as more progressive and having a greater focus on employee productivity and well-being.
The coworking service industry is primed for further growth in Vietnam in the next few years amid strong expansion by both local and international operators, with demand driven by local and international startups, freelancers, and increasingly by small corporations. Companies will also seek for cost-effective work space with the increase in leasing cost as the demand for workspace outstrips availability.
Do you think the majority of the companies are able to meet the expectations that young Vietnamese millenials and Gen Z are looking for?
In Vietnam, 91 percent of coworking space members are millennials under the age of 35. This proportion is higher than the global average of 67 percent, and it reflects Vietnam’s youthful demographics.
As the younger generation enters the workforce, they seek access to communities, facilities, and services. The last few years have witnessed significant changes in offerings by coworking operators in the market from workspace design to facilities and services, including food and beverages, and membership perks.
We believe that Kafnu has a unique proposition to offer to Vietnam’s new generation of creators and entrepreneurs. We are more than a shared workspace. Our strength is in cultivating a warm, welcoming community of like-minded change-makers, and providing unique opportunities for discovery, connection, and growth.
2. Linh Hoang, Co-founder and CEO of Circo
What trends stand out in your industry this year?
The office market in big cities is getting more occupied this year, and the office space occupancy rate is expected to be high in the following years. It’s becoming more difficult for every tenant to find suitable space because supplies of office space are limited, and the growth rate for SMEs, startups and corporates is high over the years. The shared office business will still grow fast due to the growth of startups, innovative communities, and the need for flexibility even with big corporations.
What was the most meaningful moment for your company so far this year?
Our growth is three times so far for this year; this is one of the notable achievements for the whole team this year.
What do you foresee as the key trends in coworking in Vietnam being in 2020 and beyond?
The coworking market in Vietnam is promised to grow exponentially every year as it can prove its benefits towards flexibility, team growth, and cost-saving. The coworking space model is yet to prove its efficiency towards how people are using office space and interact with the interior design of the space.
With the changing demographics of the talent pool and emergence of SMEs in Vietnam, how does this change the demands for a working space?
Startups and SMEs are emerging in Vietnam as it is a hot location for startups across Southeast Asia, and they require more space than ever. The SME sector will be one of the fastest growing private sectors in Vietnam in the next few years.
Do you think the majority of the companies are able to meet the expectations?
Since the shared office business model can prove its efficiency, especially for fast-growing companies, I think both the tenants and the landlords are enjoying the benefits from this business model.
3. Duong Do, Co-founder and CEO of Toong
What trends stand out in your industry this year?
Coworking space chains in Vietnam are expanding their network. In the past two years, the total area of a single coworking space location has grown from an average range of 1000 square meters to tens of thousands of square meters, spanning across multiple floors of a commercial building.
Secondly, coworking space is no longer a model that only attracts startups or tech companies. Established businesses and corporations with hundreds of employees are switching to coworking spaces thanks to their flexibility, creative environment, quality facilities, and excellent services.
What was the most meaningful moment for your company so far this year?
We’re truly proud of these two achievements because both reflect our philosophy. This summer, we’re opening nine locations across five cities and three countries; thus doubling our total areas compared to the start of 2019. This officially marks us as the first coworking space developer in Vietnam to expand overseas.
Secondly, we’re launching Reinvent Saigon, a cultural event with exhibitions, talks, workshops, and performances that takes place during July 22-28 in all five locations in HCMC. This is an important step to strengthen our position and the belief of cultivating a unique cultural platform for Toong’s community members. This experimental week offers an opportunity for our valued partners, customers, and the general public to immerse into the values that we pursue, that is placing self-development as the foundation for an individual’s personal growth. We aim to make this program a long-term, annual event that’s integral to our network expansion. My vision is that at every location that Toong operates in, our community network will promote the innovative spirit that takes root in the local culture.
What do you foresee as the key trends in coworking in Vietnam being in 2020 and beyond?
Coworking spaces will continue to expand their locations, but we’ll also see more customer differentiation and price competition. I think only a few will stand out if they’re able to build a distinctive brand story and identity that tailors to a specific audience, instead of competing for a lower price.
While more corporations in Vietnam will consider switching to coworking spaces, only those [coworking spaces] who have established a good reputation for their services and successful business model will attract big names.
This is because the reputation of a coworking space has an impact on the companies’ credibility. A lesser coworking space can risk the company’s credibility and puts them in a passive position to look for an alternative.
With the changing demographics of the talent pool and emergence of SMEs in Vietnam, how does this change the demands for a working space?
The number of new businesses and foreign-invested enterprises in Vietnam are skyrocketing. Constant innovation is a must if they want to survive and thrive in an economy where optimization is preferred. On top of that, the new generation of urban intellectuals and professionals demands for a different kind of lifestyle and working environment. All of these factors create more difficulties in attracting, nurturing, and keeping talents compared to 10 years ago.
Coworking space provides an environment suitable for the contemporary lifestyle. It is an outlet that stimulates their creativity and curiosity. There is an immense potential for coworking space to develop sustainably and gradually replace conventional office models. I think it will happen fast for the next three years.
Do you think the majority of the companies are able to meet the expectations that young Vietnamese millenials and Gen Z are looking for?
The answer is no. We’re living in a world where urban professionals are working not only to survive, but also to explore and enjoy life. They’re smart, crave for a diverse experience, and constantly nurture their curiosity to better understand the world. That’s why only a working environment with well-rooted purpose, and embrace diversity can attract and retain excellent talents.
It’s not easy to realize that problem. The first reason is that company culture was not the focus of companies founded more than 10 years ago. The majority follows a homogeneous corporate culture that narrows down to a limited set of people who are willing to conform, so that they can reach “stability.” That no longer works in today’s dynamic and fast-paced economy. Secondly, even if companies are well-aware of such shortcomings, cultivating a culture that’s inclusive, colorful, bustling with life, and satisfies Millenials and Gen Z demands passion, perseverance, and intuitive sharpness.
I believe in the next five years, the industry will shift towards building an innovative working environment that is not flashy on the outside, but coherent and consistent with their values. Talented individuals will be drawn to a place where culture is deeply nurtured, and with that, companies are looking for a place to gratify them. I’m talking about a co-working space model that transcends the typical perception of a co-working space in the current market.
Written by Annie Trieu
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