History of hustle drives Vietnam’s outbound startups
Communist country capitalizing on state-supported technology firms to close economic gaps and quickly reach middle-income status
Communist ruled Vietnam makes no bones about capitalizing on technology and other entrepreneurial startups to speed its drive to reach middle-income status and close the economic gap with more developed regional rivals.
Communist Party cadres are now reaching globally in that centrally planned pursuit, signing deals with nations ranging from Finland to Thailand in what planners see as the next leap forward in the transition from a command to market economy.
Vietnam’s government has established several technology accelerators, including a so-called “Vietnam Silicon Valley” under the tutelage of the Ministry of Science and Technology, and the Saigon Innovation Hub (Sihub) managed by Ho Chi Minh City’s Department of Science and Technology.
State managers say government support is needed to secure profitable niches in an increasingly competitive marketplace, particularly in the technology sector.
“Vietnam’s innovation and startup ranking is still lower than other regional countries like Singapore or Malaysia,” Sihub managing director Huynh Kim Tuoc said. “Most local startups are of a small scale, at their seed stage, with limited ability to make a breakthrough and need further incubation.”
Tuoc’s agency is now partnering with more than a dozen countries on everything from tech consulting to entrepreneur exchange programs to achieve such breakthroughs.
The mythology around successful startups folds neatly into Vietnam’s own origin myth and the way others view the nation. It’s a hard-driving history Hanoi hopes to harness and guide despite still strict state controls on expression and openness.
From a small colony with upstart guerrillas who routed France at Dien Bien Phu in 1954, to the tropical backwater that somehow overcame America’s powerful military in 1975, Vietnam is known for overcoming huge odds.
Today, its brainy programmers are aiming to code Vietnam’s way to prosperity despite a slow start. Some observers perceive Vietnam has already leapfrogged certain regional rivals, including Thailand and Indonesia, countries which Vietnam competes with for foreign direct investment (FDI).
“The world is moving fast and in order not to be left behind, Vietnam has to strive to be part of the global innovative economy,” said Nguyen Phi Van, founder of Retail & Franchise Asia, a business advisory that works across the region.
Van says she has used her own cross-border success as a platform to mentor young Vietnamese up-and-comers. That entrepreneurial vibrancy can be seen in mushrooming co-working spaces across Ho Chi Minh City, formerly Saigon, and to a lesser extent in more staid Hanoi.
The groundwork for building a so-called startup nation has been well-laid. The government gives tax breaks to new innovative companies while also offering modest capital infusions. Increasingly those incentives, observers say, are being translated into something more concrete and sustainable.
Foreign linkages have helped. The government’s so-called “Sihub 2020” strategy includes several prongs, including annual exchange programs with Canada, Germany, and South Korea; consultations on commercialization, market research, and expansion abroad; yearly events with foreign embassies that help facilitate doing business overseas; and a board of advisers that counts representatives from multinationals like Alibaba, Deloitte and Boston Consulting Group.
“We aim to facilitate the process of deepening international integration focusing on building intellectual and innovative properties,” Tuoc said.
Large Vietnamese technology companies already have taken their shows on the road. Software giant FPT, for example, is building up its business in Japan, while telecommunication giant Viettel has built networks all over Africa, from Burundi to Cameroon.
Now newer corporate names are starting to branch out, too. Ticketbox, for example, has become the country’s go-to online vendor that has set up deals with event planners and payment companies and made forays into Thailand and Singapore.
Topica, meanwhile, is expanding regionally in education services, leveraging into the fact that Vietnam beats most of its regional peers in international math and science tests. Its online tutoring and degree services have so far been rolled out in the Philippines, Indonesia, Singapore and Thailand.
Others are developing locally innovative concepts and products with an eye on eventual regional expansion. Toong, another local startup, bills itself as Vietnam’s first chain of co-working spaces, leveraging into the country’s real estate boom by offering techies an affordable place to code and collaborate.
It recently announced a partnership with the local Wink Hotels group to shake up the traditional business centers at hotels. The idea, company executives say, is to have a place where business travelers, digital nomads, and locals all can work.
“When business centers are designed with the fashionable and inspirational mindset of a co-working space,” Toong founder Do Duong said, “they will better meet the expectations of this modern working style.”
Toong’s expansion plans will start in Laos, where it is opening the smaller country’s first co-working space before expanding across the rest of Indochina.
Technology controversies and challenges in other parts of the globe, ranging from Facebook’s data sharing scandal with Cambridge Analytica, to the Big Brother-like face scanning to social scores used by China, have only amounted to cautionary tales so far for Vietnam.
That said, too much state intervention can also inhibit entrepreneurial drive. Hanoi’s main concern has been to prevent digital companies from dodging taxes and to prevent the “fake news” that has caused global ripples from stirring trouble at home.
Tight internet controls, global experience shows, can inhibit technology sector investments. But while the Southeast Asian country’s startup success is far from guaranteed, it does have a number of things going for it.
One is a huge diaspora, known as Viet Kieu, many of them driven out of the country by the Vietnam War, who settled in places like California’s Silicon Valley and are now interested in bringing their capital and knowledge back to Vietnam.
Another is a highly-educated and driven work place, with students and graduates who regularly beat rich-nation peers on the key international test rankings for science and math.
Perhaps just as important is a history of hustle: Vietnam has been home to entrepreneurs looking for ways to make a buck — or a dong — for centuries, dating to the once vibrant trading port of Hoi An to the busy shipping routes along the Mekong River.
Now as then, there is no shortage of outward-looking entrepreneurs seeking Vietnam’s next big break in the new global economy.