Vietnam start-ups eye Indonesia, Philippines

Indonesia and the Philippines possess enormous development potential for Vietnamese start-ups, said guest speakers at the recent Start-ups 2015 conference held in Hanoi.
Indonesia and the Philippines possess enormous development potential for Vietnamese start-ups, said guest speakers at the recent Start-ups 2015 conference held in Hanoi.

Do Tuan Anh, founder and CEO of mobile content platform distributor Appota, said Indonesia has characteristics similar to Vietnam's from a few years ago, but its market had seen strong growth in recent years.

"Internet infrastructure there is less developed. Two years ago, its internet speeds were as slow as those provided by a dial-up connection. Digital content providers have to depend on infrastructure, so they cannot improve the quality of content," he stated.

Appota received a series B funding from Singapore-based and Japanese investors last year to expand its operations in the region. It currently has branches in Singapore and Indonesia, with about two million users in Indonesia.

Anh said the company is yet to turn a profit from the Indonesian market, and its biggest difficulty has been its inability to allow its initial investment to reap returns of millions of dollars.

He also listed three important factors that start-up firms should consider while entering the international market, which are its language and culture, laws, and finding local partners.

"Start-up businesses should market their products outside Vietnam. Who knows, maybe your business model is not appropriate for the local market, but is suitable for other countries", Anh noted.

Nguyen Khanh Trinh, founder and CEO of CleverAds, said domestic firms should gather data from foreign markets before they take the decision to invest in them. He added that when entering Indonesia and the Philippines, online advertising provider CleverAds used Google's data to gather more knowledge about these markets.

"Like Vietnamese, Indonesians and Filipinos are also xenophiles. Therefore, when a good business model appears in their country, and is deemed appropriate by their national yardsticks, customers will be willing to pay for the product," Trinh said.

The year 2014 saw big foreign companies foraying into Vietnam, such as GrabTaxi and Uber. Nguyen Tuan Anh, General Manager of GrabTaxi Vietnam, said there was fierce competition among taxi-booking applications (apps) last year, but in 2015, some new service apps will emerge.

"Recently we have seen the launch of household service apps, including Taske and There are a lot of niche markets," he said, suggesting that start-ups also follow the trend.

Anh also emphasised on the importance of doing market research. "In order to dominate the market, conducting research is very important. However, Vietnam is not good in this field.

Failures are sometimes opportunities because if we do not try, we will not know if it is right or not," he said.

The guest speakers also agreed that big international companies, such as Uber, GrabTaxi and Lazada invest a lot in Vietnam to dominate the market. However, not all investments are effective.

According to Tran Hai Linh, CEO of e-commerce firm Sendo, a strong point of big international companies is that they have lots of money. He pointed out that Lazada's budget for one month equalled Sendo's budget for a few years.

"Companies often achieve success abroad. While entering Vietnam, they know how to invest and they undertake a lot of tests, which Sendo has not done before," he said.

"However, it is easy for them to use money without worrying too much about the returns. Besides, foreign companies are subject to the management of its leaders based abroad, so the decision-making process takes time."

Pham Anh Duc, former country head of marketing at Lazada, suggested that local firms and big enterprises need to cooperate with each other for mutual development. He said the market is large enough, and these companies need to satisfy their customers, not their enemies.

"A big company cannot do everything, so there is a need for an ecosystem. This means that all sorts of enterprises have the opportunity to earn money," he said.-VNA

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