Due to the Vietnamese addiction to Vietnam as well as lack of resources, Vietnamese companies have a hard time going regional or global. Photo: iStock
In order to understand Vietnam’s potential in the tech space, we must understand its history. No other country in SouthEast Asia experienced as large an outflow of people in the 1970s. Although Vietnam ranks as the 14th most populous country in the world with 93 million people, quickly approaching 100 million, it is worth noting that there are four million people of Vietnamese descent living outside of Vietnam’s borders. Most of these people reside in California, home to Hollywood and Silicon Valley. So although Vietnam has a much smaller population than giants like India and China, its presence is felt heavily in places like Milpitas and Orange County. And this is manifested in the likes of Uber’s chief technology officer and the ranks of engineers from Facebook to Google of Vietnamese origin. Like any early Asian immigrant community, the Asian American first generation emphasized stable jobs like dentists, doctors, and engineers.
With that, Vietnamese America was able to grow up with the tech industry, many of that first generation living through the boom and bust of the dotcom era. This begs the obvious question, is Vietnam able to leverage this at home?
With the case of the Indian diaspora in Silicon Valley, there’s a confluence of synergies that has led to a strong expatriate community. Putting aside shared bonds like family values, religion, and business practices, some would argue that the key is the “selection story”(goo.gl/bJxC4g). In short, excelling, middle-class Indians make it to the Valley. It is no wonder then that they rank amongst the most successful diaspora in the US.
Vietnamese, on the other hand, do not have such synergies. Many of the previous generation are political refugees with a troubled relationship with their home country. They fled from all walks of life. And their bent towards stable jobs like lawyers, doctors, dentists, and engineers as opposed to business ones looms over their development story. Although this has shifted in the new generation (X to millennial), it still has a lasting impact. And the new incoming generation of Vietnam (representing a more millennial population) has little or no connection to the refugee population. There is little integration since both the previous and current generations have not much in common with each other.
All of the above has rippling effects on the diaspora relationship with Vietnam. The majority of the diaspora, like many immigrant communities, is hardly connected to Vietnam. It is a foreign country to them. Within the older generation, although many of them are engineers, they cannot aid young Vietnamese engineers because the cultural and logistical gap is too large. In this sense, Vietnam rarely taps into its obvious connection to Silicon Valley.
This means that Vietnam must find its own destiny while rare flashes of connection make themselves known. Companies like Misfit Wearables, with headquarters in the Valley and development houses in Vietnam, are increasingly common, but success at the Misfit level is rare.
Indeed, when you look at Vietnam’s true successes, you will see a dearth of home-grown successes. VNG, MobileWorld, VietJet, Huy Vietnam, and more, underline the potential of the 93 million population and the considerable low-hanging fruit in a developing nation. These companies spanning omnichannel retail to regional airline to online gaming have all attained near unicorn status just serving their domestic market. These companies are founded and run mainly by Vietnamese leadership who know how to navigate the Vietnamese climate and ecosystem.
This picture begs two main questions: 1) Is Vietnam available to outsiders to win? 2) What will new Vietnamese companies look like moving forward?
For the former, the answer is no, not unless you’re a behemoth like Facebook or Unilever, a case where you have so much financial power and resources that you can bring the Vietnamese markets and incumbents to their knees (and even then, you may struggle). Vietnam isn’t impenetrable in the same way as the rest of the South-East Asian region, since it lacks an ecosystem of multibillion-dollar family offices. But it makes up for it with a regulatory climate and cutthroat business industry that is hard to navigate. This is also why you are likely to see many new large unicorn-aspiring consumer companies in Vietnam that come out of the woodwork without major family connections, including in the tech sector.
To the latter question, young Vietnamese companies must learn to adapt much like their virtual uncles and aunts. If young Vietnamese founders (many of them fresh graduates from university or young corporates) do not have the relationship-building acumen and experience to build a company, they will struggle. If you look closely at Vietnamese start-ups from the seed to Series B stages, these companies are heavily focused on Vietnam. There is so much low-hanging fruit in a country that ranks as 14th largest in the world. But by following what works, they have handicapped themselves. Although they can follow the formula of the older, larger Vietnamese companies—a generation-old script. But that script does not work in a new Vietnam and a new competitive tech world, and especially a region-focused investment climate.
Due to the Vietnamese addiction to Vietnam, Vietnamese companies have a hard time going regional or global. And even if they did, they lack the resources to do so. They may have a strong technical edge, compared to the other countries in South-East Asia, but more often than not, you will find Indonesian or Thai companies hiring them as well. So that edge can also easily be exported and squandered away.
So what makes Vietnam so appealing? You could argue that the rest of South-East Asia is less appealing for the tech sector. Many of the larger countries are dominated by family offices that are the gatekeepers to their countries and industries. Some countries, like Myanmar and Cambodia, are far too underdeveloped to be significant. And Singapore is oversaturated. Therefore, Vietnam appears to be in a stable place with a more open market.
But what people may not realize is just how Vietnamese Vietnam is.
Anh-Minh Do is the director of communications at Vertex Ventures and a regular commentator on the technology industry
This is part of the Young Asian Writers series, a Mint initiative to bring young voices from different Asian countries to the fore.