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VN start-ups eye Indonesia, Philippines

Update: February, 24/2015 - 08:58
Workers check smart meters at the International Technology Company of Central Power Corporation in Da Nang. Vietnamese start-ups are seeking to tap their growth potential in Indonesida and the Philippines. — VNA/VNS Photo Ngoc Ha
HA NOI  (VNS) — Indonesia and the Philippines possess enormous development potential for Vietnamese start-ups, said guest speakers at the recent Start-ups 2015 conference held in Ha Noi.

Do Tuan Anh, founder and CEO of mobile content platform distributor Appota, said Indonesia had characteristics similar to Viet Nam'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 Viet Nam. 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 had 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.

Big foreign competitors

The year 2014 has seen big foreign companies foraying into Viet Nam, such as GrabTaxi and Uber. Nguyen Tuan Anh, general manager of GrabTaxi VN, 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 viecnha.vn... 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, Viet Nam 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 Viet Nam to dominate the market. However, not all investments are effective. Pham Anh Duc, the former country head of marketing at Lazada, said the e- commerce platform had tried many marketing strategies, such as asking attractive girls in Viet Nam to upload their photos of shopping with Lazada, but it had proved unsuccessful.

Dang Viet Dung, general manager of Uber Vietnam, also experienced the same issues. However, he said the company had continued to invest in the country.

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 Viet Nam, 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."

Duc also suggested that local firms and big enterprises needed to cooperate with each other for mutual development. He said the market was 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. — VNS


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