On April 30, 1975, the Vietnam War ended when tanks from Communist North Vietnam burst through the wrought-iron gates of Saigon’s Independence Palace, the home and seat of the president of capitalist South Vietnam. Forty-one years later, Vietnam is still ruled by the Communist Party, and the city bears the name of Communist revolutionary leader Ho Chi Minh, but capitalism once again reigned inside the Independence Palace — also known as the Reunification Palace — last week, when it hosted the Echelon Vietnam event devoted to tech entrepreneurship.
The tanks that signalled the end of the Vietnam War are now mounted in the grounds of Ho Chi Minh City's Reunification Palace, which last week hosted the Echelon Vietnam tech conference. Photo: Sk.ru.
Those same tanks that signalled the victory of the North are still mounted in the tropical parkland that surrounds the palace, but the government has thrown its support behind the new wave of tech entrepreneurs, recognising a global trend that can only help the economy.
“Everybody in Southeast Asia realises that there’s a lot of opportunities here on the Vietnamese market,” Thaddeus Koh, co-founder of e27.co, Asia’s biggest tech media platform that organises the Echelon events, told sk.ru on the sidelines of Echelon Vietnam, which took place on November 18-19.
“It’s quite large, probably the second in size after Indonesia, depending on how you define it. But everyone has difficulty coming in here, and this is the part that we want to solve, as much as we can, so that the market is more open for foreign startups,” said Koh, who is based in Singapore.
Some foreign startups have already successfully navigated their way onto the Vietnamese market. Among the companies exhibiting their products at Echelon, which brings together tech entrepreneurs and investors, were two residents of the Skolkovo Foundation, the event’s official innovation partner.
Russian pioneers
3D Tek, a resident of Skolkovo’s IT cluster, makes projection screens using optical interpolation technology that allows them to eliminate digital pixel grids, producing a better picture. Its target markets are home cinemas, museums and exhibitions, and it opened a Vietnamese office in Ho Chi Minh, Vietnam’s tech centre, about a year ago.
Yaroslav Kuchin, technical director of 3D Tek in Asia, admitted there were difficulties involved in operating on the Vietnamese market.
“It’s not possible to work as we are used to doing in Russia — it doesn’t work here,” he told sk.ru.
“The main difference is that it’s very difficult to promote a product via the internet or other mass media. Here, sales are based on personal contacts,” said Kuchin.
Nevertheless, the company’s Ho Chi Minh office, which consists of two Russian team members and one Vietnamese, has already seen success, making sales in both Vietnam and Thailand, 3D Tek’s Moscow-based managing director Andrey Komolov told sk.ru.
The company, which was set up three-and-a-half years ago, has plans to expand across Asia, he said, as well conquering the Russian market with its screens, which Komolov says are 10 times cheaper and better quality than projection screens currently imported into Russia.
Representatives of ibox (left) and 3D Tek (right) displaying their products at Skolkovo's stand at Echelon. Photo: Sk.ru.
For ibox, whose product allows businesses and mobile merchants to process card payments via a mobile terminal connected to a smartphone, the Vietnamese market has huge potential. The Vietnamese office, which was established nearly three years ago, has so far been focusing on big companies such as large taxi firms and retail chains to consolidate its resources, but from next spring, plans to focus on Vietnam’s vast SME segment, the office’s CEO Do Nguyen Ai told sk.ru.
“Once we have enough resources, we will be reaching out to mom and pop stores, or single independent fast food sellers on the street — and there are a million of them in Vietnam, so there’s great potential,” he said.
Twin tech towns
Moscow and its twin Vietnamese city Ho Chi Minh might be thousands of kilometres apart, but their innovations and tech start up scenes have a lot in common.
Like Vietnam, Russia has a communist past (the T54 tanks that stormed the palace in 1975 were made by the Soviet Union) and has battled to overcome the negative connotations and suspicion of entrepreneurs engendered by decades of communist rule. But after a relatively late start, both countries’ tech startup ecosystems are actively developing. Both states’ tech startups, investors agree, have huge potential, and both have government support. In a fireside chat at Echelon on Saturday, Alina Suslova, head of special projects at the Skolkovo Foundation, outlined how the Russian government is supporting innovative tech startups through the foundation.
Vietnam and its hi-tech centre Ho Chi Minh City have seen a whole slew of government measures recently aimed at boosting startups, of which there are currently an estimated 1,800 operating across the country.
In October, Ho Chi Minh City’s science and technology department announced plans to set up a startup support fund worth 1 trillion Vietnamese dong: nearly $45 million, with the goal of funding 2,000 early-stage startups in various sectors over the next five years. Each startup can obtain maximum funding of $90,000, Vietnamese newspaper VnExpress International reported.
Ho Chi Minh City Mayor Nguyen Thanh Phong said the city would also set up an entrepreneurship centre to connect startups with investment funds, the newspaper reported.
The same month, a new accelerator, Vietnam Innovative Startup Accelerator (VIISA), was launched in Vietnam in partnership with major corporations. It will invest $8 million to build global-ready startups in Vietnam. More than 20 foreign venture funds are present in the country, according to local media.
Communist revolutionary leader Ho Chi Minh's portrait watches over the city's main post office, but the Vietnamese government is offering its support to budding tech entrepreneurs. Photo: Wikimedia Commons.
Just a few days before Echelon took place in Ho Chi Minh, the Vietnamese capital Hanoi hosted the two-day Techfest 2016, organised by the Science and Technology Ministry. At the event, a national startup ecosystem executive board was launched, including representatives of government and ministries, as well both local and international investors.
Like Russia, Vietnamese ministers have also recognized that bureaucracy and regulations are a hindrance to entrepreneurs.
Deputy Prime Minister Vu Duc Dam told the audience at Techfest that he hopes to capitalize on the strong spirit of entrepreneurship in Vietnam to help it become a “startup nation” in its own right, and said a transparent and fair business environment was essential, the international tech blog Geektime reported.
ibox Vietnam’s CEO Ai said that the government hosted a lot of events matching investors with startups, which he said were useful.
e27’s cofounder Koh said the government’s interest was “at least a good start,” though he said there was much room for improvement.
“Throughout the entire Southeast Asia region, all the governments are gearing up new policies for innovation and technology and preparing the way for investments to come in especially. It’s too early to say whether it’s working, but it’s something we’d like to discuss next year at the conference, because we’ll have seen 12 months of impact on the local communities,” Koh told sk.ru.
Hungry for change
Skolkovo's head of special projects, Alina Suslova, takes part in a fireside chat with e27 editor Kevin McSpadden. Photo: Sk.ru.
Koh says that while Vietnam currently lags behind its neighbours in terms of the development of its tech startup scene, the country is well on track to catch up in the near future.
“We did our first Thai event in Bangkok in 2012, four years ago, and today what we have at Echelon Vietnam is exactly what we saw back then at Echelon in Bangkok,” he told sk.ru.
e27 holds an annual startup search across 14 major Asia-Pacific cities, after which the winners of the regional stages are invited to present their projects at Echelon Asia summit in Singapore. The events across Asia attract representatives of government agencies and major companies looking to work with startups, as well as entrepreneurs and investors. Ten Skolkovo startups showcased their projects at Echelon Asia 2015.
“Echelon is a Singapore brand, English-based, so it’s perceived as international. So as a local person in Thailand or Vietnam, [people think:] ‘maybe it’s not for me,’” said Koh, explaining that most of the people who came to Thailand’s first event were people who had studied or worked abroad.
“They came to the conference because they can converse in English. We see the same thing here today. Because Echelon in Thailand is so successful now, we have managed to connect Thai-speaking people, they come to the conference to pitch their company to the audience, and we will see that happen here in Vietnam.
“It’s a matter of time to connect these more international guys in the English-speaking community down to the roots. It will take some time, but this economy is growing so fast: people here are aggressive and hungry, so we think this process will be shorter compared to Bangkok. In Bangkok I would say it took us maybe two years. By next year we hope to see a large element of this crowd coming to the conference,” said Koh.