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Tag: Vietnam

  • Vingroup retail arm acquires Vietnamese supermarket chain

    Vingroup retail arm acquires Vietnamese supermarket chain

    VinCommerce, owner of the largest Vietnamese retail outlet chain, has bought out competitor supermarket chain Fivimart.

    The deal, whose value has not been revealed, delivers 23 Fivimart outlets to VinMart.

    VinCommerce, a member of the Vingroup business conglomerate, bought Fivimart from domestic company Nhat Nam JSC and Japanese retailer AEON, which held 70 percent and 30 percent stakes, respectively.

    VinCommerce CEO Thai Thi Thanh Hai said that her company’ vision is to have VinMart and VinMart+ (a chain of convenience stores) outlets not just in Vingroup’s apartment buildings and malls, but also in other neighborhoods.

    “The acquisition of Fivimart is part of how we make that vision a reality,” she added.

    The acquisition raises the number of VinMart stores to 100 and that of VinMart+ to 1,400.

    Hai said that VinCommerce plans to have 200 VinMart and 4,000 VinMart+ stores by 2020.

    Nhat Nam JSC sold a 30 percent stake of Fivimart, founded in 2007, to AEON in 2015.

    It had increased its number of outlets from 10 then to 23 now.

    The deal saw Fivimart’s revenue increase, by as much as 20 percent a year for some time.

    But the company has been reporting losses for the last three years, attributing them to high costs. Its losses amounted to VND60 billion ($2.58 million) in 2015, VND96 billion ($4.13 million) in 2016 and VND23 billion ($989,600) last year.

    At the end of last year, Fivimart reported an accumulated loss of almost VND200 billion ($8.6 million), with a debt of VND823 billion ($35.41 million), which was equal to the company’s total asset value.

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  • Vietnam to grow 7 percent in 2018: report

    Vietnam to grow 7 percent in 2018: report

    A report by the Standard Chartered Bank says Vietnam will top ASEAN economic growth this year.

    The report, released Friday, attributed this to manufacturing and agriculture sectors.

    Titled Vietnam: fast, not furious, growth,” it said the economy will grow by 7 percent this year.

    Other factors contributing to the high growth is the robust growth of electronics, with high foreign direct investment inflow and increasing consumption, the report said.

    It estimated next year’s growth at 6.9 percent.

    Standard Chartered economist Chidu Narayanan said that Vietnam has strong growth prospects, and an average FDI inflow of about $17 billion a year can be expected from now until 2020.

    Manufacturing is set to have a double-digit growth for the second year in a row, and agriculture will recover in the second half of this year, the report said.

    It also saw stable growth in the service sector, led by strong consumption in the country, the report said.

    The service sector, accounting for 40 percent of the economy in the first half this year, saw a 7 percent growth year-on-year growth in the same period.

    The report also said young, well-trained and low-cost human resources will play a part in boosting service growth, it said.

    Standard Chartered also forecast that the USD/VND exchange rate would reach VND23,400 by the end of this year.

    The central bank rate on Sunday was VND22,720 and VND23,310-23,390 at local banks.

    On Thursday, the World Bank upped its forecast for Vietnam’s growth by 0.3 percent to 6.8 percent.

    However, the Asian Development Bank last month lowered the growth rate from 7.1 percent to 6.8 percent, saying that the ongoing trade war between the U.S. and China could have spillover impacts on Vietnam’s export and FDI inflows.

    In the first nine months this year, Vietnam’s GDP grew by 6.98 percent, the highest nine-month growth rate since 2011.

    The economy grew by 6.81 percent last year, the highest rate in a decade.

  • Foreign investors snap up prime office space in downtown Saigon

    Foreign investors snap up prime office space in downtown Saigon

    Foreign investors currently own majority stakes in about 50 percent of high-end office buildings in downtown Saigon.

    A newly-released Savills Vietnam report said investors from Singapore, Hong Kong, Japan, South Korea, Germany and Slovakia own stakes in nine Grade A office complexes in prime Saigon locations. Asian investors hold a bigger market share than that of European companies.

    Given the scarce supply of Grade A office space in the nation’s commercial hub, current occupancy rates in this segment are above 95 percent, and monthly rents have reached their highest in nearly half a decade at $50-70 per square meter.

    This has spawned many M&A deals in this property segment. Notable among these is the purchase of a 24 percent stake in Sun Wah Tower by Japan’s Nomura Real Estate Company earlier this year. The tower is located on the Nguyen Hue walking street in District 1.

    With demand remaining high, many new real estate companies have entered the market.

    Alpha King, a Hong Kong based real estate company, announced its plan to construct a 35 storied Grade A office building on Tran Hung Dao Street in District 1, close to the Ben Thanh Market. Work on this building is expected to completed by 2020.

    Slovakian investors plan to build the Friendship Tower on Le Duan Street, also in District 1. Construction of the 21-story building began this May and is expected to finish by 2020.

    When complete, both Alpha King and Friendship Tower will respectively contribute 72,000 and 19,000 square meters of Grade A office space.

    Su Ngoc Khuong, investment director at Savills Vietnam, said there are many foreign investors in Group A projects because they are cash-rich while such projects require big investment capital.

    The limited amount land available in prime Saigon locations has also led to great interest among foreign investors looking to make profits from renting space to both foreign and local companies.

    Explaining why international corporations are boldly investing in grade A office buildings in Saigon in recent years and are likely to do so in the years to come, Khuong said that global economic integration will continue to increase demand for office space in the city, thus creating a sustainable and profitable cash flow for Group A office leasing projects.

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  • Vietnam’s latest fuel price hike spikes inflation concerns

    Vietnam’s latest fuel price hike spikes inflation concerns

    Last weekend’s increase in fuel prices has stoked fears that Vietnam might not meet its 2018 inflation target.

    The ministries of Industry and Trade and Finance upped fuel price last Friday, and prices of biofuel E5 RON 92 went by VND675 per liter to VND20,906 (90 cents) and that of RON 95 by VND577 to VND22,347 (96 cents).

    Kerosene prices went up by VND485 to VND17,086 (73 cents) per liter and that of mazut oil by VND752 to VND15,694 (67 cents) per kilogram.

    The ministries said that the increase in domestic prices followed a rise in world fuel prices of 3-5 percent over the last 15 days.

    They said that a RON 92 barrel costs $90.36, RON 95, $92.40 and diesel, $96.89.

    This was the third fuel price hike since early September. In this period, the per liter price of E5 RON 92 went up by VND1,296 (5.6 cents) in total, while that of RON 95 rose by VND1,170 (5 cents).

    While the latest increase has raised concerns among economists that Vietnam will not be able to meet its inflation target for the year, transportation businesses are worried about immediate impacts.

    Lam Dai Vinh, director of a cargo business said that he had to raise his service prices as fuel price accounts for 40 percent of his costs.

    Although his customers were not happy, Vinh said that he had no other choice.

    Economist Nguyen Tri Hieu said that the fuel price hike is one of the contributing factors to higher consumer price index (CPI).

    Costs will increase for businesses, which in turn, will lead to higher goods prices and therefore affect inflation, he said.

    “It is unlikely that Vietnam will be able to keep inflation below its target of 4 percent this year,” Hieu added.

    Echoing Hieu, Ngo Tri Long, former director of the Market Research Institute under the Ministry of Finance, said that there are “variables” in the market that could negatively affect inflation this year.

    Inflation was at 3.57 percent from January to September this year, according to the General Statistic Office.

    Experts are concerned about other factors that could lead to higher inflation, including the Vietnamese currency, dong, falling against the US dollar as a result of the U.S.-China trade war and natural disasters that often occur in the second half of the year, making business target more difficult to meet.

    Oil firms grow

    However, local oil firms are seeing robust growth because of higher oil and petrol prices.

    PetroVietnam Drilling (PVD) saw the price of its stock on the HCMC Stock Exchange (HOSE) increase by 65 percent in the last 30 days because of increasing world prices.

    From September 21 to October 6, crude oil prices went up from $78.9 to $88.81 per barrel, while that of RON 95 rose from $84.16 to $92.4 per barrel.

    PVD board chair Do Van Khanh said that when crude oil prices go above $60 per barrel, the company’s oil rigs will not have to be put on hold, and when it reaches over $70, business will become stable.

    PetroVietnam Gas also saw revenues up by 41.5 percent in the first half of this year, because oil prices rose 36 percent year-on-year in the same period.

    The price of its stock on HOSE has gone up by over 40 percent to VND120,000 ($5.15) since early July.

    Vietnam’s fuel price is set to increase even more next year when the new environmental tax approved by the National Assembly’s Standing Committee takes effect.

    Starting January 1 the tax on petrol will increase from VND3,000 (13 cents) per liter to VND4,000 (17 cents), and on diesel from VND1,500 to VND2,000.

    The hike was scheduled for next year so that the government could keep inflation under 4 percent this year.

    Although the plan met strong public opposition during its draft phase, authorities defended it, saying it would bring VND15.7 trillion ($676.8 million) each year to the government’s coffers, and help to deal with environmental issues.

    In the first half of this year, Vietnam imported 7.07 million tonnes of fuel worth $4.66 billion, up 40.4 percent in value from the same time last year, according to Vietnam Customs.

    The country exported 1.6 million tonnes of fuel, worth over $1 billion, up 41.7 percent in value.

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  • Hanoi plans second sports complex for SEA Games 2021

    Hanoi plans second sports complex for SEA Games 2021

    Capital city authorities have outlined this plan in a recent report to Prime Minister Nguyen Xuan Phuc, saying the upgrade is required because the condition of Hang Day stadium on Trinh Hoai Duc Street has severely deteriorated in recent years.

    The new complex would cost over VND6.3 trillion ($270.4 million), with funds raised from investors who operate the stadium for 50 years, the report said.

    The sports complex will be built on an area of 32,000 square meters, expanding the current area of 22,000 square meters.

    A deal for the upgrade was signed in March by domestic private firm T&T Group which manages the stadium, and French firm Bouygues Construction.

    The headquarters of the city’s Department of Planning and Investment nearby will be moved to another location to make space for the new complex.

    It will be the second international sports complex in Hanoi, after the My Dinh stadium in Nam Tu Liem District.The new stadium will have a capacity of 20,000 people, with several additional facilities including cinemas, event centers, parking basements and convenience stores.

    The Hang Day stadium is a multi-purpose facility which was first established for Hanoi’s École d’Education Physique (Hanoi’s School of Physical Education) in 1934. It was later expanded in 1958.

    In 2017, it was placed under the management of T&T Group, a corporation involved in finance, real estate and agriculture sectors.

    Hanoi will host the 31st edition of the Southeast Asian Games (SEA Games), which is scheduled to last 17 days, as well as the Para Games, for 11 days, from October to December in 2021.

    A total of 16,000 people are estimated to participate in the event, 11,000 of them athletes.

    This is the second time that Vietnam will be hosting the SEA Games after the first instance in 2003.

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  • Nokia demonstrates smart city solution for Viettel

    Nokia demonstrates smart city solution for Viettel

    Nokia has completed a demonstration of its smart city management solution IOC for Vietnamese military-run operator Viettel in support of the government’s smart city ambitions.

    Nokia demonstrated its Integrated Operations Center to the operator during a trial in Hanoi.

    The IOC solution is designed to orchestrate smart city operations providing a unified real-time management of all smart city assets and services. Using a combination of automation and analytics, the solution aims to help cities improve productivity and identify new revenue and efficiency opportunities.

    Viettel will be able to use the solution to more effectively manage traffic in Hanoi by leveraging video analytics and video management solutions.

    The Vietnamese government plans to leverage Nokia smart city technologies to address a number of common city problems such as waste management, energy management and traffic management, while enabling better utilization of resources.

    “We are honored to help Viettel conduct this important demonstration. Nokia’s IOC is a proven solution to manage smart city infrastructure efficiently. This end-to-end solution provides a real-time view of the different applications, devices and systems used in the smart city. Its integrated analytics capability further opens up new revenue opportunities for the service providers,” Nokia Global Services head of public sector practice Alexander Van Overveld said.

    “Smart cities promise to provide sustainable living, and we are committed to enabling Viettel to deliver world-class use cases and solutions to its customers.”

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  • An overview of the Vietnam’s startup scene

    An overview of the Vietnam’s startup scene

    When you think of the startup scene in Southeast Asia, places like Singapore and Indonesia may come to mind, but Vietnam is another tech ecosystem on the rise. With a domestic market of over 95 million people and an economy that has grown 6% on average in the past 10 years, the population is becoming increasingly wealthy. In addition, the talent pool in Vietnam is young and increasingly educated with a growth mentality. Costs of operating are relatively low and there is a high rate of internet penetration—approximately 50 million users in 2017.

    It will come as no surprise then that Vietnam’s startups grew 14% in the first quarter of 2017 alone, with 39,580 startups entering the market. A Topica Founder Institute report stated that startup investments in Vietnam were $291 million USD in 2017, a 42% increase from 2016. However, there are still significant hurdles to foreign investment, such as the need for a stronger legal framework to protect venture capitalists and a more streamlined licensing and tax structure. Moreover, although Vietnam has significant technological expertise as an outsourcing hub, the startup scene could benefit from greater business acumen.

    In response, Viet Kieu, or Vietnamese people who have studied or worked overseas, have taken on leadership roles, accounting for more than half of the founders out of the 26 firms that 500 Startups Vietnam has funded. Their experience with multinational corporations, understanding of cultural differences, and English proficiency have been instrumental to the success of the Vietnamese startup scene. Still, the country itself is finding ways to support its startups.

    The Government and Accelerators Are Fueling Growth

    The Vietnamese government is aggressively promoting small enterprises. In 2017, deputy prime minister Vuong Dinh Hue announced the goal of doubling the number of businesses in Vietnam from half a million to one million by 2020. Vietnam Silicon Valley is a government-sponsored initiative to provide legal and financial support to 2,600 startups over the next 10 years. Lastly, the government has relaxed visa programmes for Viet Kieu, allowed them to regain citizenship under specific conditions, and exempted them from certain foreign investment requirements.

    Tech accelerators are also pushing the growth in startups. Topica Founder Institute is a 14-week programme with an impressive track record of 60 graduate startups, $20 million USD in funds raised, and $100 million USD in valuation since 2011. VIISA, the Vietnam Innovative Startup Accelerator, is an accelerator programme and seed stage fund of $6 million USD. Launched in 2013, Vietnam Silicon Valley is a government-sponsored bootcamp that includes a $20,000 USD investment and access to 60 mentors and 52 startup alumni. Lastly, TechFest is an annual event showcase of over 200 startups, hosted by the Ministry of Science and Technology and broadcast over live television.

    With major resources behind them and a positive climate for tech businesses, here are four Vietnamese startups showing immense promise.

    Logivan

    Based out of Hanoi, Logivan is a web-based platform that connects businesses with a fleet of over 5,000 trucks, which are constantly tracked and optimised. The logistics industry makes up approximately one quarter of Vietnam’s GDP, and in 2016 logistics firms earned approximately $8.5 billion USD in revenue, owing in part to the country’s underdeveloped transport infrastructure which causes prices to rise. Logivan plans to disrupt and digitise this industry, centralise and automate logistics, increase capacity, and improve supply chain efficiency.

    In November 2017, the up-and-comer won “Best Startup” at RISE Pitch Battle, the largest technology conference in Asia, and earned a sponsorship from Uber Chief Technology Officer, Thuan Pham. In August 2018, Ethos Partners, Insignia Ventures Partners, and VinaCapital Ventures funded a $1.75 million USD Series A round to expand Logivan’s logistics services in four major economic hubs across Vietnam. The startup previously received a $600,000 investment in March 2018 from Insignia, which the company matched during its time at the Topica Founder Institute accelerator programme.

    The company was founded by Linh Pham, a former Goldman Sachs technology analyst and Cambridge University graduate who previously founded Snappetite, a time-dependent platform for deals. Pham’s vision is to reduce prices, offer transparency, and provide real-time tracking for shippers and cargo owners.

    Foody

    Founded in 2012 in Ho Chi Minh City, Foody is a gourmet media company and user-submitted review platform for any location food-related, including restaurants, bars, cafes, bars, bakeries, and resorts. The company boasts hundreds of thousands of locations, images, and comments.

    One of Vietnam’s most successful startups, Foody has received numerous rounds of funding by an array of investors. Seed and Series A funding was provided by Japanese VC firm, Cyberagent Ventures, and Pix Vine Capital. In 2017, Singapore-based consumer internet group, Sea Limited, acquired an 82% controlling interest in the company for approximately $64 million USD, the largest investment of the year. Sea, one of Southeast Asia’s first unicorns, is valued at about $3.75 billion USD and previously funded a Series B round in 2015, which was followed by a Series C investment by Tiger Global Management less than a month later.

    Like many other startup leaders in Vietnam, Foody’s founder and CEO, Dang Hoang Minh, spent time abroad. Born in Vietnam, he went to Australia for university and studied Software Engineering and Information Systems before returning to his home country. Foody has expansion plans in Indonesia and Thailand.

    Ami

    Based in Ho Chi Minh City, Ami is capitalising on Vietnam’s booming real estate market by developing a suite of software and hardware products that will help owners and property managers connect with residents and digitise their information. Based upon blockchain, internet of things, and artificial intelligence technologies, the company’s products include:

    • Ami A Biz, a supply chain logistics to verify authenticity in goods and ownership
    • Ami Citizen, a digital record of individuals used by landlords and businesses
    • Ami University, a data management tool for universities to track students and professors
    • Ami Building, a condominium management platform
    • Ami Electricity, a web-based metre tool
    • Ami Fingerprint, an online storage space for fingerprints

    In the past couple of years, the startup has had an incredible growth trajectory. It won the top prize at the 2017 TechFest competition, and subsequently received $9 million in funding from the Vietnamese real estate corporation, Binh Minh Group. Between October 2017 and April 2018, the number of tenants in its property management product tripled. With approximately 1,500 rooms in its marketplace, the company’s target for 2019 is 100,000 rooms across the entire country. Looking forward, Ami plans to create a digital community between Vietnam’s citizens and their residences, schools, and businesses.

    Tiki

    Established in March 2010 as an online book dealer, Tiki is a business-to-consumer e-commerce company and the fastest-growing retail company in Vietnam. With more than 300,000 products in 12 categories, the company posted 2016 revenue of approximately $2.7 million USD and a loss of about $7.8 million USD after high operational expenditures needed to entrench itself in the consumer marketplace.

    Despite its losses, Tiki has been an attractive investment, especially as the e-commerce sector grew by more than 25 percent in 2017. The startup received initial funding in 2013 from Seedcom, CyberAgent Venture, and Sumitomo Corporation. In 2016, the startup was valued at $45 million and subsequently received $17 million USD for a 38% stake by VNG Corporation, which specialises in digital content, online entertainment, social networking, and e-commerce. Most recently, Chinese megaretailer JD.com Inc. and South Korea’s STIC Investment funded a Series C round of $54 million USD to help consolidate Tiki’s market presence.

    As one of the top four general e-commerce retailers in Vietnam, Tiki is well-positioned to leverage the influx of foreign investments that are flooding the sector.

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  • DHL brings “Cash on Delivery” to Malaysia, Thailand, & Vietnam

    DHL brings “Cash on Delivery” to Malaysia, Thailand, & Vietnam

    E-commerce exporters in China and Australia, consumers in Malaysia, Thailand and Vietnam, and DHL eCommerce are all expecting benefits from the introduction of a Cross Border Cash-on-Delivery (COD) system by Deutsche Post DHL Group.

    The DHL e-Commerce Cash on Delivery (COD) service will allow consumers in the three Asean countries to pay in cash when they receive their online purchases.

    With more than 73 per cent of Southeast Asia’s population unable to access credit cards or internet banking services, DHL is realising that reverting to low-tech cash has the potential to see significant increases in volume (and revenue), as the regions burgeoning middle-class looks further afield for their purchases.

    “The low level of credit card penetration has forced e-commerce retailers to offer alternative modes of payment methods, such as cash on delivery, digital payments, and in some cases paying in-store”, said Charles Brewer, CEO of DHL eCommerce.

    “This opens up a huge potential by reaching out to a new group of unbanked consumers, and also meeting the needs of consumers who prefer to pay in cash.

    “With our fully-owned domestic delivery network in Malaysia, Thailand and Vietnam, we are able to deliver on-time with secure features like cash-on-delivery”, Mr Brewer added.

    The DHL eCommerce COD service allows sellers, specifically in China and Australia, to collect cash on delivery in the three Asean member states, with payment status tracking available on the DHL portal. Vendors receive their money every 14 days.

    Comprising a total solution, DHL eCommerce offers parcel pick-up, easy IT integration of the seller’s inventory into the DHL shipping process, end-to-end tracking, dynamic routing and distribution, returns management, and more.

    DHL Vietnam to truck Sendo’s local sales

    Meanwhile in Vietnam, DHL recently announced a partnership with Sendo, Vietnam’s leading local e-commerce platform.

    The deal will see the German logistics giant provide delivery to Sendo customers in Ho Chi Minh City (HCMC), Hanoi, and other primary markets in the country.

    Describing the deal as delivering benefits to everyone, Tran Hai Linh, CEO of Sendo said the international standard delivery service will boost the confidence of the country’s eCommerce shoppers, and deliver increased business to the 300,000  vendors, micro-entrepreneurs, and small businesses who sell their products online.

    To kick-start the arrangement DHL eCommerce has placed more than 300 ServicePoints in locations that provide easy access to Sendo’s sellers.

    Vendors can either drop off their parcels and receive discounts of up to 20 per cent, or arrange for a pickup by DHL for direct door-to-door delivery.
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  • HCMC office rents soar to five-year high

    HCMC office rents soar to five-year high

    High-rise buildings in downtown HCMC have seen monthly rents rocket to $70 per square meter, the highest in five years.

    A report on the Ho Chi Minh City office market in the third quarter of 2018 said the main reason for rising prices is that office supply is not able to meet current demand.

    The report, prepared by real estate service firm Jones Lang LaSalle (JLL) Vietnam, noted that in the past three months, the average gross rent of Grade A office towers rose to about $50/sq.m per month, up by nearly 7 percent over the same period last year.

    However, the highest gross rents of towers in prime locations in HCMC soared even higher to $70/sq.m per month. This marks a record high for nearly half a decade.

    Similarly, rents for Grade B rental properties located in Districts 1 and 3 of the city have surged over the $30/sq.m per month threshold.

    Rental office space occupancy rates for Grade A properties are now over 95 percent while Grade B offices have been filled up 96.5 percent.

    Office occupancy has accelerated as a result of the boom in information technology, e-commerce and co-working space industries. The demand for HCMC office space could increase by 10 percent every year for the next 10 years, according to JLL Vietnam.

    As of the third quarter of 2018, the total office space for lease in HCMC was approximately two million square meters: Grade A buildings totaled 250,000 square meters; Grade B, 900,000 square meters; and Grade C, about 810,000 square meters.

    The JLL report also forecasts that in the next three months, office rents in HCMC will continue to rise quickly due to the lack of new premises to meet the huge demand.

    Grade A and B office space will continue to be in short supply in the fourth quarter of 2018, as the next 11 buildings planned are only to be completed by 2019-2020 at the earliest, it said.

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  • VinFast sedan, SUV should cost around $50,000

    VinFast sedan, SUV should cost around $50,000

    Experts say VinFast’s sedan and SUV should cost below and just above $50,000, respectively, to be competitive in Vietnam.

    VinFast’s debut at the Paris Motor Show this month has sparked much speculation among Vietnamese customers on the selling price of the two models expected to hit the domestic market next year.

    Apart from promising “high-end cars at reasonable prices”, the automaker has not revealed any concrete price range.

    Industry analysts say vehicle prices depend on multiple factors such as dimensions, comfort, vehicle safety technology, operation, design as well as production, assembly and localization.

    However, these factors will only amount to a base number, as the final price would depend heavily on the brand’s business strategy, they add.

    The marketing and sales director for a Japanese automaker believes that reasonable price tags for the sedan and SUV should fall approximately below VND1 billion ($42,800) and VND1.2 billion ($51,300) respectively.

    Product position is crucial to any car brand, he explained. The company cannot just simply open with high prices and lower them once it achieves a desired market share. The strategy may seem workable at first glance, but runs the potential risks of previous customers feeling that they have lost something, and therefore, turn their backs on the brand.

    He also believed that LUX A2.0 and LUX SA2.0 are not VinFast’s ‘trump cards’. Initially, the manufacturer may accept not to prioritize profits. Attention and acceptance of the brand, especially for new products, would in fact be the most important factors when entering a new market.

    The director of a distributor of imported German cars said he also believes reasonable prices should hover around the VND1 billion mark. If the price is set between VND1.4-1.6 billion ($59,900-68,500) as per, the company will be creating obstacles for itself, as VinFast is still very young.

    “Even if VinFast is 5 to 10 years ahead of other companies, it would still need just as much time or longer to establish a brand and build customer trust,” he said. “The initial ‘national pride’ and excitement for novel products will inevitably cool down over time.”

    Moreover, he said, it would take at several years after the models hit the road to verify their quality and durability, not the mention the fact that technology and equipment for the cars have not yet been finalised.

    Bui Sinh, who has held senior positions with several luxury car brands in Vietnam, praised VinFast’s ‘clever’ strategy to start with high-end models. “Once you make a good impression with a mid-range or above product, making small cars will be easy”.

    VinFast had not done the opposite, as in reality many automakers specialising in affordable cars faced much difficulties expanding upwards into luxury segments, he added.

    However, Bui Sinh reminds that caution must be taken with a low pricing strategy. If the market response does not meet the company’s expectations, the company would be locked into covering losses over the next few years.

    On specialist said: “If customers are enthusiastic over a VND1 billion car, selling smaller models at VND300-400 million ($12,800-17,100) will be much easier.”

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  • Competition heats up in third-party merchandise, food delivery market

    Competition heats up in third-party merchandise, food delivery market

    With huge demand driving Vietnam’s merchandise, food delivery market, investors are keen on a piece of the action.

    After operating for a year in HCMC Lalamove, a logistics company headquartered in Hong-Kong specialising in same-day delivery and courier services, came to Hanoi Wednesday.

    A day earlier Grab had released its food delivery app, GrabFood, after a period of testing.

    The food delivery market looks extremely lucrative, and businesses want to cash in, industry insiders said.

    “By 2020 Vietnam will have over 50 million customers shopping online,” Phillippe Rambaud, head of Lalamove’s Hanoi market development division, said. “This will be a large market for on-demand delivery services.”

    Nguyen Duc Loi, CEO of Lalamove Vietnam, said the firm aims to have 10,000 contracted drivers on a permanent basis.

    Grab Vietnam CEO Jerry Lim claimed GrabFood’s growth has been very impressive, with the number of its contractors increasing eight-fold in just a month of testing in Hanoi.

    “GrabFood is the next major step for Grab in becoming a super-app which meets all the essential needs of people’s daily lives,” he said.

    “The way each individual service interconnects and complements each other allows us to build an ecosystem that delivers real benefits not only to our customers and drivers but also to our business partners and vendors,” Jerry Lim added.

    Go Viet has launched Go Send as a complementary service, but also aims to develop it into a super-app like Grab. It also plans to launch a food delivery service later this year.

    Last year Go Send delivered over 800,000 fashion products and handled 2.3 million food orders for 203,000 small-scale online vendors.

    But despite their major success in the online delivery market, the three entrants have to face the difficulties that come when competing with established incumbents popular in the market such as Delivery Now (Foody), and Vietnammm.

    Besides, many of their drivers are reluctant to make advance payments to vendors and take on the risk of wrong delivery and customers not accepting goods.

    Lalamove for instance has a policy of having drivers make advance payments for food/goods of up to VND3 million ($130.4) in HCMC and VND2 million ($86.95) in Hanoi.

    Many vendors still do not focus on delivery through third party applications as an important income stream.

    A representative of a milk tea chain in Hanoi told VnExpress that revenues still come mainly from direct sales and phone orders as well as the chain’s own digital app.

    Its response times are still much faster than using third party apps, he said.

    As more and more providers of delivery services emerge, he believed the most important factors vendors would look for are effective support systems and prices.

    The intense competition means consumers will benefit increasingly from the variety of choices and the discounts and improvements in service competitors constantly make to gain market share.

    Companies like Grab, Go Viet and Lalamove uniformly claim competition is good for the market, consumers and the businesses themselves.

    One of them said the Vietnamese market would see even more competitors in future.

    Analysts said this boom would soon spark a struggle between digital delivery platforms and traditional services just like the ongoing between Uber and Grab and traditional cabs.

    Do Xuan Quang, deputy head of Vietnam Logistics Business Association, said Vietnam was the fastest growing e-commerce market in Southeast Asia, and along with the strong growth of the logistics industry at 15-20 percent, a similar movement in the delivery market is not surprising.

    In 5-10 years, the delivery market in Vietnam will be valued at around $10 billion, he said.

    U.K.-based market research firm EuroMonitor International values the food delivery market in Vietnam at around $33 million this year and at more than $38 million in 2020.

    It also puts the annual growth rate of the market at 11 percent.

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  • Asian Coffee : Vietnam quiet despite recovery in global prices; Indonesia premiums tighten

    Asian Coffee : Vietnam quiet despite recovery in global prices; Indonesia premiums tighten

    Global coffee prices recovered but markets were subdued in Vietnam and Indonesia due to low stocks in both the countries, traders said.

    In Indonesia’s Lampung province, exporters quoted premiums for the grade 4 defect 80 robusta at $25 to $30 premium a ton to London’s November and December contracts, down from last week’s $50 premium, a trader said.

    Another trader quoted the beans at $70 premiums to November and January contracts.

    “Market prices rose in the past week, we have to cut premiums,” one of the traders said, adding that only a few transactions took place this week due to weaker demand and low stock after Indonesia’s main harvest ended last month.

    Indonesia coffee exports from the province of Lampung in Sumatra in September plunged 51 percent from the same month last year to 10,058 tons, official data showed, with lower production this year and higher domestic demand contributed to the drop in exports.

    “Global buyers have shifted to Vietnam because its cheaper there,” the trader added.

    In Vietnam, exporters have started offering beans from the upcoming harvest since stocks from the past crop were running low, while farmers are still not satisfied with the price despite a recovery in global prices, traders said.

    Farmers in the Central Highlands, Vietnam’s largest coffee growing area, offered coffee at VND34,000-34,400 ($1.46-$1.47) per kg, up from VND32,600-32,800 last week, but still below a 6-year-high level of more than VND47,000 hit last year.

    “The green bean (prices) are too low and the cost is increasing. (In) some countries, the running cost is even higher than the price,” said Luong Van Tu, chairman of the Vietnam Coffee and Cocoa Association.

    Regardless, Vietnam in the 2017/2018 crop exported an estimated 1.8 million tons of coffee, up 12.95 percent from the previous crop, while January-September exports grew 19.6 percent annually to 1.46 million tons, government data showed.

    Exporters offered Vietnam’s 5-percent black and broken grade 2 robusta at $30-$40 discount per ton to London’s November and January contracts, same as last week, but importers asked for a larger discount of $50, traders said.

    Extended rains in Vietnam’s coffee growing region have raised concerns about the quality and timing of the upcoming harvest, which could start as early as next month.

    Scattered showers are expected over the next week in the Central Highlands region, the National Centre for Hydro-Meteorological Forecasting agency said on its website.

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  • Experts on the fence over first made-in-Vietnam cars

    Experts on the fence over first made-in-Vietnam cars

    Several experts and industry insiders are advising caution over judging carmaker Vinfast too highly, too soon.

    VinFast, a unit of Vingroup JSC (VIC.HM), Vietnam’s largest business conglomerate, officially showcased its first two vehicles: the LUX A2.0 sedan and the LUX SA2.0 SUV at the Paris Motor Show on Tuesday.

    The new carmaker impressed everyone by doing this just one year after kicking off production in northern Hai Phong City. It received much praise for completing design and development of its models, as well as putting together a production line at an astonishing pace.

    Supporters pointed to the company’s ‘daring’ strategy of gaining a head start by taking a shortcut, by signing agreements with a strong list of global partners.

    The company uses Siemens’ plant construction expertise; BMW’s intellectual property; Pininfarina’s design; and Bosch for hardware, software and service solutions.

    Experts say that VinFast’s car falls into the mid-luxury segment. Automobile expert Le Anh believes the sedan can sell for VND1.4 billion ($60,869) and the SUV for VND1.8 billion ($78,260).

    However, amidst all the praise and euphoria, many people have advised caution in assessing VinFast’s progress.

    An expert with many years of experience in the luxury car sector in Hanoi said: “Initial images and figures do not say much about the product line’s final performance. The commercial version of the models have not even been completed yet.”

    “The fact that VinFast could develop the models so quickly is easy to understand given that it has bought most of the required technology, designs and engineering from other carmakers,” the expert said.

    This observation matches that of Bill Russo, head of Shanghai-based consultancy Automobility Ltd and a former Chrysler executive.

    “The key question is why the world needs yet another car brand in an era when hardware is commoditising. The fact that they have outsourced design and manufacturing and are relying on foreign R&D tells me they are following a traditional path that may not be competitive in an era of digital mobility services,” Russo said.

    Meanwhile, a former Vietnamese engineer who has worked for Volkswagen in Germany for many years, said Vietnamese people have the right to be proud at the birth of a new Vietnamese brand.

    “But what comes next? Quality, reliability and price are the real problems that VinFast needs to overcome when approaching customers,” he added.

    Bui Sinh, who has many years of experience with other luxury car brands, said that there were no grounds to trust the two new models.

    “The information provided is one-dimensional, and there is no actual car to verify these claims. Only when we know the car works, should we move on to analyse the quality of the car and the calibre of its technology.”

    Sinh also pointed out that if VinFast were to position the first two models in the luxury car market segment, ‘national pride’ would just form part of the brand, and have little effect in the actual selling.  For wealthy customers used to driving luxury or mid-luxury vehicles, patriotism cannot replace actual function, he said.

    Other experts have also said people should be careful in assessing VinFast’s progress. Previously, two other automobile makers in Vietnam– state-owned VEAM Motor and private venture Vinaxuki– have flopped.

    Bui Ngoc Huyen, chairman of Vinaxuki, which tried to produce a domestic car but ceased production just before its first car was to be officially released in 2012, said VinGroup’s deep pockets would help, but warned that building a brand takes time.

    “You have to move from producing small and cheap cars to luxury ones,” he said. “It will take several years for a new carmaker to fine tune its products and win the confidence of consumers. It will take between 10 and 20 years.”

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  • Amazon, Alibaba seek Vietnamese sellers

    Amazon, Alibaba seek Vietnamese sellers

    E-commerce giants Amazon and Alibaba are looking to sign up more Vietnamese sellers for their online marketplace.

    U.S.-owned Amazon last month collaborated with the Vietnam E-commerce Association (VECOM) to organize a workshop called Selling Globally on Amazon in Hanoi and Ho Chi Minh City.

    The events attracted over 2,000 people each.

    Since March Amazon has been partnering with VECOM to host a number of training courses and workshops for sellers.

    It has launched a website and an official Facebook fanpage in Vietnamese to connect with individuals and businesses who want to sell their products on its network.

    Park Joonmo, CEO of Amazon Global Selling Korea and Southeast Asia, said there is an increasing number of Vietnamese sellers on Amazon, including manufacturers, brand owners and startups.

    They have started selling globally through Amazon to reach millions of potential customers all over the world, he said in a statement.

    Around 200 Vietnamese businesses are selling on Amazon, according to the Ministry of Industry and Trade.

    Experts said this number could rise greatly since Vietnam is a major exporter of items such as agriculture produce, foods and furniture.

    China’s Alibaba has also been looking for Vietnamese sellers on its AliExpress website since July.

    AliExpress executive Yang Ninh said Vietnam is one of the most diverse manufacturers in the world, and its growth makes it an important destination for Alibaba.

    AliExpress wants to open the door for Vietnam to over 200 markets around the world, he added.

    Vietnam’s e-commerce market grew by 25 percent last year, according to VECOM, which forecasts this rate to continue until 2020.

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  • European businesses repose confidence in Vietnam

    European businesses repose confidence in Vietnam

    European companies’ business sentiment in Vietnam is at the highest level in 18 months, EuroCham’s Business Climate Index shows.

    The latest index (BCI), which the business group released Wednesday, is at just two points below the all-time high achieved in the third quarter of 2016.

    This growing confidence in Vietnam’s trade and investment environment is reflected in a six-point jump in the second quarter of this year against the first quarter.

    The BCI shows Vietnam is open for business as an attractive trade and investment destination, Nicolas Audier, co-chairman of EuroCham, said in a press release.

    “The EU-Vietnam Free Trade Agreement (EVFTA) should be ratified soon. On the cusp of this historic deal, which will boost trade and investment on both sides, we hope this positive message from EuroCham and its members will inspire the government to continue opening its markets to foreign investment and improving its trade and investment environment.”

    EuroCham members reported an optimistic outlook on a range of issues, from their own investment and profit projections to workforce levels and Vietnam’s economic outlook.

    Over 70 percent reported a positive situation at their enterprise in the last quarter, with 62 percent describing it as ‘good’ and 12 percent as ‘excellent’.

    Looking ahead to the next quarter, 64 percent believed their business situation would be ‘good’ while 15 percent said ‘excellent’.

    EuroCham members are also optimistic about Vietnam’s economic outlook, with 57 percent predicting ‘stabilization and improvement’ in the next quarter and 34 percent believing it would remain unchanged.

    Fifty seven percent believed their business would see either a ‘significant’ or ‘moderate’ increase in staff next quarter, while 61 percent expected either a ‘significant’ or ‘moderate’ increase in investment.

    Over three-quarters of members (76 percent) believed orders or revenues would see a ‘significant’ or ‘moderate’ increase in the third quarter.

    For the first time, EuroCham asked members for their views on corporate social responsibility (CSR). 87 percent said CSR is important to their business operations in Vietnam. The main motivations for CSR included ‘brand reputation’ and ‘customer/environmental concern’.

    Vietnam’s GDP grew by 6.98 percent between January and September, the highest nine-month rate since 2011. The economy grew by 6.81 percent last year, the highest in a decade.

    The foreign sector’s exports in the first eight months of the year were worth $110.3 billion, up 13.4 percent year-on-year and accounting for 71 percent of the country’s total exports of $155.4 billion.

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