Statistics speaks of the uniqueness of the Vietnamese economy. In a country of 90 million people, the unemployment rate is only 2.2%. 70% of citizens have access to the Internet. Most users are between 25 and 34 years old.
According to experts, the e-commerce sector in Vietnam in the next six years will grow 10 times and reach $ 50 billion. Taking into account one of the highest GDP growth rates in the world (about 6% per year), Vietnam is becoming one of the most attractive countries for the expansion of foreign, including Russian and European, business. But for the successful promotion of projects in this country, it is necessary to take into account a number of its specific features.
Digital Vietnam: everything is just beginning
In 2019, Vietnam was ranked 57th in the Global Connectivity Index, which measures the country's readiness to transition to a digital economy. In terms of readiness for the use of cloud technologies, Vietnam still ranks 14th among the countries of the Asia-Pacific region. The cloud services market in Vietnam is projected to grow from $ 165 million in 2019 to $ 291 million by 2024.
The COVID-19 pandemic has dramatically accelerated the digital transformation of both B2B and B2C sectors of the country's economy, affecting not only large enterprises, but also small and medium-sized businesses. Today, it is in demand for collaboration solutions, software for retail management and customer service, HR, marketing, logistics and cybersecurity. The market will remain far from saturation for a long time.
Local specifics: blackouts, cybersecurity and native language
Audrey Ottevanger reports
Despite the almost total Internet literacy (on average, the Vietnamese spend 3 to 5 hours a day online, using mainly mobile Internet), they are quite calm about frequent local power outages. Vietnam is ranked 77th in the world for energy efficiency, according to the Global Energy Architecture Performance Index.
Another factor limiting internet business in Vietnam is local legislation. For example, the personal data of Vietnamese citizens cannot be stored outside the country, so Internet companies entering the Vietnamese market should acquire local servers.
As in most Asian countries pursuing a policy of protectionism, Vietnam has withholding taxes that prevent foreign companies from transferring funds abroad. This should also be taken into account when opening a business in this country.
Finally, an important factor that can seriously affect the work of a foreign company in Vietnam is the peculiarities of the local mentality. Vietnamese are far from always able and willing to speak English (in local schools they still teach mainly French), preferring to speak their native language. This applies to both potential clients and employees.
In addition, the unwritten rules of local management differ from those in Europe. For example, in Vietnam, the system of rewards and fines does not always work: emotionally built relationships and a general benevolent atmosphere are important here. And teamwork is more applicable at the lower levels of the corporate hierarchy. The higher the position, the more important is unity of command.
After Quarantine: Payments Go Online
The most important factor determining the success of a business in any country is understanding the payment behavior of its residents. The payment landscape in Vietnam is not only different from that in Europe. Vietnamese are accustomed to paying for purchases and services differently from other countries in the Asia-Pacific region. Moreover, this applies to both the B2B and B2C sectors of the economy.
This difference was especially pronounced this year, during and after the quarantine restrictions, which caused the rapid growth of electronic payments not only in Vietnam, but throughout the world.
Cashless payments account for 20% of the total number of transactions in Vietnam. In recent months, due to the pandemic, the popularity of online payments has skyrocketed. According to official data, the total number of non-cash payment transactions through the State Bank system increased by 76% compared to the same period last year.
At the same time, mobile payments through local alternative payment systems such as Momo, Moca and ZaloPay are especially popular. They account forup to 90% of mobile payments in the country. As for non-mobile local payment methods, without which there is nowhere, these are online banking, local ATM cards, Viettel Post & Vietnam Post, and Nganluong.
The growth of payment transactions using the QR code of the local VNPAY system in February 2020 increased to 600%. At the same time, the Visa payment system announced the opening by 2023 of 300 thousand new card acceptance points in Vietnam in collaboration with local banks.
How to get started in the Vietnamese market
Here are useful life hacks from Anton Mezentsev, global business development and e-commerce manager at Softline and Ivan Osipov, head of the international payment systems division. The company has been operating in the Vietnamese market for several years. Perhaps these tips will save you from unnecessary problems or misunderstandings of your Vietnamese clients and partners.
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- Localize customer support. A prerequisite for working in Vietnam is the organization of user support in their native language. But that's not all. Vietnamese users often prefer not to contact technical support, but to call directly to the mobile phone of the branch director or other manager, finding contacts on the Internet. This feature of proactive consumer behavior must be accepted as a given.