When looking at list of top advertisers, listed companies, or companies going to go IPO, well performing local companies in Vietnam…, I see that in some particular industries, local companies do compete pretty well versus FDI. For example:
Vinamilk, Tan Hiep Phat, Saigon Beverage Co, Kinh Do
Truong Hai Auto
(Besides products/services of the above companies)
Local news portal (such as Vnexpress versus Yahoo News for instance)
Yantv channel (versus MTV or Channel V), …
I know I miss several examples. But I have long desperately been looking for an answer to this very simple question: Why/How are these local companies/products able to reach the scale they are at, maintain them in good shape and expanding? What do these companies/products share in common? Are those things teachable, transferable?
This is a tough question to ask since the people inside some of these companies cannot answer how can they pick the key patterns in their own successes and create others? Like FPT, TGDD has been struggled in their own shadows for a long time (speaking from an outsider perspective). On the other hand, companies like Masan has been kind of very successful in duplicating their successes. The FDI companies in Vietnam are weak in one critical thing: focus in Vn market. And which local companies take that to be their key advantage win. How KIA doing so well in Vietnam? Because Truong Hai. How Unilever doing in much better than P&G in Vietnam? Because Unilever is extremely more focus om this market including their early partnership thing with local company. In most of the games, who pay more attention, win. Most of successful FDI companies in Vietnam played the strategy of partnership with locals at its early day to fix this disadvantage. Many examples for this
I don’t have much time so just share my quick thoughts:
The common lession for long-lasting successful companies is they Understand very well the market (consumers, products, competitors,…) and have good Management & Executive team to set the right stragety and execute it at excellence.
For local brands who succeeded, I see the commons are: 1) The industries & products: Localization is the most important CSF –> Food & Beverage and Entertainment. Localization here is “Taste” (F&B) & “Content” (News, Music). Therefore, Local players have much better chance.
2) Except entertainment which is quickly changing, most of other successful local brands have very long history of experience in their industry/market: Vinamilk, SaigonBeer, THP, KinhDo…
3) They succeeded in their Marketing in a whole (product, price, place, promotion, people,…)
My 2 cents 😀
Support from Govt, consumer goods, excellent marketing strategy
Thanks Trieu Nguyen,
1) Localization: makes sense. But how do you say about Starbucks vs Trung Nguyen?
2) Long history – makes sense
3) Marketing – usually FDI have advantages in this area.
But let me jump quickly into my main concern, how do Vietnam startups manage their own resources to compete with very strong global players? Say Kleii vs. Dropbox for example.
1) Protectionism (direct/indirect) 2) Localisation 3) Commitment. Many international players don’t understand #3, those that do have made it big here…The ones that don’t, dip in and out of the market or struggle for ROI.
simply because there must be someone on top, among the protected ones, even in a small market. and when they are on top, they will have enough resources to maintain their position for quite a long time since they don’t have many strong rivals. just like a rich man in a small village, it’s easy for him to live.
I think Startbucks has been well adopted but not yet a success. Starbucks brings new value (“experience”) and have their own group of customers. But Trung Nguyen still owns their different customer segment. For me, they both can grow (and maintain) their market. Profitability is the question for Starbucks.
3) I don’t mean they did better than FDIs but they did good enough to maintain advantages. In their success there were hands of Vietnamese CMOs.