Large enterprises - key role for startup businesses

Government policies and large enterprises both play an important role in helping startup businesses acquire capital and technology, and linking them into production chains to jointly penetrate the market.

In recent years, startups have strongly developed in Vietnam and received a lot of special attention from the government.

Ho Chi Minh City has developed the Saigon Innovation Hub (SIHUB) as an official connection portal between Vietnam and the world’s innovative start-up support ecosystem, hoping to make Vietnam a start-up hub of Southeast Asia.

Many Vietnamese startup businesses have had early success bringing their products to market, participating in the production chain of large enterprises, and attracting domestic and foreign investment capital.

Tran Anh Tuan, CEO and Member of the Board of Directors of the Sao Bac Dau Technologies Corporation, which invested in 5 startup projects last year, said a startup business lacks lots of things – capital, technology, management experience, opportunities to take part in production chains, and markets.

Of many basic startup elements, Vietnamese startup businesses have only an idea and a staff full of energy.

Tuan said many startup businesses want support from a larger enterprise but worry about being taken over.

“Once a startup business gains the support of a large company, it will have an advisor, an investor, and a financial backer. Linking with a large enterprise gives a startup business more markets. But lots of startup business owners are worried their young company will be taken over. Large enterprises would never do that because we need you to work with us and add your solutions to our chains of solutions,” Tuan noted.

Nguyen Viet Duc, CEO of the Vietnam Innovation Capital Management Company, said when a startup businessman calls for investment capital, he often focuses too much on his product and forgets to prove the product’s market worth, which will determine the product’s competitiveness and success. Startup investors don’t have an opportunity to divest if a startup fails. As a result, large enterprises and other investors are wary of startup projects.

In recent years, Industrial Revolution 4.0 has offered new tools to help businesses change their working methods and new opportunities for businessmen to start a new business line. Integrating startups into the world market requires standards and an appropriate working method.

Hoang Minh Tri, Director of AiPac in San Jose, California, is a Silicon Valley entrepreneur with a successful track record of building companies from the ground up. Tri is investing in startup businesses in Vietnam.

According to Tri, “the strength of Vietnamese startup businesses is in software. Domestic startup businesses in the software sector are pretty familiar with the market. This is an important factor in attracting foreign firms for a partnership to jointly develop state-of-the-art technologies.”

Nguyen Hoang, Deputy Director of the Loc Troi Group, a leading agricultural manufacturer and service supplier in Vietnam, said the value chain in any sector needs the involvement of strong businesses. Startup businesses that enter a chain will receive the support they need to prove themselves and grow.

High-speed boat between Vung Tau and Con Dao

The express 36 high-speed boat has capacity of nearly 600 passengers. — Photo nld.com.vn

 The trip from Vung Tau City to Con Dao Island in the southern coastal province of Ba Ria-Vung Tau will now take only three hours compared to the previous 13 hours of slower boats, thanks to a new high-speed boat service that began on Friday by Phu Quoc Express Joint-Stock Company.

The express 36 high-speed boat with capacity of nearly 600 passengers departs from Cau Da Port in Vung Tau City to Ben Dam Port in Con Dao Island at 8am and returns at 1.30pm on the same day. The prices are from VND660,000 to VND1.2 million (US$28.4-51.6) per turn.

Between February 15 and 28, the company is offering a 20 per cent discount on the price.

The company also operates high-speed boat services in the Mekong Delta province of Kien Giang from Rach Gia City-Phu Quoc Island, Rach Gia-Hon Son Island, Rach Gia-Nam Du Island, and Ha Tien-Phu Quoc Island. 

Can Tho’s import-export, service turnover hits over 2 billion USD

Processing Tra fish for export 

Turnover from export-import activities and foreign currency service of the Mekong Delta city of Can Tho exceeded 2 billion USD in 2018 - a record high in the last 15 years. 

According to Chairman of the municipal People’s Committee Vo Thanh Thong, Vietcombank Can Tho was one of the major contributors to the result.

The bank’s total capital mobilisation and loan amount hit 9.6 trillion VND and 7.7 trillion VND, respectively. It earned 250 billion VND in profits in the year. 

Thong asked the bank to continue to work with local authorities to support enterprises, especially those specialising in agriculture and rice exports, in 2019. 

The export success is attributable to the efforts of agencies and enterprises in the city seeking new markets and improving product quality.  

Can Tho is the only city in the Mekong Delta and a development driver of the southwest region.

The prices of oil and petrol have been kept unchanged after the latest regular adjustment by Ministry of Finance and the Ministry of Industry and Trade on February 15. 

The ministries review fuel prices every 15 days to adjust prices in accordance with fluctuations on the world market. 

Accordingly, the retail price of bio-fuel E5 RON 92 will not be higher than 16,272 VND  (0.7 USD) per litre, and that of RON 95 no more than 17,603 VND (0.76 USD). 

The ceiling prices of diesel oil and kerosene will be maintained at 14,909 VND ( 0.64 USD) and 14,185 VND (0.6 USD) per litre, respectively. The price of mazut is capped at 13,275 VND (0.57 USD) per kg. 

This is the third consecutive time that oil and petrol prices have been kept unchanged in an effort to control the prices in line with market mechanisms under State management, thus contributing to controlling inflation, stabilising the macro economy and reducing production and business costs, and facilitating people’s daily lives. 

Leaders of the Mekong Delta province of Vinh Long pledged to stay side by side with enterprises during a gathering with local businesspeople on February 15. 

Permanent Vice Chairman of the provincial People’s Committee Le Quang Trung affirmed that the province will issue clear guidance on new policies to facilitate businesses’ operations, encourage business households to switch their status to enterprises, and hold regular dialogues with them to promptly clear any arising barriers. 

In order to improve the provincial competitiveness, a public administrative centre will be put into operation this year. 

He asked firms to pay attention to environmental protection, lives and legitimate interests of workers and social welfare programmes in the province. 

Local statistics showed that there were 351 newly-established firms with total registered capital of over 3 trillion VND (130.4 million USD) last year. Meanwhile, the total investment for social development surpassed 13 billion VND. 

In 2019, Vinh Long will focus on restructuring its economy in combination with renewing growth model and improving growth quality and labour output. 

It will take synchronous measures to restructure agriculture in tandem with new rural development, build a manufacturing and consumption chain for key farm produce, and call for infrastructure investment in industrial zones.

A view of VSIP Nghe An (Photo: baonghean.vn)

A Singaporean company will invest in a textile project in the Vietnam-Singapore Industrial Park in central Nghe An province (VSIP Nghe An).

The project is invested by Singapore’s Royal Pagoda Private Limited with total capital of 4.65 trillion VND (200 million USD).

This is the project with the largest capital in the list of projects that are expected to receive investment approval or investment registration certificates at a meeting of investors in Nghe An province on February 23.

At this meeting held by the People’s Committee of Nghe An province, the provincial authorities schedule to give decisions on investment approval or investment registration certificates for seven other projects, with total investment of more than 1.2 trillion VND (51.8 million USD).

They include an export leather footwear production factory in Van Dien Industrial Complex and a tempered glass manufacturing and processing factory in VSIP Nghe An.

In addition, also at the meeting, 15 other projects are expected to sign investment agreements with a total capital of 11.8 trillion VND. They include a project on developing a five-star hotel in Cua Lo town, a project of 15,000 ha high-tech organic agricultural material zone and a 3-trillion VND project of preservation warehouse in Ky Son border district.

The 11th investor meeting held by the provincial authorities of Nghe An on February 23 in Cua Lo town would be an opportunity for the authorities to meet investors and to call on domestic and foreign investors and businesses to invest in the province.

A corner of Ha Tien town, Kien Giang province 

The Mekong Delta province of Kien Giang plans to spend 17 billion VND (around 734,000 USD) on organizing investment, trade and tourism promotion activities both at home and abroad in 2019.

According to the provincial Tourism, Commerce and Investment Promotion Centre, the local authorities will hold conferences to call for more investment into Kien Giang and arrange dialogues with enterprises to seek feedback about the investment environment.

Local enterprises, especially those operating in the fields of agriculture, food processing and tourism, are encouraged to join trade and tourism fairs in and outside the province, as well as those abroad, thus introducing and seeking markets for their products. 

Delegations representing local firms will be helped to participate in exhibitions and fairs, conferences and forums in Asia and Europe, to seek ways to expand tourism markets and further promote trade and investment. 

Vice Chairman of the provincial People’s Committee Le Thi Minh Phung stressed the province is working to enhance connections with both domestic investors and foreign partners, while focusing on speeding up administrative reform, thus creating an attractive and transparent investment environment towards attracting more investment. 

Attention has been paid to fostering relations with foreign trade and investment organisations, foreign consulate generals in Vietnam, and overseas Vietnamese communities, thus luring investment in the fields of hi-tech and organic agriculture, agro-aquaculture-forestry processing, food production, supporting industry, development of industrial parks, urban and  tourism areas, waste treatment and renewable energy. 

The local authorities also pay heed to expanding tourism promotion activities in both traditional and potential markets and developing more road, water and air-way tourism routes.

The Mekong Delta province of Tra Vinh is resolved to revoke licences of delayed projects, while rolling out new measures to attract more investment in the locality.

The province will work to accelerate administration reform and improve the provincial competitiveness index, thus creating an attractive business climate. 

The provincial authorities will also increase transparency and provide sufficient information about Tra Vinh’s policies and investment environment, as well as maintain dialogues between leaders and businesses.

Tra Vinh currently gives priority to infrastructure development projects in economic zones, industrial parks and those are suitable for its potential and advantages, among others.

Chairman of the Tra Vinh People’s Committee Dong Van Lam said the province put an end to or revoked investment licences of 13 sluggish projects in 2018. Meanwhile, the province attracted 89 new projects, up 37 projects as compared to the previous year.

In addition, Tra Vinh welcomed more than 80 delegations of domestic and foreign investors to study the local business environment, including those from Japan, the Republic of Korea, China, Germany, Belgium, Russia and Thailand.

The province is now home to 269 valid projects. Of which, there are 39 foreign-invested projects with total registered capital of 3.25 billion USD and 257 domestic ones worth more than 101.72 trillion VND (4.4 billion USD).

Furniture industry takes cue from young buyers, makes over designs

Furniture manufacturers are striving to meet the changing tastes of young people, who have begun to value eco-friendliness and aesthetics.

Nguyen Chanh Phuong, vice president and general secretary of the Ho Chi Minh City Fine Arts and Wood Processing Association (HAWA), said the furniture segment for small urban houses is abuzz in Vietnam, with its main customers being young adults born between 1980 and 2000.

Unlike the previous generation, who preferred simple but durable furniture that could last 100 years, young people prefer to buy comprehensive interior packages based on their own aesthetic views, he explained. 

They see furniture as things that serve their needs and not assets to be passed down, and so products only need to last about 10 years, he said, pointing out this was why furniture makers like IKEA have been so successful. 

"There is a lot of opportunity arising from this group of customers alone. I estimate they only account for 15 percent in terms of number of buyers but account for 30-40 percent of spending." 

Industry insiders said the market is seeing rapid growth in raw materials production, design and manufacture of furniture, and one can now find all types of international "fashionable" wood varieties from Germany, the U.S., France, Japan, Canada, and New Zealand.

According to Tavico, the company operating the distribution centre, Vietnam’s furniture market is currently worth $4 billion, and is expected to grow to $5-7 billion by 2025.

Nguyen Quoc Khanh, HAWA chairman, said not only is the scale growing but also Vietnamese are increasingly demanding higher quality products. 

"I think 'strong and durable’ is not the Vietnamese style; it was a need at a difficult time. Life is much better now, so people are allowed to express themselves.

"The only regret is that the market has not yet created the necessary ecosystem for the business of interior design. That is, furniture manufacturers have not been able to work with designers and real estate companies to completely meet users’ needs."

Foreign home interior brands and designers are present in force and dominating the increasingly affluent market.

According to the Vietnam Chamber of Commerce and Industry (VCCI), some 80 percent of luxury woodwork and interior decoration items is imported from Europe, with local players accounting for the rest.