VietNamNet Bridge – There is a fierce competition in Vietnam’s e-commerce market, and experts believe that those enterprises which have long term and profuse capital will be the winners.

 

At the 2010 e-commerce forum held by the Ministry of Industry and Trade’s E-commerce and Information Technology Department on December 1, an expert pointed out that it is very costly to develop e-commerce because investors have to spend much money on servers, techniques and security measures. Investors can make profit only after a long period of investing. Besides,  building up staff in charge of selling and caring for customers also gobbles up a lot of money.

 

According to the expert, in Vietnam the competition in e-commerce has become very stiff, and people are waiting to see “who will go bankrupted first”. Everyone should understand that they cannot profit overnight and that the winners will the those who have long-term and profuse capital.

 

“Five years ago Vietnam had some 20 enterprises in e-commerce, but only five enterprises have been existing to date. The figure may drop to two in some years,” he commented.

 

The story of vatgia.com

 

Nguyen Ngoc Diep, Director of vatgia.com, said that the e-commerce website is now ranking the 12th among the websites with the most visitors, according to Alexa. After four years of operation, vatgia.com now has 750,000 visitors per day and the total transaction value reaches $12 million a month.

 

However, before obtaining such a high growth rate, vatgia.com was once on the verge of bankruptcy  since it did not have money to maintain operation. However, fortune smiled on the company when it met DFJ VinaCapital, a venture capitalist fund.

 

In the first three years of operation, vatgia.com spent $2.5 million on servers, maintenance, technology, labor force and marketing. In that period, vatgia.com simply spent money and did not earn money.

 

According to Diep, vatgia.com once thought of making initial public offerings (IPO) and listing on the bourse to mobilize capital from the public. However, the plan was unfeasible because only the enterprises which made profit for the past  few consecutive years, would be eligible for listing.

 

However, vatgia.com luckily met DFJ VinaCapital.

 

The worry of being swallowed

 

Once they had capital, vatgia.com began pushing up its business and making profit. However, a new worry has been raised.

 

Diep said that e-commerce is a completely new business in Vietnam and enterprises may face high risks when making investments. He also said that if domestic enterprises and the government do not pay attention, the business may be usurped by foreign investors.

 

Duong Thi Bich Nga, Director of Viet Song Hang Company, also thinks that the enterprises in the field may bear pressure and face the risk of being swallowed by investors.

 

Diep also said that the worry of being swallowed is the permanent worry of vatgia.com. He believes that the governments of some countries give support to big Internet service corporations such as eBay, considering these as national assets. “It would be a big waste if we leave the business field open for foreign investors. I think that the government should give support to help develop this kind of business,” Diep said.

 

Meanwhile, as an investor, Hoang Duc Trung, Investment Director of DFJ VinaCapital, said that it is necessary to keep a more open view about foreign investment funds and consider the funds as the opportunities for enterprises.

 

Trung believes that Vietnam’s e-commerce market will develop strongly, and with 30 million internet users, 3G technology will also develop. To date, DFJ VinaCapital has poured $16 million into eight companies operating in three fields, consumption via Internet, media and telecommunication.

 

Source: Thoi bao Vi tinh Saigon