E51: Redefining "Made in Vietnam" with the rise of homegrown innovation
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The government is trying to foster our ownership of the products, of the services, not just serve as a destination for outsourcing or for foreign markets to go into Vietnam and take our talents and take our competitive salary. So I think it's the meaning of the campaign Make in Vietnam.

Welcome to You Don't Know Vietnam, the show that demystifies Vietnam for global audiences by talking to the creative, trendsetters and business owners who are taking on the market. Forget what you thought you knew about Vietnam. Guess what? It's no longer that, as you're about to find out. I'm Ian Painton, co-founder of We Create Content, a content marketing agency that helps global brands enter Vietnam and connect with Vietnamese consumers.

We make global brands relevant in Vietnam with always-on, hyper-local content. On this episode of You Don't Know Vietnam, I'm talking to Thomas Vinh Do, who is the Director for Global Business and Cooperation at Vinasa, the Vietnam Software and IT Services Association. Using his experience working with more than 600 of Vietnam's tech companies, Thomas tells me why Vietnam is so well positioned to become a tech and innovation hub in Southeast Asia.

We talk about how Vietnam could do so much more than IT outsourcing and why this hasn't happened sooner. He describes the new mindset of Vietnam's young startup founders and tells me which sectors are experiencing the most exciting innovations. He also gives his top tips for doing business in Vietnam and shares what you need to do if you want to hire and retain top software talent.

Thomas Oi. Oi. Thanks for joining me on You Don't Know Vietnam. My pleasure. Thank you for having me today. I was on a podcast last week in Singapore, actually, and someone said to me, what are you most excited about for Vietnam? And I said, I think it's about its capacity for innovation going forward. It's been known as this kind of manufacturing hub for others, and I'm quite excited to see what Vietnam does.

can do for itself in terms of innovation and technology. There seems to be a rising star in the region. Yeah, you're right. Observation is very good because Vietnam is now a very big point on the world map.

and innovation and technology and everything. So standing at the point of Venus, Vietnam Software and IT Services Association, we've been leading the industry for more than 20 years now, and we really see some potentials in the near future. What do you think are the macro trends that are positioning Vietnam so strongly right now in terms of software, engineering, technology, innovation? I

I think it's not just one thing, right? I think it's a combination of very powerful macro trends. Many, many trends are the same direction. So first we can mention about the economic growth, right? I just read about

The economic report yesterday, they say that Vietnam is leading in the GDP growth rate. I think in 10 recent years, it is about 6.4%. That is very high compared to even India or China.

So I think the government is very good in maintaining the economic growth. So that is the first thing. The second thing is about the demographic dividend here. It is very huge. We have a population of around 100 million people, and most of them are very young, and a significant portion of people were under 35. So this is

a big workforce and they can produce a lot of productivity in their job. Moving on, we can have a lot of other things like the Vietnamese government has made a very clear strategic decision to prioritize the development of the tech sector. They've been rolling out incentives and policies. Recently, we have its National Digital Transformation Plan,

and also a plan, a campaign called "Make in Vietnam" that is modernizing all the economy and fostering this domestic innovation. Last but not least, Vietnam is located in a very significant position

We are strategically in the middle of Southeast Asia and it's a gateway to Asian markets and a key global shipping route. I think it's a very good place for China plus one trend that every company is moving here to Vietnam to diversify their logistic and supply chain management. So, yeah, there are many micro trends that we can see.

contributing to this innovation and development. To summarize, we're looking at constant economic growth, strong GDP year on year, young population, fiery population, super talented as well, government strategies, incentives and policies, and this sort of hunger to change the meaning of made in Vietnam, I think, and its geographical location. But on that made in Vietnam thing, I think

Across the world, people will think of made in Vietnam and they'll think of stuff that they're wearing, whether it's Nike or maybe some Apple products or Samsung products, more recently Lego perhaps. But what do you think going forward the government wants made in Vietnam to mean? Well, there are two terms here we need to distinguish. So the first one is made in Vietnam. So made in Vietnam is not necessarily something that Vietnamese people

make from the beginning. It can be some China factories that is building their locations here in Vietnam and they use Vietnamese people to make their product and then exporting to Europe market, to American market that is made in Vietnam, like you mentioned, like the clothes,

textiles. But "Made in Vietnam," that's why we changed the name "Made in Vietnam," not "Made in Vietnam." So "Made in Vietnam" means Vietnamese own the initiatives. We make it from the beginning and we consider it as the image of the country and then we export it to the world. The government is trying to foster our ownership of the products, of the services, not just

serve as a destination for outsourcing or for foreign markets to go into Vietnam and take our talents and take our competitive salary. So I think it's the meaning of the campaign Make in Vietnam. Yeah.

So I love that the difference between made in Vietnam versus making Vietnam and making Vietnam is much more about the concept being born in Vietnam, the innovation being done in Vietnam, the production, the branding, the marketing, all of it, and shipping those complete products to the world. Is that right? Yeah, absolutely. What do you think has stopped that from happening so far? Obviously, we've got huge tech companies here. I

I mean, you're no better than I do. You work with more than 600. But let's say VNG, for example, but it's still very local. So what have been the barriers to date, do you think, that have meant domestic tech companies aren't making it to the world? It's a very good question. And I think our leaders in this industry, they have been thinking about this question for many years now. First of all, I think it is the lack of VCs or capitals that is funding for later period because VCs

Most of the capitals now I know is they are funding for early stage, like seeding of like first or second round of it. So there are many successful companies, startups that have been funded for the last five years, I think. But when they have grown to a certain version, they will lack the resources, the funding to go further. Perhaps before they also get funding

very early stage funding and then they also get a little part of the funding so they can grow very fast. But now in Vietnam, not so much. I think the venture capitals, they are now fighting good initiative, good ideas. They've been proving it can work, but then they will not continue to support the startup to go further. So that is one thing. We do not have enough resources and money.

A second thing is, I think Vietnam is lacking this, say, mindset for building products that can win in global scale. When we design a software or a product, we need a very clear architecture of the product.

That architecture is based on experience of exposing to international clients for many years. So that requires a person or a team that is knowing all about it, have experience in serving international clients for many years. But unfortunately, our leaders in tech, mostly, as I can observe, they grow from being

a technical team, meaning they used to be an engineer and then they grow to be CTO, CEO of the company. So maybe they have their mindset. They have the idea in building a technical product, but they cannot do the sales. They cannot do the market penetration. They lack the skills and the knowledge and the know-how. So that's why the product is not accepted widely on a global scale.

I see that as a very big pinpoint. So I think there are two main things. Firstly, it's the funding. And secondly, it's about the team and the leadership. Got it. And I guess the second part of that is a result of being built for other companies for so long, right? So Vietnamese engineers have always taken perhaps leadership and direction from global brands. Yeah, because Vietnam is an IT-assourcing hub for many years. Actually, we've been serving international market from late 90s.

So we have nearly 30 years experience in ITSLC. So yeah, because when we go ITSLC, we learn from other people and we receive the orders from other people, not ourselves. And we build our products based on that. So maybe the mindset, the skill is not us. It's their orders, their requirements. So we may like that skill. Yeah.

But I do get the sense that this is changing. Working with as many companies as you do, you must work with a lot of tech founders right now. What do you feel like the current mindset is in Vietnam among tech startup founders? First observation is I see they are very young and they must have gone abroad to study or to work. So they are quite new in mindset and their motivation is very brand new.

Their product is more international oriented. The team is very agile and they have new working style in their leadership, in their operation. It's very flat. It's not hierarchical like before and they can give decisions very quickly.

So I think there's a big change right now and I see a big future on that. So they will create more disruptive solutions. And I definitely believe in this new generation in the near future. What sectors are you seeing some of the most exciting innovations happening in right now in Vietnam?

There are many, I think. But first of all, I think it is about fintech. Because fintech here in Vietnam is right now a potential sector in tech.

So you may know about companies like Momo. It is a unicorn here in Vietnam. It's very big now. I think everyone is having their Momo app as their phone. So this is B2B as well as B2C market. Other than that, we also see a lot of solutions and products for banking and financial institutions.

Some of them come from big players like FPT, Viettel, but it can come from a small startup. Like tomorrow when you wake up, you can hear about a solution for banking that's coming from a very small startup team.

So first thing is fintech, right? Second thing is e-commerce and retail because e-commerce is still a big topic right now in Vietnam. People talk about Shopee, TikTok shops. And recently we have Temu from China. We also have our own Vietnamese e-commerce platform, Sendo. We have Lazada. We have Tiki.

So e-commerce and retail is providing the solution for this kind of sector. And they build their solutions like how can you optimize their e-commerce shops? How can you sell products to international clients? So these companies are building product for all of this. They bring their

products to the customer within a very short time. The next thing I want to mention is gaming and blockchain. This is a very big sector right now when blockchain is gaining all this spotlight. There's some companies that are building blockchain games. This is a very new generation of games, right? And they can earn money easily than ever before.

The fourth thing I want to mention is about software and IT services that is our core strength for more than 20 years right now, like I mentioned before. So there are some companies like FPT Software, they have been gaining revenue of more than $1 billion in 2023. And there are some smaller companies like Sotatech or NTQ or RedKsoft. They've been having thousands of people working for them.

The last thing is about edtech sector. So education tech is also a big thing. There's a platform called Prep.vn that is gaining traction right now. So yeah, I think there are many sectors that we are gaining attention right now. Which seems to me to make sense, right? You've got e-commerce and retail.

people shopping a lot and things being delivered like super quick things move so fast in vietnam don't they so you've got all of these tech companies that are helping to optimize this process you've got the fintech how do we pay for things then you've got gaming and blockchain which obviously vietnam's a huge gaming country yeah and of course the blockchain games and the play to earn games i can see going down very very well with vietnamese and then the

the core and legacy scale of software and IT servicing, not to mention education tech. Yeah. So you can see it is like an ecosystem of products and services that we are serving locally and internationally. So everything is connected

to each other. And it definitely makes sense. Yeah, it's almost like if I was going to ask AI to paint me a picture of Vietnam, I would probably put in these types of prompts like fintech, e-commerce, gaming, software and education. And it'll probably come up with the perfect picture because I feel like

global audiences still have the wrong idea about Vietnam. If they're really out the loop, they're probably still thinking about war. Then they might be thinking about rice paddies and buffalo and farming. And actually it's such a dynamic and vibrant start-up energy here. What else is going on that makes Vietnam a really good place to build tech companies right now? First, we have to mention human resources that is abundant and competitive.

Our talent here is very young and quite competitive in income, salary. That's why many big players like Samsung or LG or Intel, they've been putting their companies, their factories here in Vietnam for many years now. Secondly, I think it's about our infrastructure that we are building right now. Over the past 10, 15 years, the government really focused on building infrastructure

infrastructures for our nation.

So you may hear about very big mega projects right now that is happening in Vietnam. Like we're building this expressway from the north to the south that reduces the time and the effort to go throughout the country. We're also building this highway railroad from the north to the south to support the supply chain. We're also building this nuclear electricity factory in central Vietnam.

That is taking out around 42 billion US dollars. That is a mega project that is providing a lot of electricity for the whole economy. We're also building this big airport in Dong Nai, near Ho Chi Minh. That's called Lam Khang Airport. That is five times bigger than Tan Son Nhat Airport. That is also providing a lot of logistics supporting. We're also building...

many ports in the South. So we're trying to be the second Singapore when every company is shipping their products there to be a good destination to go further into other countries in Asia. So I think the government is pushing very hard on building infrastructure for logistics and supply chain here in Vietnam.

Yeah, to name two biggest things, I think human resources and the government focus on infrastructure. What other government incentives and policies would you say are going on that make Vietnam an attractive place for tech startups? Very good question, because a lot of other international friends also asked me that question.

So the government is providing a lot of sandboxes for trying out new technology, especially emerging technologies like AI or blockchain. They are putting their sandboxes in places like central Vietnam, Da Nang. They've been testing our sandboxes for the last, I think, two years right now. So it is a very good destination for global companies to move into Vietnam to try out these kind of sandboxes.

The special thing about these sandboxes is it's easy to penetrate, it's easy to operate, and there are not many regulations related to those kind of sandboxes. It's unlike the other traditional businesses. So I think it's good to try that. Secondly, it's about the tax and tech incentives.

For example, when the tech companies moving into Vietnam, they will enjoy, I think, four years with no corporate taxes. And the next nine years, they will enjoy reduced corporate taxes. So it's very good for them to set up their businesses in Vietnam, especially in Vietnam.

In industrial parks or in software parks, we have three biggest software parks in Hanoi, in Da Nang, and in Ho Chi Minh City. So I think, yeah, there are two things, tech and sandboxes. I've got to admit, I don't think I know exactly what a sandbox is. I get the idea of it, right? Like it's a place to test things. Is that right? Yeah.

Sandboxes, you can imagine as a regulation of the government in a very early stage. When the government do not know it can work or not, they will call that sandbox. And for example, it is a box of sands and there are many things inside there. But you have to open the box to see what is inside. So maybe the sand is good for them. Maybe the sand can turn into...

Money, it can turn into difficulties. You don't know. You have to try it out. You have to open it. The government cannot open it because they are government. They need companies to open that, to try out that. I guess it's almost like a place to play a little bit, an experiment. Yeah, with special rules. Yeah. Like what? You don't have to obey every regulation,

You do not have to pay this, you do not have to submit this kind of documents. So it's very simplified compared to traditional business and regulations. Of course, you have to obey certain rules of Vietnam laws. You cannot go beyond the lines, you cannot go beyond everything.

they have reduced quite a bit on regulation and policies. I see. And who's playing in these sandboxes? Must say it's about blockchain, fintech, gaming. I think those three areas are getting the most spotlight on sandboxes because they're quite new. I like what you said earlier about being the second Singapore sandbox.

I love the idea of Vietnam being a second Singapore in the region. We've been dreaming about it because we are strategically positioned in Southeast Asia under, I think it's the third largest sea round ever.

But we haven't taken advantage of this. People will go through Singapore and Singapore has turned into a dragon with a small land. We have a huge land. Why can't we? Because we are also very strategic in our location. So I think the government is looking into that area because they are trying to build Ho Chi Minh City as a financial hub.

And they're building some other provinces nearby as a logistic hub to host all these kind of ships and transportation throughout this area. So we're trying to build a second Singapore. I think it's not official declaration of the government, right? Because it's just our personal view. And there's someone, I think, has the same view as me right now. ♪

Thomas, something I really liked when I landed on your LinkedIn page was you talked about you had two failed startups. I think people don't really talk about their failures enough, right? What were those startups and what were the lessons that you learned there and in your job with Binasa thereafter that mean you could give three to five solid tips for someone launching a tech startup in Vietnam?

Well, thank you for touching that area. I think people should talk more about failures, more than victories, winning things, because we can learn from failure and we can be motivated by failure as well. So for me, my two startups is not related to technology because I did that before I worked in Vinasa. So the first startup I do is when I was in third year university.

I tried to build a small team to do the trading. It's not currency. It's about close trading team that is buying from China and then selling to internationals.

So actually, we go to the border of Vietnam in Lantan Sun to buy things in Quang Chau. So maybe it's like clothes, maybe like shoes, maybe other domestic things. And then we put it on an e-commerce platform and then we sell it to Europe. We sell it to North America and everything. I run that business for maybe six months.

So that is the first thing. Second thing is I tried to build an education center because I was studying English at that time in university. So I built an English center to host courses and classes on English. And I also built

a company behind that and we do all the training for the teachers, we do the recruitment for the students and we do the syllabus. I run that for more than one and a half year and we have around more than 20 classes. And then due to lack of marketing campaigns and insights into this market, we also stopped the businesses. And then I moved into Finasa and worked for Finasa for more than five years now.

So my tips and my lessons learned from these kind of businesses and also the time when I worked in Venus, I've been exposing to hundreds of startups and companies. And my point of view is that in Vietnam, it's not easy to do startups, but at the same time, it's not difficult as well.

So I think the key thing is you have to have a very solid business plan. You have to know who's your customer, how big is the market, and how to penetrate this market. You have to be very clear with yourself. And then you have to pitch this idea to the team. And at the same time, you have to have some mentor who have experienced the same business before. What I did

before was not that. I do not have a solid business plan. I just this idea, I put it on a paper and then I just do it. And it failed as a result of this. So I highly recommend you have a business plan, a strong team that have motivation, determination to go with you. And you have some coach or mentors that is willing to give you advice on this.

Especially when nowadays the market is changing maybe every day, you need to be updated every day. You need to read about the news. You need to catch up with people to know what's going on, to have appropriate direction for the business. Maybe today you sell something, but tomorrow you need to change that. You cannot sell this thing because the market has changed. Tax incentive and everything is going on right now.

So I think, yeah, further than that, the founders, the leaders need to be the one that is driving this lifetime learning culture to the team. They need to be updated. They need to keep reading, keep meeting people.

even when their business is successful, they need to keep learning and updating. So I think there are three things. Firstly, business plan. Secondly, be ready to change. And thirdly is to keep learning.

From my experience as well, the business plan, it seems obvious, right? But I feel like in order to recruit and retain talent, they need to feel like they're part of something on a bigger mission going towards something. That's the feeling I get in Vietnam. And if you have that, I think you can really attract people and people will get behind it. That's totally true because I've been experiencing the same thing because I also have a small team. They've been working for some projects I can consider as a startup project.

What the generation, maybe Zen Z's right now, they may put on the table is about the vision, the future of the product they are building. Some of them, they do not focus on salary. They will not focus on income. They will focus on the vision of the leader and how the leader is leading the team. So I think leadership is very important and the leader needs to show their teammates that

how the future of their startups will be, like how the product is helping a lot of people and how it can derive into many versions, not just this version, but it can adapt to changes in the market. So I think leaders is very important right now. People, especially younger generation, they

They are very critical in knowing about the company's future. So it's not just about the revenue. It's just not about the marketing areas, not about the sales area in the first place. In the first place, the founders need to show the team how they can grow in the future, how big they can be. Yeah, I think that's what is going on. The other point that you made, which I liked, was

be open to pivoting quickly, which I think is relevant anywhere in the world, but particularly in Vietnam where things are changing so fast. Yes. So we need to pivot quickly. Being open to change. Yeah. I've got a quick challenge for you, Thomas. Based on everything you know right now and all of your experiences so far, if you had $5 million to invest in a Vietnamese startup tomorrow, where would you put it?

As my point of view, I will not directly go into a company to invest in. I will go with venture capitals because I will play safe because they already know about the market. They have the team, they have the consultant, they have their executives that knows about exactly what is happening in the future. Or I used to have this idea of creating my own venture capital.

I come from a mountainous area in the north of Vietnam, right? There's one tree we call cây cóc, right? So cây cóc is a high tree and it produces a lot of leaves you can use in many areas in your life. That tree is very close to me as a boy, as a child. And I used to play near that tree for many times. So I have this idea of creating this name called Lá cóc Venture. So Lá cóc means...

That tree leaves, that is sheltering me when I was a small boy. It will shelter me when it's raining and when it is sunny. So I want to create my own venture capital. And then I will create a team for this, to looking for a good enough portfolio, good companies to invest in. So what I mean is, first we'll play safe as go with other venture capitals.

And second is to create our own venture capitals to hunt for the best project. I think that's a great answer. I mentioned before that I was on a podcast last week in Singapore and someone said to me, what are the companies to watch right now in Vietnam? Which one would you back? And I almost wanted to say all of them, any of them. There's so many. So I think hedging your bets with venture capitalism is a good shout.

So I like to end these episodes by asking you, what are you most excited about for Vietnam's future? Now, I've got a good idea about what you're going to say here based on our conversation today. But I'm going to ask it anyway. What are you most excited about? I project Vietnam will stand in top 15 economies by 2035.

Yes, I really believe in that future because what I see is a leader of the government right now, they've been working very hard to push this machine forward.

to move forward. It's not just central government, it's provincial government and local government is moving very fast right now. And the government is projecting the GDP will go for more than 10% every year from this year onwards. So I think based on that, the businesses are

The citizens will go through a big change in the coming years. And I'm really excited about the journey ahead. When our country is in top 15 or top 20, we'll have more opportunity. Other people will go invest in Vietnam. We'll have shift our economies from industrial countries

to the higher level of services so that we'll bring more money into the country and we will be a developed economy in near future. I hope in 10 years we can be a developed country. So yeah, I really believe in that journey, that future. You've been listening to You Don't Know Vietnam. I'm Ian Paynton from We Create Content. I'd like to thank DJ Jace from The Beat Saigon for their epic soundtrack and a massive thank you to you for making it all the way to the end.

Bye.