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Proven performer

Released at: 02:53, 20/10/2014

Proven performer

A decade of remarkable achievements by the Mobile World Group, Vietnam's leading mobile phone and electronic devices retailer, was confirmed by its listed shares hitting the ceiling time after time in their first few weeks on HoSE.

by Hai Bang & Minh Tien

Ten years ago Mr Nguyen Duc Tai was interested in buying a new mobile phone for around VND5 million (about $330 at the time) as a gift for his wife to mark the Lunar New Year (Tet) holidays. “It was a frustrating experience,” he remembers. “I dropped into two mobile phone shops but neither had much of a selection. They only had one or two to choose from, which wasn’t enough. If they had shown me ten mobile phones I probably would have found what I was looking for.” From the frustration, however, emerged a business idea. “Something was clearly wrong,” he thought. “I had the money in my pocket and was ready to buy. But I couldn’t find what I wanted. There was definitely an opportunity there.” He was right, and as General Director and co-founder he’s overseen the Mobile World Group (MWG), Vietnam’s leading mobile phone retailer, list on the Ho Chi Minh City Stock Exchange (HoSE) in mid-July and watched its share price rise considerably in the first few days.

Rocketing growth

Mobile World Co., Ltd was incorporated in March 2004 with e-commerce - online trading as its main business activity. At the time, though, it was clear that e-commerce was underdeveloped in Vietnam because consumers had little trust in online trading. So it established three small shops with the purpose of building consumer trust not just as a “virtual” supplier but one with physical retail outlets. With three shops in different parts of Ho Chi Minh City, it was hoped that the company could quickly provide customers with the products they sought.

As a small retailer, though, customer trust was slow in coming. “They did not see our shops as being licensed distributors, instead viewing them as being like other shops that sold goods illegally brought in from overseas by hand,” Mr Tai said. Learning from the mistake, the company accepted losses in the order of VND1 billion (around $50,000, or 50 per cent of its charter capital at the time), closed the three shops and opened its first major outlet, in Nguyen Dinh Chieu Street. With an area of over 200 square metres, the spacious new store was successful as it was totally different from the 10,000 or so small mobile phone shops in the city back then, which helped it to secure customer trust as a retailer of only genuine mobile phones.

The company installed display cabinets, where customers could try out the phone to see if it was suitable. They could also seek advice from shop assistants at a small table, which creates a comfortable and friendly atmosphere compared with traditional shop counters. These improvements made the shopping experience at MWG’s Thegioididong.com chain stores more enjoyable and effective than at its competitors. The company successfully carried out plans that further optimised the operation and also enhanced customer service, including re-designing the store layout, providing customer care campaigns, and optimising the product portfolio.

The company applies an omni-channel customer service policy, providing a streamlined customer experience whether online or offline (i.e. in a store). For example, when a customer orders online a sales person from a store will deliver the phone to the customer’s house within 30 minutes if the customer lives close by. This is a good way to combine online and offline in a way that a 100-per-cent-online vendor cannot manage.

After recording remarkable achievements in urban markets, MWG continued to actively reach out to smaller provinces with the launch of the Dienmay.com network, which identifies provincial and rural areas as its target market. People in the countryside would previously have to travel some distance to buy a mobile phone or other electronic device or arrange for repairs. Now it can all be done locally.

The company had only 37 stores in 2009, but as at March this year had expanded to all 63 cities and provinces with 213 Thegioididong.com chain stores, specialising in retailing mobile devices such as mobile phones, laptops, tablets and accessories as the only retailer having developed a truly nationwide network. The Dienmay.com chain, which was born at the end of 2010, specialises in retailing home-use electronic products like televisions, karaoke systems, refrigerators, washing machines and others at 13 supermarkets, primarily in the south. According to figures from market researcher GfK in April this year, MWG was the market leader in Vietnam’s mobile devices retail industry, with a market share of more than 25 per cent.

Maintaining momentum

Over such a successful decade were good times and some not-so-good times. MWG’s performance went slightly off-track in 2012. According to figures from Gfk, purchasing demand in the electronics market in 2013 fell 10 per cent against 2012. In contrast, total supply doubled, as businesses with resources attempted to expand their sales network.

Nevertheless, the company made huge improvements in 2013 and recorded impressive growth. It was a year of excellent execution by MWG’s management team, with consolidated net revenue standing at ($448 million) and net profit after tax of ($12.17 million); more than double 2012’s net earnings. In the 2009-2013 period, net revenue and net profit after tax enjoyed compound annual growth rates (CAGRs) of 48.4 per cent and 52.5 per cent, respectively. As at December 31, 2013 the group had 5,486 employees.

Its net profit in the first five months of 2014 was ($12.31 million), up 391 per cent compared to the same period of 2013. The high profit growth has been due mainly to operational improvements implemented over the last two years and the company’s clear long-term vision and plan for achieving that vision. The company has been open to learning and adopting best practice and building up its management teams. They have been working with external experts and consultants, who have helped to introduce international best practice. They also understand the importance of having a strong culture and building a team of people that share the company’s values.

In a recent analysis of MWG, FPT Securities (FPTS), based on collected data, concluded that the demand for mobile devices and electronics products will reach saturation point within the next five years, especially in mobile devices, as their functions tend to surpass the actual needs of the majority of consumers. Demand for electronic products is saturated in urban areas and will be likewise in rural markets shortly as average per capita income is rising.

Conversely, MWG foresees a bright future for online retail in Vietnam and has made online a major strategic priority. Thegioididong.com is now among the most popular retail websites in the country and far ahead of its nearest competitors, attracting approximately 350,000 visits each day. MWG aims to more than triple the proportion of online sales out of total sales, from 4.6 per cent in 2013 to about 15 per cent by 2017. By leveraging on its nationwide store network and its focus on delivering the best shopping experience to customers, MWG aims to increase its market share to at least 30 per cent by 2016.

Such a goal is certainly not impossible, as MWG has a very clear idea of how to get there. For the 2014 financial year the Board of Directors set revenue and net profit targets of ($594.22 million) and ($20.71 million), representing year-on-year growth of 32.6 per cent and 49.2 per cent, respectively. However, in the first two months of this year revenues were already ($8.04 million) and net profit ($4.6 million), both well ahead of plans. Growth in 2014 will come mainly from expanding the Thegioididong.com store network, setting up more flagship stores in central locations of large cities, more deeply penetrating into rural areas with small stores, addressing untouched areas in Ho Chi Minh City and Hanoi, continuously improving the customer shopping experience, strengthening its online presence and, last but not least, improving cost control.

MWG has found itself in another battleground after listing in mid-July. Just prior to listing it drew significant attention when Mr Tai announced that the planned opening price would be VND85,000 ($4) per share. Only four or five existing stocks on HoSE are currently at similar levels or above, and all have long operating histories and various advantages within their industries. MWG’s listing price eventually came out at VND68,000 ($3.21) per share. Nevertheless, the stock price has only gone upwards since listing, increasing more than 50 per cent within the first week.

Market prices go up or down according to the rules of supply and demand and under this circumstance MWG has proved to be a blue-chip of high demand, after successfully attracting a remarkable number of foreign investors. FPTS’s forecast of market saturation may be right or wrong, but even in a flagging market lies potential for continued growth. 

Mr Nguyen Duc Tai, General Director and Co-founder of Mobile World Group (MWG)

What is Mobile World’s main purpose in listing at this time? What do you expect from the listing in the near future?

Within the near future Mobile World will not need to raise capital via a focused stock market. The listing also aims at other long-term goals. To retain talented individuals, the company needs an attractive reward and remuneration policy. Cash remuneration is generally not as effective as a stock bonus scheme due to the high personal income tax rate. However, stock bonuses are only attractive to staff as long as the stock is sufficiently liquid. The listing will enhance the liquidity of the stock and promote the efficiency of stock bonus schemes for employees.

The possibility that the company will need to raise capital for development projects in the future should not be excluded. At that time, the stock market will become an effective capital mobilisation channel.

Lacking the pioneering advantage that Thegioididong.com had, Dienmay.com started out when the electronics market was already dominated by tough competitors. What is your evaluation of its effectiveness over the last four years?

Over the last three years Dienmay.com was in an “apprenticeship”, which of course comes with “tuition fees”. The “fee” that Dienmay.com paid, however, was quite low. Business opportunities in the electronics industry were still substantial. While competition in Hanoi and Ho Chi Minh City was quite fierce, customer demand in other regions had yet to be fully met in terms of products as well as service quality. Dienmay.com’s development strategy does not focus on Hanoi and Ho Chi Minh City but on regions where the needs of customers are unmet.

The rise of small mobile phone retailers is clear to see. They have advantages in low retail prices due to low operating and management costs. How would you assess the risk these competitors pose?

Mobile World is not concerned by any of these competitors. Their sales revenues are not high enough to cover their costs, even those that aren’t paying rent. They may hold advantages in retail prices, but this is only true in terms of second-hand goods as they can avoid the 10 per cent VAT, which Mobile World implements. When tax policies are strengthened, such advantages will fade away.

Development Milestones



Jan - 2004

Starts with only three small stores in Ho Chi Minh City.

Oct - 2004

Opens its first 200 sq m store, standing out from the 10,000 identical mobile phone outlets in the city.

Jan - 2006

Opens its third and fourth stores in Ho Chi Minh City, controlling 20 per cent of the genuine mobile phone distribution market in the city.

2007 - 2009

Converts into a joint stock company with charter capital of VND7.6 billion ($358,400), receives investments from Mekong Capital and begins to penetrate into Da Nang and Hanoi.


Its subsidiary - Dienmay.com - which focuses on home electronic equipment distribution in southern markets, is established.


Becomes the first distributor covering all 63 cities and provinces in Vietnam with 213 large stores. In March, Mekong Capital reduces its ownership from 32.5 to 25.8 per cent. Exited shares represent an 11x return (including dividends received).


Charter capital reaches VND627 billion ($29.5 million) in April. Mekong Capital completes its second divestment, reducing its ownership to 14.3 per cent. In July, 62,719,888 MWG shares officially list on HoSE.

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