Mr. Nguyen Hong Truong, Vice President at IDG Ventures Vietnam, tells VET's Minh Tien the sharing economy model in Vietnam is still in its infancy.
■ How do you view the potential of the sharing economy in Vietnam and the development of related mobile apps?
Mobile phones have made e-commerce more convenient than ever, not only for businesses but also for customers. While traditional e-commerce simply helps enterprises selling tangible products business-to-customer (B2C) on websites, the new sharing economy model has been able to deliver intangible products and services while connecting even not only business-to-business (B2B) but also B2C and even customer-to-customer (C2C). We can now book a taxi, buy tickets online, or order room services with new mobile apps.
This has grown to be a global trend. The major issue is how to make it successful in Vietnam. While Uber and AirBnB have been quite successful globally and also taken off in Vietnam, it still takes time for the market to develop a comprehensive value chain. Vietnam is a large market with a population of nearly 100 million but more time is needed for the market to be fully developed so that sharing economy projects can achieve commercial success. The market has potential but it is still in its early stages.
■ Do you think the sharing economy is a sustainable model for development or just another temporary trend? Will it succeed in the future?
Trends often appear, flourish, and then decline. With technology moving extremely quickly the market expects new models and new products that can serve demands better or even serve brand new demands that may emerge due to new technologies. The sharing economy is currently making a significant contribution, helping to change consumption habits in a better way and also creating a foundation for a better model to come into view. This follows the circle of development and is definitely a positive thing.
I believe that the sharing economy model in Vietnam is developing in the right direction. The first startup generation nurtured by IDG Ventures Vietnam years ago has grown considerably and would be able to help this new generation of startups in a sharing economy. IDG will also invest if we see a bright idea with potential. The current resonance of the ecosystem for this new generation of startups is quite enjoyable. The market is seeing more and more investors and they are willing to throw in more money. Investments may come not only from venture funds but also foreign funds and even from individuals with the financial wherewithal.
Generally speaking, it is easier for startups now than previously, but the success of this new model will be affected by a handful of factors, such as economic setups, legal issues, and the development circle of the economy in general. For example, e-commerce can only flourish with increasing purchasing power, which requires higher incomes, which in turn requires a growing economy.
■ You mentioned legal issues. Do you think these may be an obstacle to the development of the sharing economy in Vietnam?
Vietnam is not the only country facing this issue. Uber is seeing protests from the traditional business model for taxis and is being criticized by authorities in New York, Paris, and elsewhere over taxation and various social issues. The business community should see this as systemic risk and market settings they cannot avoid and so must comply with. The traditional e-commerce model and online gaming also had to go through the same problems and had to make changes to their products and to their distribution and selling policies so they were within laws and regulations.
From the perspective of authorities, key changes to Vietnam’s new Law on Enterprises and Law on Investment last July represent a new approach to legislating in Vietnam, as all activities not listed as prohibited are now open to investment and operation. This has opened the gate wider for the sharing economy model to thrive. In the context of Vietnam managing to build a better system, it would be unreasonable to prohibit new business models as this will hold back the circle of development. It is, however, the responsibility of legislators to recognize the advance of new models and to make changes to laws and regulations. The longer such changes take, the more enterprises will have to suffer.
Government agencies need to join hands to address the legitimate issues and make changes in time to support new business models such as the sharing economy that, consequently, benefit the people. I believe some of the recent moves made by authorities are on the right track.
■ Startups in Vietnam are extremely strong in technology, with talent graduating in the US and other developed countries, but they are new to the business environment in Vietnam and may lack expertise in other areas like marketing, for instance. What advice do you have for them?
Startups don’t need anyone to teach them as they are the first-hand workers, the pioneers in what they do, and therefore they should know exactly what the problems may be. They are supposed to overcome the difficulties themselves; this is the law of the market. It is normal that they may even go bankrupt. Those that find solutions to survive and thrive will gain the attention of investors, while those who fail will become lessons for others to learn from. Like any other business, not everyone will succeed.
- Mr. Nguyen Hong Truong
- economy model