[Ho Chi Minh City] JUST months after Vietnam reopened to international visitors, some Singapore companies are wasting no time heading to the South-east Asian country in search of opportunities, in areas from tech to lifestyle.
Emile Dumont, founder and chief executive of sports massage studio The Posture Lab, said that Vietnam has a growing fitness and wellness trend, but a lack of proper accreditation for trainers. This gap is what The Posture Lab, which also runs an academy, hopes to fill.
"That's why we actually want to come in with that first-mover advantage to build up that whole ecosystem aspect, before we actually build or develop even just gym management or setting up gyms," he explained.
The plan is to work with universities to offer internationally-accredited fitness and wellness courses. This also creates a pipeline of manpower for when the business is ready to scale, Dumont told The Business Times (BT).
To get a head start on these plans, the company participated in the Global Innovation Alliance (GIA) accelerator programme in Vietnam in August.
Formed by a partnership between Enterprise Singapore (EnterpriseSG) and venture capital firm Quest Ventures, the programme is curated for "high-potential" startups and companies, with masterclasses, market immersion programmes and ongoing mentorship.
Earlier batches did not get to visit Vietnam as borders were closed due to the Covid-19 pandemic. But now that borders have reopened, Quest Ventures said that new applications for this fifth edition were up 14 per cent compared to the previous run, despite a shorter application window.
Only 5 companies were ultimately chosen for the programme, which took them to Hanoi and Ho Chi Minh City over 5 days jam-packed with networking events and meals with potential partners and investors, as well as meetings with mentors.
Describing the experience as "amazing", Dr Tan Yeow Kee, founder and CEO of fall detection startup SoundEye, said he found 2 partners during the trip. One of them is Canon Vietnam, with which Dr Tan had already been in contact prior to the trip.
"Before I came, I already started to look for partners, otherwise it's going to be a bit tough. So I think a few steps ahead," he said. He plans to return to Hanoi this month to meet a customer.
Since 2020, 45 Singapore-based startups, including the latest cohort, have participated in the Vietnam GIA programme.
Kow Juan Tiang, executive director for South-east Asia at EnterpriseSG, said 3 startups have since set up a presence in Vietnam, while more than 10 are in discussions with potential partners on possible project collaborations.
Beyond the GIA, companies can tap schemes such as the Market Readiness Assistance grant, which provides support for overseas set-up, business matching and market promotion. Businesses can also apply for the Enterprise Development Grant to increase their in-market competitiveness.
EnterpriseSG also has 36 global overseas centres to help companies navigate foreign markets. In Vietnam, these are in Hanoi and Ho Chi Minh City.
Nguyen Phi Van, chair of Vietnamese government-backed Saigon Innovation Hub, credits the good inter-government partnership for many Singapore companies' interest in Vietnam.
"Singapore has always been one of the strongest partners of Vietnam pre- and post-pandemic. After the pandemic, the first 10 delegations I receive in Vietnam are all Singaporeans," she said with amusement.
Singapore companies' appetite for the Vietnam market can also be seen in the flows of capital into the country.
Singapore was Vietnam's top foreign investor for the second straight year in 2021, and still holds the pole position for the first half of 2022 with direct investment contributions totalling S$4.1 billion, according to Vietnam's Ministry of Planning and Investment.
The Singapore Business Federation (SBF), which set up a Singapore Enterprise Centre (SEC) in Ho Chi Minh City in January last year, said companies are ready to head here now that the pandemic is fading away.
For the past 2 years, the SBF could only hear companies expressing interest; now, with more information and greater confidence, it can "see a lot of companies flying in", said Amy Wee, country head at the SEC@Ho Chi Minh City.
Wee, who shuttles between Ho Chi Minh City and Singapore every few weeks, manages the GlobalConnect@SBF in the southern Vietnamese city. From Aug 22 to 26, an overseas market workshop was held there for 16 companies which are new to the market and would like to meet potential customers and vendors.
One of the companies is Singapore fashion store iORA, which hopes to make Vietnam its second overseas market after having expanded into Malaysia in 2007.
Speaking to Singapore reporters on the sidelines of the workshop, iORA's marketing director Teo Toon Lin said it was very important to do sufficient groundwork before deciding to expand overseas.
"We want to really have an opportunity just to check things out a bit and get ourselves familiar. Looking for suitable partners might take some time too, because you want to work with people who share the same ideas," she noted. "And you want to make sure that you trust your partner to do certain things here correctly when you're not around."
Ripe economic conditions
Following sluggish growth last year, Vietnam has made a swift recovery from the pandemic, with gross domestic product (GDP) expected to grow 7.5 per cent year on year in 2022, according to estimates by the World Bank. With a population of close to 100 million, Vietnam's middle class is also believed to be among the fastest growing in Asia.
While these alone are attractive factors for potential investors, market watchers note several other enablers that make Vietnam stand out: social and political stability, relatively low operating costs, easy access to labour, as well as a bevy of business and investment incentives offered by the pro-business government.
The government has been "very welcoming to invite foreign businesses to actually develop themselves in Vietnam" and has encouraged young Vietnamese to upskill, SBF's Wee added.
EnterpriseSG's Kow has observed that many Singapore companies, particularly in tech, choose to set up in Vietnam as it has a ready pool of tech talent, reducing the time needed to set up shop. "These talents can also help Singapore companies gain market insights and navigate local business practices, as well as bridge language barriers as they look to collaborate with in-market players," he said.
The country's strategic location -- bordering China, Cambodia, Laos and Thailand -- and long coastline make exports easy, SBF's Wee pointed out.
Vietnam's recent history also presents certain unique conditions, said Taku Tanaka, co-founder and CEO of Ho Chi Minh City-based food-sourcing startup Kamereo that last year raised US$4.6 million in a Series A funding round.
"Compared to other countries, Vietnam doesn't have very big conglomerates yet. Because of the Vietnam War, most of the big corporates started from the 1970s or 80s," pointed out Tanaka, adding that most conglomerates are still managed by their first-generation founders and chief executives.
Noting that 98 per cent of businesses in the country are small and medium enterprises, he said: "So the conglomerates are not really strong enough, and I think there's still a little room for even foreigners to come in to do something better than what there is right now."
This is the first in a new BT regional series on South-east Asian markets. In the coming months, BT journalists will head to countries in the region to bring you the latest from the ground.
Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission.