In a story reported by VN Express here, Shop & Go, a chain of nearly a hundred convenience stores in Ho Chi Minh City and Hanoi was sold to Vingroup for $1. Shop & Go was a Singaporean enterprise that was one of the first in the convenience store space in Vietnam.
Unfortunately, Shop & Go was not profitable, building up debts around ten million dollars before agreeing to sell to Vingroup for the nominal fee. Vingroup intends to rebrand Shop & Go with its VinMart+ brand and will not only close some stores but replace staff and contents of the stores.
This is a cautionary tale. Vietnam is a prime investment location, but just because you have a good idea and some money, doesn’t mean you’ll succeed. In fact, without a lot more than a good idea and some startup capital you’ll probably fail.
While Vietnam has consistently ranked among the top GDP per capita earners in the world over the last decade, it is also one of the tougher markets to get into. There is a lot of competition. That high GDP rate, and the relatively young workforce combine to make the place an attractive market for entrepreneurs.
But what about need. Just because something is useful in the United States, or even Singapore, doesn’t mean it will be successful in Vietnam. Look at McDonald’s. They came in expecting a hundred stores overnight, so far I count three in Ho Chi Minh City. That’s a far cry from the success story expected. And even then they have modified their menu considerably to take into account Vietnamese tastes.
You need to know the place, the culture, the needs of the people. You can’t just come in with that great idea and expect to succeed in Vietnam because its a bustling market. It took a decade before the first western malls began to take off, and now they are popular, while the traditional stall markets like Ben Thanh and Tan Dinh continue to do well throughout the country.
It’s a conundrum, but one that requires local expertise. You have to know what the people need. And uniquely, lawyers are placed well to answer this need for a need. While the law is slow to respond, sometimes it does anticipate needs based on international norms, and on anticipating currents in the custom.
Take for example, credit rating agencies. I remember when the government issued regulations for the opening and operation of these institutions. This was in anticipation of dealing with some of the lousy debt that had accrued at banks throughout the country. This was an area where someone with the right funds, the right experience, and the right advisors could have come in and taken steps to build a successful rating agency.
Also, consider gambling. A couple years ago the government issued specific regulations allowing gambling to be entertained as something for the masses. Though there were limited types allowed and certain restrictions, someone who was paying attention could have taken advantage of that regulation and applied to run a greyhound racing den, or a sports betting ring.
Regardless, knowledge of the ground environment is key.