Go SEA or go home. Part 1: Thailand vs Vietnam!
The first time I have met Thais was more than ten years ago, thanks to the Japanese government. At that time they launched a training sponsorship for SEA software engineers to learn how to work with Japanese companies. The first three countries attending the program in Japan were Vietnam, Thailand and the Philippines, each of which assigned 5-7 engineers. That was also the first time I got the chance to communicate and work with the Thai people. Initially, it appeared to me that Thai and Vietnamese people shared some the same traits, but I found myself altogether wrong later, we are vastly different. The Filipino people prefer to be in groups, Thai people sometimes go out with a group, sometimes are seen to be alone, and more of Vietnamese people love going solo.
Since the first trip to Thailand in 2009, I have been back to work in Thailand few years later. That’s why, now I’m writing this series as a Vietnamese ecommerce expat have been based in Thailand for almost five years, and keep working on Southeast Asia region, especially Thailand – Indonesia – Vietnam Internet & ecommerce markets.
Also read: Go SEA or go home. P2: Indonesia – Beauty in the Ugly
People & Culture
When I went back to Thailand for working, due to my very first impression of the similarity between the two countries, I had not learnt much about the country’s culture before coming. On the surface, Vietnam and Thailand have the same time zone GMT+7, then Buddhism, 1.5 hours flight apart. However, after experiencing all SEA countries, I realized that Vietnamese has many opposite behaviors with the Thais and while shares some familiar identities with Indonesians. In Asia, the Vietnamese are a bit more like the Chinese people or some parts of the Taiwanese and South Koreans in terms of behavior and culture, which also explains the massive increase in Vietnamese – Taiwanese or South Korean intercultural marriages, though people often think of economy reason instead of cultural ones. South Korea and Taiwan also contribute lots of companies with operation in Vietnam. But we will leave such this fascinating topic for another time to get more in-depth discussion, not now.
Usually Vietnamese people are quicker and and can quickly learn something new, but the Thai are more patient and more elaborate to get the final products done. While most of the Vietnamese work harder, Thais prefer to use their time finding enjoyment. But Thais are also good at doing business while maintaining their relaxation manner, this is also a key reason while Thai tourism industry are growing well and attracting millions of tourists every year. Tourists love the Thai hospitality and kindness while they’re traveling. More than 50% tourists have returned to Thailand after their first trips. Generally Thai people are more hospitable and jai-dee (eg good-hearted) than the Vietnamese.
The Vietnamese are generally good at natural sciences such as mathematics, physics, chemistry and IT. Due to BusinessInsider: ” Vietnam’s basically the only low-income country that performs at the same level as rich countries on international academic tests.”. On PISA test, Vietnam comes ahead of Germany and Switzerland in science – and ahead of the US in science and maths. Thai people have very good artistry and creativity. They have many designers, artists. They also have very strong marketing mindset. And no wonder why they stand out as ASEAN’s hub for advertising industry. Many FMCG brands in Vietnam have to to go Thailand for advertising production. Thai products also earn a good reputation in Vietnam for their reasonable price/quality. Thai companies are gradually looking to outsource their software work to Vietnam.
Diplomacy – Politics
Sometimes I found out that the two countries have quite ‘funny’ contradictions. Thai folks seem to get along a whole lot better, hardly lose their tempers or engage into individual conflicts. Most of them always try to avoid confrontation. Meanwhile, the Vietnamese are hot temper, oppositely with the Thais. There always seems to be some sort of conflicts, even due to trivialness like unintentional touches in the local pubs or on the crowded road, some really fierce battles with knives may happen.
However, while the Vietnamese probably have no interest in any kind of political confrontation, hmm the reason is too obvious to talk about in a communism country, Thai people are always ready for political rallies till the last few years. In Thailand, anti-government protests leading to violence are being hold frequently and no longer strange. Since 1933 when Thailand had the first democratic government, there were 21 prime ministers were overthrown. If I wasn’t wrong, former PM Thaksin was the only one who was able to hold a full term, except for the second term. Until the junta government, we could celebrate one more thing in common between Thailand and Vietnam.
Thailand is a master in the art of diplomacy in Asian stage. It was the first country in Asia to establish formal diplomatic relations with the United States and a longtime US ally in Southeast Asia. They also have a very close relationship with Japan and companies of this country. There have been more than 100,000 Japanese in Thailand (probably the largest Japanese community in ASEAN) and Japan has also allocated the most investment to Thailand in SEA countries (though Japan is recently shifting its investment to Vietnam, Indonesia and Myanmar). CP Group, one of the largest family corporations in Thailand, is also the first foreign company to invest in China when this nation began opening. Thus, with the three largest economies in the world, Thailand have set very close and longstanding relationships though these mentioned countries had great contradictions in the past.
Previously, I used to feel “proud” because Vietnam could win wars against big countries like the United States, France, China, the Mongols in their peak time conquering the world. I later realized, although these victories were incredible and very few countries in the world could do, the fact is that Vietnam used up our power and resources unnecessarily. We paid dearly for continuous wars every a few decades or hundreds of years, wasting both physical and human resources and having to rebuild everything from scratch, poorly. Meanwhile, going back more than 700 years since founding, Thailand have avoided most of the wars, so it is the only country in SEA not invaded by the West (of course excluded their Asian neighbor) because Thai leaders deftly dodged, early suggested for cooperation and ceded lands, etc. If there had been no war, Vietnam must have been a strong power force in Asia.
Meanwhile, Vietnam was super-brave when confronting the world’s largest military-economy, defeating the top military in Europe, combating the world’s most populous country for thousands of years. The spirit of our self-reliance is very high although the leading economies of Europe and Asia such as Germany, Japan and Korea are still dependent on the United States for economic development and national security. To be honest, standalone is not a good way to grow for Vietnam. But due to historical and political reasons, there is still a dilemma for Vietnam in the relationship with US and China.
Without any sufferings due to no wars, Thai people usually have long-term vision and their characteristics are not as impatient as Vietnamese people. “Milk of human kindness” (Nature of human is good). If you are not able to figure out what is waiting ahead, you must be on the defensive and set short term plans, try to leverage as many as opportunities as possible, which is the typical Vietnamese trait. This trait can reason why some groups of Vietnamese don’t have good reputation in some countries while living abroad.
Having not experienced any wars so far, Thailand has several family business with the fortune accumulated by multiple generations, so they are extremely rich. Credit Suisse reported that Thailand has more than 90,000 millionaires, as many as in South Korea and Singapore though these two countries have GDP per capita 7-10 times higher than Thailand. Korea’s population is about 50 million, little bit less than Thailand which is 66 million. Besides, the number of Thai billionaires is also highest in SEA, 4 of which are top billionaires or familes with over US$10 billion. Thailand has total 28 billionaires due to Forbes. At the same times, Vietnam has just more than 14.000 millionaires with only two billionaires, but are on the fast growing track. From Knight Frank’s report: Vietnam’s super-rich population is growing faster than anywhere else in the world.
In the past few years, most of the leading Thai corporations have considered Vietnam as a key market in SEA and even in Asia.
The large corporations such as Central Group, Thai Bev, CP, Berli Jucker, Singha, SCG etc. have been investing in many big retailers in Vietnam such as Metro, Big C, Holcim, Nguyen Kim, Zalora Vietnam, Vinamilk, Sabeco, considering Vietnam is one of the six most attractive retail markets in Asia.
Much younger than their counterparts in Thailand (mostly from 50-70 years old), the Vietnamese home-grown big guns such as Viettel, FPT, VietJetAir , Thegioididong – TGDD, VinGroup usually from 10-30 years old, are also quickly growing and firmly holding their home-ground market while also aggressively going global (Viettel Telecom, FPT Software, VietJetAir).
TGDD, a 13 years old retail chain, now dominates Vietnam digital and electronics market, which used to be led by Nguyen Kim (Power Buy style, majority owned by Central Group). Excludes India and China, FPT Software is one of the top software outsourcing companies in Asia with more than 12.000 employees. VietJetAir, a 10 years old company is now competing head to head with Malaysia’s AirAsia, Indonesia Lion Air, Singapore’s TigerAir. VietJetAir also created the first and the only female billionaire in Southeast Asia with it’s CEO Ms Phuong Thao ($2.4 billion). Last year, the feminine CEO signed a deal to buy 100 Boeing airplanes with total $11.3 billion during U.S. president Barack Obama’s visit to Vietnam.
Today, in ASEAN, Thailand is the largest trading partner of Vietnam and Vietnam is the second largest export partner of Thailand, with total bilateral trade in 2016 reaching $12.5 billion. See more “Nhà đầu tư Thái Lan – vào sâu, ở lâu, bám chặt”
It’s almost impossible not to mention tourism when talking about Thailand. And I chose Thailand instead of Singapore for my overseas job of online travel industry.
In this industry, Thailand is No. 1 in SEA nations. Last year, it attracted 32 million international visitors (the second in Asia, after China), earning almost US$50 billion. Bangkok is one of the world’s most visited cities, along with New York, London and Paris.
Start-up & E-commerce
Until 2012-2013, startups and the Internet market in Vietnam has grown better than Thailand, or even Indonesia. At that time, VNG may have been the startup which earned the highest revenue and the largest startup in Southeast Asia, a 7-8 years old startup with annual revenue around two hundred million USD.
However, at the moment, Vietnamese startups have been surpassed by Thais and of course dwarfed by Indonesian ones. Take the amount of investment in this year as an example, Pomelo receives 19$M, fin-tech Omise earns $25M from ICO, aCommerce receives $65M. Central Group has formed a 50-50 joint venture US$500m with JD which also invested $44M to Tiki.vn an Amazon of Vietnam. Momo, an e-wallet also got $28M from Standard Charter and Goldman Sachs, VnTrip raised $10 million.
The Vietnamese startups, on the other hand, encounter many difficulties in raising fund. The main reason is that most of the investors are interested in the expandability to other countries of a startup (except the largest market in Indonesia where only one country is good enough). Besides, Vietnam’s GDP ranks 6th in South East Asia (SEA), and their startups hesitate to reach out international markets.
Why there is such a huge difference? In my opinion, we can analyze the problem in following perspectives
Founders & Products
Thai founders usually originate from business oriented family, so they have good perspectives about the market. Vietnamese founders, by contrast, usually start with the engineering background, which may substantially benefit their startups in the technical aspects. However, their products rarely meet user needs, and hard to use. Because many Vietnamese startups are lacking creativity, they tend to replicate products from foreign counterparts without adjusting to fit with the local market.
Thai people are not great at technology, but their product has good UI/UX and user-friendly. Besides, most Thai founders can communicate fluently in English due to being sent to study overseas by their wealthy parents, or living in a large foreign community. At the moment, Vietnam is in top ten countries which have the most international students in the US . Vietnam has even surpassed Japan in total enrollment to hold the sixth position, only after Canada, South Korea, Saudi Arabi, India, China.
Another reason is the significant growth of Thai tourism. Expats can easily make a living in this country, so there are a lot of foreign entrepreneurs start their business in Thailand. For example, two American founders of Agoda lived in Phuket. Recently, Pomelo’s founders, who used to work for Lazada, are Korean, Chinese and Thai. Another startup whose founders are foreigners is Omise, which works on fintech and payment. Finally, a German is the main founder of Eatigo, which received more than $10M investment from TripAdvisor. For a reference, let’s read my post: “Why Thailand is top the world as the best place for expats”
Thai people can be classified into two main groups. The first one is business-oriented, who usually choose their professions as businessman or managers. They have a tendency to try hard in school as well as at their job to get a promotion, or they like to start their own business. People in this group often start their company with family members or friends (usually classmates). In contrast, Thai people in the remaining group are likely to be satisfied with 9 to 5 job, and they do not have much ambition. Therefore, their career path usually limits as a middle manager. They can work well with repetitive jobs, provided that they have instruction.
Because of the supplementary synergy of these two groups, Thai companies have strong foundations. At the top management level, the personnel usually come from generations of a family, so they form a solid team which is capable of running a company smoothly for years. At the lower level, there are people continuously seeking new opportunities. However, it is not a serious issue because when a company has a good reputation, employees are more likely to stay. Besides, it is said that Thai people tend to be risk-averse.
On the other hand, in Vietnam, there is no significant difference in personality between the manager and the employee groups. They all think that they are better than other people. Employees are always looking for better jobs, and managers are trying to start their own businesses. My foreign friends usually asked me “Is it true that most of Vietnamese have their side-job? Can you estimate how many percents? “. Because of these traits, there are countless small and medium businesses are founded each year in Vietnam, but there are not so many giant companies. It can be explained that because it is so hard to find a loyal management group in Vietnam. In another word, it is much more challenging to create a large local company in Vietnam than in Thailand. In case there are people can successfully grow their businesses into large ones, we can call them “Superman”.
In Vietnam, the two companies completely solve the human resource “Vietnamese style” challenge, are Viettel and TGDD. Viettel, a state-owned firm, implements a policy using competitive salary and strict military discipline. TGDD, a listed company, on the other hand, encourages their employees by a policy which links competitive bonuses with performance. Therefore, TGDD’s employees are willing to work days and nights to serve their customers and increase company’s revenue. However, it is projected that TGDD’s model will have to be modified to tackle challenges in the era of e-commerce when their HR model would likely not fit at some points.
Although Thailand was one step behind Vietnam in the Internet market 5 years ago, they experienced a rapid and timely growth. Till now Thai ecosystem, despite the fact that it has not been perfect, has been somewhat complete.
Their three biggest telcos are AIS (belongs to Singtel, used to be managed by president Thaksin), True Move (belongs to CP Group, and China Mobile owns 18%), DTAC (directly invested from Telenor – Norway). All these telcos have their own incubators, accelerators, and VCs to invest in startups. Especially, most of Thai telcos focus on achieving win-win solution instead of taking advantage of startups like Vietnamese ones (Refer my chat: Head of AIS The StartUp – Dr.Srihathai: We want to strengthen startup business with growth opportunity!)
Besides, large banks such as SCB and Kasikorn have their own investment funds, which also invest in Bitcoin/ Blockchain. The fund of SCB is about $50M.
Interestingly, the Thai government also has their fund to invest in startups, with figures are around $500M. It seems that the government really care about payment (or taxing maybe? :)), when they have an e-payment PromtPay, linking to all the banks. Every year, they organize up to 2 significant Startup Thailand events (Refer to an article at Business Insider: Thailand’s national e-payment system should bolster e-commerce)
Vision for SEA countries
As mentioned earlier, what surprised me in the period from 2013 to 2014 was that the startups were rushing to expand their markets to SEA countries, although they did not have the significant amount of investment, and they were not even on top of their countries, for example StockRadar and Priceza, the bigger ones can mention Ookbee and aCommerce. Most of the startups founded by foreigners likely had “Go SEA” concept in their minds from day one. Omise, Eatigo, Pomelo are already operating in one or two other countries in SEA.
How can Vietnam collaborate with Thailand? Please share your ideas!
Next : Go SEA or go home. P2: Indonesia – Beauty in the Ugly
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