Vietnam is going to mimic the growth of another Asian giant – South Korea

Babylons: Recently, there is more awareness of made-in-Vietnam products. Why is that happening?

Lawrence Chong: It is normal for any emerging country to garner its fair share of attention. Vietnam, being an industrious society with a relatively low-cost structure and better infrastructure, will not have a problem in securing better market share when producing quality products.

However, I believe a more significant phenomenon is the growing desire to experience Vietnamese culture through food, art and fashion. You are finding a lot of people overseas setting up food and beverage outlets with concepts inspired by Vietnam. The prices for Vietnamese art pieces have also risen exponentially.

This is an important trend but having been to Vietnam several times, I don’t think our Vietnamese friends really appreciate the significance of the new soft power – Vietnamese culture. There is growth potential here because of its uniqueness. Quality is no longer enough. Now the world needs unique experiences.

Vu Cao Dam’s famous Chuyen tro voi giai nhan trong vuon (converse with the beauty in a garden) (1939) was purchased for US$230,477 in Hong Kong. (VnnNews.net)

Babylons: Vietnamese export companies are facing increasing competition from emerging markets like Cambodia for agricultural produce and labour intensive products. What action do you advise these producers to take?

Lawrence Chong: The challenge is that Vietnamese companies do not go far enough in their own product development. There is too much emphasis on quantity and variety of products. Therefore, when other countries offer similar products with a lower price point, Vietnamese products suffer. Vietnamese products have limited differentiation and value. For example, if you were to sell plain noodles, it is easy to undercut this business with a lower price. However, if you leverage on your core ingredients and create uniqueness by providing instructions on how to prepare Phở then you enhance the value.

In addition to this, Vietnamese companies must learn how to appreciate the power of design to raise price points. Japanese and Korean agricultural products are priced at a premium because of the design and packaging. When you combine these strengths with great tasting noodles, you enhance your competitive advantage. This then increases your profit margins and give you the fuel to fend off cheap competition.

Babylons: A lot of famous Vietnamese brands have fallen into foreign ownership recently, including Highlands Coffee, Pho 24, Bibica, Sabeco. What’s your view on this trend?

Lawrence Chong: It is really a pity because a number of these brands like Highlands Coffee and Pho 24 could have grown into larger brands. However it is unavoidable, if you look at global trends. It is not easy to have the strong will and ambition needed to build companies into global brands, so people tend to cash out early. Some of them may have sold out below valuation.

If you look at a number of these brands, there are still many areas where they could have improved in their execution such as customer service and packaging. Once the business is generating cash flow, the owners seek an early exit.

We have not seen many Vietnamese brands fully exploiting the power of Vietnamese culture and the renowned spirit of tenacity. By giving up so early, it does not fit the image of a Vietnam nation that was preserved despite French colonial rule and American power.

So the question remains, as the Vietnamese economy has so much more room to grow supported by an industrious society, why are these owners cashing out so early? Are they really making a good return or have they actually lost a golden goose?

Observing the buyers, I believe they have gotten themselves a good deal because they know that the market opportunity is huge.

From the looks of it, Vietnam is going to mimic the growth of another Asian giant – South Korea. Like Vietnam, South Korea had to recover after a major conflict. Similarly, it has strong traditional values and culture, and a talent base overseas in Vietnam’s diaspora. It is only a matter of time before we see equal growth and success. My advice to Vietnamese companies is to be more confident in your own culture and create unique experiences. Work very hard to execute better. Don’t cash out too early or you will miss the boat to become the next Hyundai or Lotte.

Babylons: In a nutshell, what actions do you advise brand owners to take to protect their brands?

Lawrence Chong: The best way to protect brands is to start from the inside out. Are your staff clear about the purpose and vision of the business? If they do not have faith in your business then half the battle is already lost. Spend more time ensuring that people clearly understand the intent and meaning of their work. Then create a culture where you increase the probability of sharing good ideas.

We have served companies in over 15 cities across Asia. Ninety percent of the time the staff are aware of negative practices but in more than half of these companies, they do not tell the management or offer their own solutions. Imagine what would happen if these staff had shared with the management and the leaders changed things. Often these ideas could make a real difference to the performance of the company.

If you want to ensure that your brand continues to grow, think deeply about what you value in a person. Setting up a clear system to manage talent will help secure your success. It is incredible that most companies spend a lot of time on sales but less on building systems to capture and grow value. Most of the time, it is like a leaky vessel – whatever is not captured is eventually lost.

Owners should consider the following steps to build strong brands:

1. Clarify the meaning and purpose of your work to every member.
2. Create conditions to enhance communication and collaboration. Find ways to lower barriers. Enable and reward collaboration.
3. Create a clear leadership development programme to shape corporate behaviour. You don’t have to be big in order to start. We have seen even companies with a staff strength of 10 deploying simple measurements.
4. Clarify the purpose of design and ensure that all forms of expression meet your business goals. If your ads and corporate messaging are all over the shop, it is a sign that your organisation is confused. Build a brand from the inside-out, starting with a meaningful purpose.

Babylons: The world economy is in crisis, how can we be part of the solution for our customers’ problems? The main Vietnamese export markets are Europe and US and these two economies are in turmoil. How can we be part of the solution for their problems so that we can sustain our export values?

Lawrence Chong: Again, I think the time has come for Vietnamese brands to go up the value chain by focusing on creating unique experiences. Vietnamese companies should focus more on Asia and Latin America where there’s growth. However, to gain traction in this countries, they need to improve their image and generate more unique experiences through the combination of culture and good business models. It is time to stop selling based on price points and move towards selling more creatively.

Hanoi’s famous Beef Pho, Phở bát đàn (tiendatle)

Babylons: Instead of spending on marketing and advertising, what’s the best way to communicate with customers with no budget?

Lawrence Chong: A unique product will get people talking. If you are just selling clothes, no one will bother. Sell fashion and people will follow you. If you just sold noodles, you are just one of the many options available. If you sell the charm of eating by the roadside of Hanoi, add in the beef chunks and the special broth, it suddenly becomes an experience that people will want to have again and again.

Lawrence Chong is the Director for Strategy at Consulus, among the few Asian identity branding consultancies with both business management consultants and multi-disciplinary designers. Consulus has served leading and emerging Asian brands in 15 cities throughout the Asia-Pacific. For more information visit www.consulus.com.