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IDG will invest another $400 Million in Vietnam

Mr. Patrick J. McGovern is the founder and chairman of IDG (International Data Group), one of the leading event, research and technology groups in the world.

In 1964, after graduating from MIT University and working as assistant editor for Computers and Automation Magazine, Mr. McGovern established International Data Corporation (IDC), which is now a partner of IDG.

Three years later, he published Computerworld Magazine, providing readers with information about technology and new products. Since then, IDG has published more then 300 newspapers and magazines, and opened online networks including more than 450 websites around the world. Some brand names of IDG in more than 90 countries include CIO, CSO, Computerworld, GamePro, Network World and PC World.

In 1980, Mr. McGovern began his first cooperation with a company in China. In 1992, he started to establish a presence in Vietnam.

Mr Patrick J. McGovern, chairman of IDG, tells us that the market in Vietnam is one of the fastest growing in the world.

Highly skilled and low-cost labor are two of the most attractive elements in Vietnam, Mr. McGovern says. However, in order to help grow the technology industry, he thinks Vietnam needs to invest more in education to satisfy the demand for quality labor. NCDT discussed this issue with Mr. McGovern during the Computer Electronics World Expo in Ho Chi Minh City, Vietnam.

What is your opinion about the economy in Vietnam?

Among developing markets, Vietnam is the fastest growing after China. IDG has operations in more than 95 countries and Vietnam is one of the fastest growing in services, education, information, investment and small business creation.

What are the activities of IDG in Vietnam?

We’ve invested US$ 150 million in Vietnam. There is $50 million in education and information and $100 million in venture investment. IDG is investing in companies on mobile phone and Internet platforms, such as online shopping services, online games, online payment systems and education programs. About 70% of the companies IDG has invested are high-speed Internet-based.

In the future, which industries do you want to invest in?

We will continue to invest in online services such as security, shopping, online education, games and video services. We invest in Internet-based companies with high growth potential. Vietnam is a good market for this reason.

How has IDG’s investment performed in Vietnam?

IDG opened IDG Vietnam in 1992, mainly in the events and research markets. For many years, the company grew at about 30-40% per year. IDG Ventures has invested in 40 companies and has seen profits up to about 75 times of the investment amount.

What will be the level of IDG’s investment in the Vietnamese market within the next five years?

We intend to open a second fund with $150 million for venture capital and a new growth fund with $250 million. We hope to increase the number of companies that IDG invests in up to 80-90 in the next 5 years.

What do you think about the information technology (IT) sector in Vietnam?

The level of growth in information technology was about 20% in 2009. Many companies invest in Vietnam to manufacture and provide technology services, because they realize that the Vietnamese work hard, are intelligent and fast learning, and have had good education in information technology.

Is it also because of lower labor cost?

Many businesses have invested in China, but the labor costs there are increasing on average 30-40% per year. Labor costs in Vietnam are lower than China by about 40% (labor costs in China are about $1.50 an hour on average but in Vietnam it’s about half that). Many companies want to leave China and are choosing Vietnam because of the lower labor cost and high skill.

How can the IT sector in Vietnam grow stronger?

The best way is to invest in education. Right now, only 11% of students are studying telecom, computers and technology. To provide more labor in this field, Vietnam can encourage students to focus on this major from high school forward.

Does this mean we don’t have enough labor to meet demand in the IT industry?

There needs to be a great deal of labor to satisfy the many investment projects. In Vietnam, there are many knowledgeable people in IT, but it’s not enough. The growth of technology is always in relation with educated workers. Labor needs to be both quantity and quality. If there is enough highly-skilled labor that will lead to the fast development of the information technology industry.

Can Vietnam follow India’s software industry?

I think so. In India, spending on service technology for software is triple that of Vietnam. Software development or similar activities can also be done in Vietnam because the two countries have the same skills. But [Vietnam] needs to have more skills in English for customer service.

What about developing IC?

We can talk about Intel. They decided to build a plant for assembling and testing IC in Vietnam. It’s two times bigger than any of their other plants. They searched many countries, checked their labor markets, and found Vietnam to be the suitable choice.

Can you compare Vietnam’s results to come with China?

We worked in China before Vietnam. Our first project in China was in 1980. However, I realize you are going to catch up. Many things are repeating in Vietnam such as investing in education, encouragement and incentives from the government, and the development of stock market with the role of raising capital for developing companies.