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Vietnam 2.0: Dynamic tech scene grabs global attention

By  Apr 04, 2014 1:57PM UTC

Three young Vietnamese girls use a laptop and smart phones to go online at a cafe in Hanoi, Vietnam. Pic: AP.

Vietnam’s tech community is growing fast.  From the well-known game Flappy Bird and companies like VNG Corporation, to lesser known operations like GlassEgg, Vietnam is producing an increasing number of young and dynamic businesses led by a new wave of entrepreneurs.

Much of this phenomenal growth in the tech community has been fueled by the fact that, out of a total population of 90 million, there are more than 36 million internet users in the country, a number that is continuing to grow. There are more than 140 million mobile phones in the country and more than 20 million Facebook users.

Building a tech community
As Vietnam continues its transition to a market economy, many of the young people who grew up in the ’80s and ’90s in a time of increased economic freedom are now among the country’s new breed of tech entrepreneurs. Entrepreneurship in Vietnam is seen as something to aspire to, and the coolest form of entrepreneurship currently is associated with the country’s tech community.

Among the earliest and most successful of Vietnam’s tech companies are VNG, Vat Gia, and VC Corp.  These companies were formed around 2004 and are now among the most dominant players in the tech industry in Vietnam.  However, these companies cannot be mentioned without also including the venture capital firm that was the key to their rise – IDG Ventures Vietnam.

While IDG Ventures Vietnam bills itself as the first technology venture capital fund in Vietnam, there are now a plethora of other firms seeking to become the next up-and-coming tech company in the country.  These include CyberAgent Ventures, DFJ VinaCapital, Sumitomo, and OneCapitalWay.

Alongside the venture capital funds, a number of incubators and accelerators have arisen in order to help provide the funding and skills that are lacking from many of the budding entrepreneurs. Standout incubators include the Silicon Valley Project (funded in part by the Ministry of Science and Technology) and Hub.it.

A key online community that is very active in relation to the local tech startup community is the Facebook group Launch.  On this forum, one can see numerous conversations discussing the startup situation in Vietnam, those asking for advice, posting events, and promoting their own new products.

The Vietnamese government is also stepping up to help invigorate the local tech industry. Beginning in 2010, the government announced its intention to make Vietnam an “advanced IT country”.  The Ministry of Science and Technology has facilitated this goal by investing heavily in the country’s infrastructure and its science and technology parks.  Additionally, the World Bank has provided a US$100 billion loan with the goal of further developing Vietnam’s technology infrastructure. A clear positive result of these programs has been the development of a strong broadband technology infrastructure – a key to attracting foreign investment.

Gaming takes flight
One of the most successful areas of the country’s tech community has been in the area of gaming. The whole world has now heard of Flappy Bird, but there are also a number of other Vietnamese gaming companies that are creating successful products on a consistent basis, rather than as one-off successes.  Standout local companies that are involved in the gaming industry in some way include VNG, Appota, Divmob, and ME Corp.

Any discussion of Vietnam’s gaming community must include a mention of Flappy Bird due to the level of its success – it makes for a very interesting case study.  Despite its poor graphics and deceptively simple user interface, Flappy Bird was a breakout phenomenon in not just the Vietnamese gaming community but the whole world.  At its height, Flappy Bird was making around US$50,000 a day in ad revenue. Although the game is no longer available for download, it still serves as a point of inspiration for Vietnam’s game development community.

Flappy Bird

Flappy Bird has spawned numerous clones; most of these are shoddy imitations that change the bird to someone’s face or some other object.  However, recently, someone purporting to be the original game’s designer, Dong Nguyen, has released a new game called Flappy Bird: New Season. The game appears to be exactly like the original and is currently the hottest download on the UK Apple App Store. Suspicions have been raised, however, due to the new game’s designer being much less media shy than Dong Nguyen was. Nguyen was famous for hiding from the limelight that his game created for him. So although the new game is likely not from the original designer, it is still interesting to see how popular it has become.

There is also a burgeoning business for game design outsourcing in Vietnam.  The leader in this field currently is a company called GlassEgg. The company has received game design outsourcing contracts from such mega firms as Microsoft and Electronic Arts. GlassEgg is particularly adept at designing cars, and was one of the key designers behind the hit racing game Forza Motorsport.

Not just playing around
Besides gaming, other important app areas include mobile commerce/payment apps, loyalty apps, and mobile content distribution systems.

While many foreign tech companies have already entered Vietnam and many of the apps that are ubiquitous throughout the world are also present here, local companies are starting to give the foreign invaders a run for their money.

A prime example is VNG, which has arisen as a strong competitor to Viber. VNG’s chat app Zalo has over 10 million registered users.  The struggle for the top spot has been raging for some time.  In 2014, after 3 months of heavy marketing, Viber reports that it currently has 12 million registered users. But it is clear from VNG’s announcements that this battle is far from over.

Some companies are finding ways to embrace foreign technology and use it as a tool for their own companies.  A Vietnamese online education company, Topica, has begun using Google Glass in order to teach English to its students.  Online education is a fast growing industry in Vietnam and throughout Asia.  Another company, DeltaViet, has been compared favorably to the well-known international online education company Udemy.

The e-commerce market, in particular, is starting to really heat up. Vingroup, one of Vietnam’s largest companies, which owns a variety of properties including malls and resorts, has announced that it is putting more than US$30 million into its effort to become the dominant leader in Vietnam’s e-commerce market.

The world is slowly starting to take notice of Vietnam’s tech community. It seems clear that over the coming years we can expect to see more and more mature and exciting offerings from this dynamic community.