On a quick walk from the hotel district of Ho Chi Minh City to the Reunification Palace — where the North and South of Vietnam became one country after the Vietnam War — tourists pass by vendors selling street food, pop-up tables with this week’s lotto tickets and taxi drivers pitching to everyone who walks by in the hopes of securing a fare.
It’s this kind of vibrant capitalism found throughout cities in Vietnam that tech startups around the world tend to admire.
“It is pure grit and hustle,” said Bobby Liu, co-director at the Topica Founder Institute, a Vietnamese education technology startup.
Liu has lived in Vietnam since 1997 and has been part of the local tech scene since 2011. For years, he was a participant in the country’s burgeoning startup scene that was regarded as having a great deal of potential.
In the past 18 months, this potential has been accelerated by the trade war between the U.S. and China, according to people in Vietnam’s tech industry and regional investors with stakes in the country.
With China and the U.S. at odds — and tech companies and money caught in the middle — Vietnam has emerged as one of the beneficiaries of the trade war. The country’s startup scene continues to experience healthy investment from both China and America, buttressed by increasing interest from a diverse group of Asian investors as well as major tech companies in the U.S. and China, experts said. The broader boost to Vietnam has been strong enough to strain the country’s existing infrastructure.
The most high-profile change came when Google announced in late August that it would move production of the Pixel phone from China to Vietnam, marking a significant on-the-ground moment in the U.S.-China trade war.
Then, Grab — the Southeast Asian equivalent of Uber — announced plans to invest $500 million in Vietnam over the next five years.
The announcements offered a public confirmation of what tech investors and executives in the region had already known for years — Vietnam’s market had begun to flourish. It is now the third-largest startup market out of 10 ASEAN countries, according to a new report from Cento Ventures, a Singaporean venture capitalist firm. Two years ago, it was sixth.
Nikhilesh Goel, co-founder and chief operating officer of Validus Capital, a Southeast Asia investment firm, said Vietnam has been boosted by American investment that has shifted its focus away from China, but noted that the country’s good fortune is the result of years of changes — both public and private — that have resulted in pre-trade war success stories like Momo, an epayments company, and Tiki, an ecommerce company.
“We must not forget that Vietnam is a fast-growing market in its own right and has the right conditions for the startup scene to grow and mature regardless,” Goel said.
The trifecta
Liu credits Vietnam’s success to three elements: an extended period of peace, the country’s “Hanoi Hustle” and the Viet Kieu, ethnic Vietnamese who are returning to Vietnam with greater frequency.
“Vietnam hasn’t really experienced any kind of economic peace for a long time,” Liu said. “This is something new, an opportunity to [discover] the possibilities.”
Vietnam spent roughly 100 years in a state of conflict. The 20th century was marked by the fight against French occupation, after which the country navigated the destruction from the American-Vietnamese war, then fought off an attempted invasion from China and a war with Cambodia to oust the genocidal Khmer Rouge regime.
The political upheaval displaced millions of people, leading to diasporas of Vietnamese living abroad. For example, in 1979, the Jimmy Carter presidency opened the American border to allow 14,000 people from Laos, Cambodia or Vietnam to enter the country each month.