Vietnam’s Mobile Growth Completely Ignores the Macro-Economy

On the eve of Mobile Day in Hanoi tomorrow, I think it’s worth taking a closer look at mobile growth in Vietnam. It’s increasingly becoming a buzzword that I hear among tech circles that are looking at the consumer market. Especially with foreign companies like Hungrypanda entering the market with a mobile app and big internet companies like VNG going mobile first, and even e-commerce companies like Project Lana getting more serious about fostering communication over mobile, mobile is a clear and present future. The companies are all readying the battlefield for the mobile growth factor.

Mobile growth in Vietnam is bullish as hell

One of the key reasons we’re seeing such powerful growth in mobile in Vietnam is because of the monetization potentials. In Vietnam’s web space, monetization has mainly been lead by advertising and now e-commerce. But online marketing is sparse at best, only accounting for less than 5 percent of total marketing spending in the country.

Mobile, on the other hand, although not exactly an easy space to monetize, given that telecoms take more than 30 percent of the cut on purchases made via SMS, is still a significant space. It’s significant because the market is about to expand very fast. And that market comprises of users who may have never been online before. As of late 2012, according to my sources, Vietnam has over 27 million smartphones (much of that is not on iOS and Android). And as I reported before, 6 million new smartphones will be shipped into the hands of consumers by the end of this year. That’s a 150 percent growth over the year before. And this figure is just 1.5 million under the total amount of users currently reported on the leading chat apps in Vietnam. (1)

Okay, so there are macro-economic issues

Now, lately I’ve been seeing lots of sensationalist gripes from international economists about how Vietnam’s economy is in a crisis and that it’s Asia’s weakest link, and granted, these warning signs have been seen for a long time. There is no doubt that Vietnam is in a quagmire in dealing with banking systems, corruption issues, and infrastructural issues like education.

But these macro-economic sweeping statements miss some key things about Vietnam. One of them is, small and medium sized businesses in Vietnam, according to some of my sources, are still not impacted. They’re still growing. And they account for a lot of the new businesses and growth in the country. The technology industry is also robust as ever, especially being lead by the outsourcing juggernauts in the country.

And mobile growth underlines some very key factors

Where is this mobile growth occurring? Why are so many companies set on attacking the mobile space despite the macroeconomic factors? Well, over 70 percent of the Vietnamese population is under 35, and many of them are in or entering the employment market. What’s the average monthly salary of this group of people? VND 3.2 million ($150). That may seem small, but not so small when weighed against the buying power of families that pool their salaries together living in one household. And even more so when weighed up against the dropping prices of smartphones and the already severely low 3G rates. This population is going mobile very fast, and whoever comes to dominate is sure to make tons of money. So don’t be surprised when the mobile market is one of the support beams that lifts Vietnam out of its current economic woes.

Oh, and mobile designers in Vietnam, seem to be much better than web designers.

Disclosure: Now, granted, I’m no economy major. But the impact of mobile is still a huge factor worth looking at when assessing an anomaly of an economy like Vietnam, which has been repeatedly thought to be in a “crisis” but defied analysts again and again.

(1) The math goes like this: 3.5 million from Viber + 2 million from Zalo + 1 million from KakaoTalk + 1 million from Line = 7.5 million. This does not account for obvious overlaps. Suffice it to say, if 27 million (total from 2012) + 6 million (total shipped in 2013) = 33 million smartphones in Vietnam. Thus 7.5 million only accounts for 22 percent of the smartphone market. And that assumes there’s no overlap. If overlap is accounted for, that percentage would be much smaller. This also does not factor in WhatsApp’s unknown numbers.