13 Reasons Why I Expanded My Business to Vietnam

1. I Fell in Love with Vietnam

I fell in love with Vietnam when I visited the country in 2011, and that was the main reason why I decided to expand into the country (laugh). The atmosphere of the city, the climate, the cuisine, and the Vietnamese people’s personalities matched me so well that I decided to “expand into this country”. I was especially fascinated by the atmosphere of Hoi An and Ho Chi Minh City.

 

2. I Felt the Enthusiasm and Momentum in Vietnam

Having never experienced Japan’s period of rapid economic growth or the bubble era, the slow growth in Japan was something I had come to accept as normal. However, when I first visited Vietnam, I was struck by the vibrant streets, the sheer number of motorbikes, and the construction rush of new buildings. The energy of the city and the country as a whole was palpable. It made me realize that I didn’t have to accept Japan’s stagnation as inevitable and inspired me to immerse myself in an environment of growth.

 

3. Few Companies Had Entered the Market

As of 2011, there were few companies expanding into Vietnam, and the awareness of Vietnam in Japan was low. I received many reactions such as, “Why go to Vietnam?” and “Isn’t that the country from the Vietnam War?” The fact that many companies were not interested worked to my advantage, as it made it easier to gain first-mover benefits. However, due to Japan’s labor shortage, interest in Vietnam suddenly surged nationwide, and the competition for talent in Vietnam has become more intense and faster than I initially anticipated.

 

4. The Land Area is Similar to Japan’s

Vietnam’s land area is approximately 330,000 square kilometers, while Japan’s is about 380,000 square kilometers. The sizes of the two countries are quite similar, and both have a vertically elongated shape. You might think, “So what if the land sizes are similar?” (laughs). However, before considering expansion into Vietnam, I was contemplating entering China and was traveling back and forth there.

China has massive buildings, large roads, and everything is on a grand scale, which made it difficult for me to envision how a small company like ours could succeed there. I found it challenging to grasp the sense of territory, almost like trying to understand it through an animal instinct. In contrast, Vietnam felt like a size where my instincts could be more effective, and I thought it would be a more feasible market for expansion.

 

5. A Good Balance Between Population and Development

Vietnam was a country on the rise with a population of about 90 million, making it attractive both as a workforce and as a market. In comparison, neighboring Laos had a population of around 6 million, which was relatively small, and Cambodia, with a population of 15 million, was still developing. Malaysia was more developed but had a population of about 30 million, while Thailand, with around 70 million people, was already highly developed and difficult to enter. Myanmar had 60 million people, but it still felt too early for small businesses to expand there. Indonesia, with 220 million people, had an ideal level of development but was a tough decision. Ultimately, I chose Vietnam.

 

6. Abundance of IT Talent

Vietnam, with its national focus on developing IT talent, has a large pool of IT professionals. In contrast, Cambodia still faced a shortage of IT talent, making Vietnam a more accessible country for web development.

 

7. Advantage for Japanese Companies in Talent Acquisition

In the Asian region, a country’s preference for partnerships can be significant. India tends to focus on Western countries, giving Japanese companies no particular advantage. The Philippines, with English as its primary export, is more accessible for Western businesses. Cambodia has strong Chinese investment. Vietnam, as a unique country that is less accessible to Western countries and prefers not to align closely with China, presented an advantage for Japanese companies. However, the situation has evolved, and now many countries are focusing on Vietnamese talent, reducing the advantage that Japanese companies previously had.

 

8. A Pro-Japanese Country

Thanks to Japan’s active involvement in ODA (Official Development Assistance), Vietnam holds a positive image of Japan, making it a country where Japanese people find it easier to do business. During the Vietnam War, the Honda Cub was known for its durability, so much so that motorcycles were commonly referred to as “Honda” (though I have not personally heard this). Additionally, Japanese products and culture have made their way into Vietnam, and even taxi drivers often praise Japan while you’re riding with them.

However, it seems that the positive image of Japan is mainly held by those in their 40s and younger generations, such as those in their 20s, may prefer K-pop. Additionally, the negative reputation regarding the treatment of Vietnamese trainees in Japan has become known, suggesting that the perception of Vietnamese people liking Japan might not last indefinitely. Therefore, I believe it is essential for Japan to continue making efforts to maintain a positive image.

 

9. Support from Local Mentors

After visiting Vietnam for business in 2011 and developing an interest in the country, I started traveling to Vietnam on my own. Despite initially knowing nothing, I gradually built a network of acquaintances and received support from people who were already working hard locally. With help and inspiration from contemporaries like Mr. Masuko of Pizza 4P’s and Mr. Sul of Evolable Asia, I was able to establish my own business.

 

10. Good Safety and Relatively Safe Taxis

While crime does exist in Vietnam, it is relatively safer compared to other Southeast Asian countries. It is a country where you can walk alone at night with minimal risk of being involved in serious incidents. Taxis from companies like Vinasun and Mai Linh are generally reliable, which is very reassuring. However, thefts of iPhones and bag snatching are common, and occasional child abductions do occur. Additionally, after COVID-19, there has been an increase in overcharging taxis. While safety is generally good, caution is still necessary.

 

11. Vietnamese Cuisine is Delicious

When expanding into a new market, it is crucial that the local cuisine suits your preferences, as you’ll be spending a lot of time there. Vietnamese cuisine, with dishes like pho, bun, banh xeo, banh mi, and various shrimp dishes, has always been to my liking.

 

12. Direct Flights from Nagoya to Vietnam and Proximity of Airports

At that time, traveling to Phnom Penh, Cambodia, required a layover, which consumed a significant amount of time. Vietnam, however, offers direct flights to both Ho Chi Minh City and Hanoi, which is very appealing. (The Ho Chi Minh City-Nagoya route had three flights per week at that time.)

Additionally, direct flights from Ho Chi Minh City to Japan are late at night, making it possible to work in Vietnam on Monday, travel overnight, and work in Japan on Tuesday, which is highly efficient, though it can be tiring. The proximity of Ho Chi Minh City’s airport to the city center also allows you to work right up until the last minute at the office (though I have missed flights because of this).

 

13. Low Costs Make Business Trips Affordable

As you may know, the cost of living in Vietnam is low, making business trips there far more affordable than traveling to Western countries. A week-long business trip from Nagoya to Tokyo can result in significant expenses for hotel accommodations and meals. However, in Vietnam, a week-long stay costs only about 15,000 yen for a hotel, which was a great help for ALIVE when we were still a small business (at the time).

Focusing on Vietnam was a more rational choice for ALIVE, a small company based in Nagoya, rather than targeting Tokyo. (Back then, the exchange rate was in the low 70-80 yen range per dollar, and 10,000 yen could be exchanged for 2.6 million VND. Now, it’s about 1.8 million VND. I also stayed in hotels costing around 2,000 yen.)

 

In Conclusion

I’ve briefly outlined the reasons why I decided to expand into Vietnam back then. While some aspects of the situation have changed over time, it’s clear that there were many reasons to take the leap.

In 2011, I traveled to Vietnam with about 20 other business owners on a business tour, yet I was the only one who actually expanded into Vietnam. Even when there are plenty of reasons to take action, there are often just as many reasons not to. Looking back, I believe that having a strong personal drive to expand was more important than simply having reasons to do so.