Tuesday, September 9, 2014
VietNamNet Bridge – Vietnamese companies that make games and apps have to export their games or take non-game projects in order to survive, as the local market is not profitable.
Many game firms have questioned whether it is worthwhile to pursue the business.
The director of a small game firm with 50 workers in Hanoi said it is very difficult to make money in Vietnam. Since the beginning of 2014, his firm has developed several projects which “have no relation to the game industry”.
Most recently, the director said, his firm had succeeded with a project on location solutions for non-smartphones. The solution was sold to a Singaporean telco through an intermediary company.
The director said he does not want to give up games, which is the firm’s core business. However, he is now thinking of making games to distribute overseas instead of Vietnam.
“We are going to sell a game to a foreign company which would distribute the game overseas. We do not intend to distribute the game in the home market. We have to struggle hard to overcome too many barriers,” he said.
The director said that game firms, because of the government’s management oversight, will not be able to develop because they meet high risks and they cannot figure out long-term business strategies.
“You will have to make heavy investment to develop a game. You will have to spend big money on qualified engineers and other expenses. However, you are not sure if you can obtain licenses for distributing the games,” he explained.
“Meanwhile, gamers are now spending less money to play games. They would rather play free games, so the revenue from games is expected to drop,” he said.
The director thinks that many small and medium sized firms will take extra non-game jobs to survive the difficulties and hope for a “brighter future”.
In early 2014, a small game firm in Hanoi developed two mobile games and posted these on app stores.
However, after having to pay VND220 billion in fines, it decided to give up the two games, though it had spent big money to develop the products.
Game firms have complained for years about the barriers they face. The watchdog agency over these companies has promised to amend the legal framework to help ease difficulties, but nothing substantive has been done.
Duong The Luong, director of VTC Intecom, said domestic game firms still face too many problems.
About 40 PC games and 60 mobile games were distributed in the first six months of the year, but the probability of success was low, at just 10 percent.
“Success” means “breaking even”, and “not taking a loss”.
VTC Intecom launched several games in the market in the first six months of the year and it did not incur a loss. However, the company is considering developing non-game projects, including cloud computing and e-commerce.
Source: Buu Dien/Vietnamnet
VietNamNet Bridge – Only 20 percent of Vietnamese businesses have domain names, which opens up opportunities for businesses dealing in domain name trading.
Domain names are traded in Vietnam, even though there is no legal framework for the business. The involved parties go ahead with sales because they say they cannot wait for the legal framework to be completed for transfer deals.
The Ministry of Information and Communication in 2008 released a circular on the management and use of internet resources, which lifted the ban on domain name trade and transfer. However, the circular was not enough to pave the way for this kind of business.
There are hundreds of domain name investors, individual and institutional, mostly in Hanoi and HCM City. Hanoi-based Micronet is one of the investors. It now owns 3,000 domain names and hopes to have an investment portfolio of 20,000 domain names by 2017.
The Vietnamese market is believed to have great potential for investors. Under current regulations, domain names cost tens or hundreds of thousand dong to register, and the same sums of money are needed to retain the domain name every year.
Meanwhile, investors can transfer the domain name for billions of dong if they can find suitable buyers.
BKAV, a well-known Vietnamese internet security solution firm, for example, had to spend VND2.3 billion in 2012 to buy www.bkav.com from an US company which registered the domain name before.
According to the Vietnam Internet Network Information Center (VNNIC), only 20 percent of Vietnamese businesses have registered domain names.
Nguyen Minh Hong, director of the Quang Ninh Province’s Information Department, said at a recent workshop on domain names that 1,400 “.vn” domain names and more than 2,000 international domain names had been registered in the province.
The province had 11,800 businesses by the end of 2013.
“The figures showed that the number of Quang Ninh’s businesses with domain names remains modest. Meanwhile, in the digital era, e-commerce and internet-based ad activities have been developing so strongly,” Hong said.
The Ministry of Information and Communication said it was drafting a decree on auctioning and transferring usage rights of digital telecommunication repository and internet domain names.
An official of the ministry said the decree will clarify which kinds of domain names can be transferred.
The domain names with suffix “.vn” will be transferable, while transfer of domain names related to state agencies and socio-political organisations will be prohibited.
The decree will also show the procedures that involved parties need to follow to conduct domain name transfer deals.
Tran Minh Tan, Deputy Director of VNNIC, said the ministry is also compiling a circular guiding the management and use of internet resources.
Tan, analyzing the domain name market’s history, noted that the number of registered domain names rises sharply every time the policy is adjusted.
This shows that policies have a major impact on the development of the domain name market.
VietNamNet Bridge – Samsung and Microsoft this year relocated their smartphone production bases in Vietnam as they have closed factories in other parts of the world.
In mid-August, Microsoft, the new owner of Nokia phone brand, announced that its factory in Bac Ninh would become a major smartphone production base in its global value chain.
Nokia, the 150-year old phone manufacturer, is relocating its factories in Hungary to other sites. It is also closing some of its factories in China.
More than 30 production lines from its factories worldwide will be brought to Vietnam by the end of the year.
Stephen Elop, CEO of Nokia in October 2013 and now vice president of Microsoft, said, after Nokia inaugurated its factory in Bac Ninh province, that he could see great advantages setting up a production base in Vietnam.
He said Nokia was encouraged by the investment incentives offered by the Vietnamese government, including the 10 percent corporate income tax for the first 15 years, and tax exemption for the first four years after the year it begins to have taxable income, and a 50 percent tax reduction in the next nine years.
Microsoft, the new owner of Nokia, understands the Vietnamese market well as it has been there since 2007.
Samsung has also said that it would use Vietnam as a major production base after pouring $6 billion into the factories in Vietnam.
The managers of the South Korean group confirmed that its total investment scale in Vietnam had increased 10 times over the last five years.
Another South Korean giant, LG Electronics, has announced it will put a $1.5 billion project in Hai Phong City into operation in October.
Unlike Nokia and Samsung, the LG factory in Hai Phong will not focus on smartphones as the key products in the immediate time, but on TVs, washing machines and carpet sweepers.
However, the representative of the group said that it would make smartphones in Vietnam in the future.
Apple has not made an official investment in Vietnam, but has taken a move towards Vietnam.
Bloomberg has reported that Apple is negotiating with FPT, the Vietnamese largest information technology group, on plans to develop the Vietnamese market in the near future.
Vietnam, according to analysts, deserves to be a good investment point for Apple. The sale of Apple products in Vietnam rose threefold within the first three months of 2014, a growth rate which was five times higher than in India, where Apple has injected big money to acquire a bigger market share.
Sales of iPhones in Vietnam have been increasing steadily week after week.
Apple’s representative said at a press conference in July that the firm’s management board now sees Vietnam as a potential market.
VietNamNet Bridge - The emergence and expansion of international technology corporations in Vietnam in the past two years shows an important shift in investment. The Vice President of the Vietnam Association of Foreign Investment Enterprise (VAFIE), Nguyen Van Toan, talks about this trend.
Q: Microsoft recently announced that it would expand the production scale of the Nokia cell-phone factory in Bac Ninh Province. Earlier, Samsung, LG, and Intel had also said they would increase their investment in Vietnam. What do you think about the investment wave of these world-leading technology companies?
Mr. Nguyen Van Toan.
A: Foreign investment is not something new in Vietnam but the appearance of technology groups with projects worth billions of US dollars show the changes. This proves that the investment climate in the country is getting better and Vietnam is becoming the preferred destination of foreign investors, especially as many international companies are gradually withdrawing from China because of macroeconomic instability and high labor costs.
This opportunity also comes at the time Vietnam is strongly changing its investment attraction orientation, focusing more on quality and giving priority to investment in the field of high technology, clean technology and source technology and the investors from the developed countries.
The presence of multinational corporations can push the development of the local business community, help local businesses participate in the global production, supply chain, increase export value and improve the quality of human resources.
Creating a Silicon Valley in Vietnam is the dream of many people. I know that Samsung is seeking land to set up a research center in the north. This is a good sign because if they do so, it means that they want to turn Vietnam into their global production base. The latest technologies and models will come from here.
Q: However, the under-developed supporting industry of Vietnam is a barrier hindering the country from entering the production chain of multinational corporations. What do you think about this?
A: The support industry has been a matter of concern for decades, but until now it has not been solved properly. For Samsung, its current supply chain includes 80 foreign units.
However, when more international technology groups come to Vietnam, I believe that Vietnam's supporting industries will prosper. In early September, VAFIE will hold a conference with local businesses to seek supporting partners. It is good if a big technology group can select 10-15 Vietnamese firms.
A businessman told me that it is a huge success if Vietnam can join the 1% on the value chain of the technology groups like Samsung.
Q: To become a partner of the multinational corporations, what should Vietnamese businesses do and what support that they need?
A: First of all, Vietnam must invest heavily in technology, brains and human resources. Initially, they may have to import technology. Obviously, technology is a long-term issue of Vietnam.
In addition, the Government should also have incentives for support industries in terms of taxes, land leasing, and capital to promote the development of this field. Priority should also be given to foreign high-tech enterprises if they commit to support and have long-term cooperation with domestic enterprises.
Management mechanisms also need to be stricter to create transparency in the investment environment.
Q: With the new policies on investment encouragement, how will be the wave of investment of high-tech groups in Vietnam in the coming time?
A: Years ago, experts predicted the new wave of investment shifts into Vietnam and this is the biggest opportunity, both economically and politically. In the message released early this year, the Prime Minister set out the key task of seeking new growth engine for the economy, which is the technology platform.
At the same time, developing the high-tech industry, cooperating with many international friends such as Japan, the USA, South Korea, and the EU are also the key to Vietnam to escape from dependence, toward greater equality in development production. I believe that Vietnam can succeed in this shifting wave.