Secrets of startup success – from Viet Nam

He will be handing over executive control to his son, Huy, sometime next year. The endless green fields of retirement await.

" As soon as you sit back and think you’re on top of it all, you’re probably doomed."
Lai Hoang Hung, Founder, HTD

So what’s wrong with this picture?

Nothing, really. It’s a story the millions who every year throw the dice and start their own company would probably love to emulate. Be their own boss, build something themselves, call the shots on their retirement.

Of course, sadly, most fail. In spite of tax breaks and government assistance schemes.

Is Viet Nam any different? Can I hear old hands muttering about ‘special arrangements’ in Viet Nam?

For Hung, there were none. His sliver of opportunity came in the 90s when a former Haiphong wharfie and then Secretary-General of the Communist Party, Do Muoi, declared a ‘new road’ policy permitting private company activities.

NEW ROAD

Visitors to Viet Nam today are amazed at the standards of living but this was by no means certain in 1996 when Hung quit a comfortable government job and got out there to ‘have a go’ in private enterprise.

I caught up with Hung recently over a beer at the local golf course and asked him about the keys to his success.

His story is a fascinating chapter in the development of Viet Nam and its evolution of a more market-based economy. But just as fascinating is how universal his story is for small business and would-be entrepreneurs anywhere.

WHAT SUCCESS?

Hung openly laughed at the idea he has ‘succeeded’. There are always problems great and small that have to be looked after, he explained.

As soon as you sit back and think you’re on top of it all, you’re probably doomed. There are always others out there who’ll do the extra yards if you won’t, he said.

Hung though did private a few tips and they have universal value.

Do a simple market assessment

Do Muoi’s Viet Nam was going to need factories and those factories would need specialist building materials.

Their nature would change over time: power stations would shift to processed food. Further into the future, IT equipment. But some areas of demand would not change and others would reflect the specialist needs of the sector.

It sounds simplistic but for Hung it was simple – in scope. The key issue of quality was something else.

There’s a lazy generalisation the Vietnamese are permanently addicted to the market of cheap and shoddy products but Hung saw through that.

He would confidently tell prospective buyers sure, his products cost more than other like products in the market – but that was because they delivered more in terms of quality and durability. Much more in fact.

Hung’s view was never be backward about your own strengths. Did he get it right? Absolutely. But this was not so obvious in the Vietnamese market of 1996.

Getting the family out of a family business

This might be one area where cultural difference between Viet Nam and Australia does count. If the loyalty of family members is unquestionable, their competence is not.

One of Hung’s most difficult tasks was getting rid of free loaders from his family and persuading them yarning in the local coffee shop was their real talent after all. Just not on his pay packet.

It might also be where Hung had a real break. Apart from being the mother of two gifted children, his wife was a thoughtful and clever, always waiting up for him no matter how dishevelled he was. The fact she was also senior investigator of the central Bank of Viet Nam in her own right did not escape attention either.

Collect your debts

This is a must do for small business anywhere. In my long experience with Austrade what I always considered unethical was the tendency of larger companies to intentionally drag out payment to smaller ones.

In my experience in Asia – particularly Japan – going to the larger company’s bank was remarkably successful.

Where good standing with a bank is a most important asset, even a question from the bank to the debtor company on why this foreigner wants to see me about your company would produce a muttered apology and a quick payment.

Hung however ignored my advice and stuck with an established Vietnamese stratagem of just wearing them down.

The sight of a CEO turning up every Wednesday morning to ask for his money becomes too embarrassing for even the most hard-hearted accountant and they would probably pay their bills just to get rid of him.

But was this the best use of his time? He seemed to think so and the protection of cash flow is no small thing for a small company. In fact, this might even be an example of strategic thinking.

Be flexible

A chance meeting with an Indonesian businessman a few years ago resulted in a very comfortable deal. It required no extra staff as they already had a large import section and it was virtually money for jam for Hung.

It seemed to violate the basic rule of sticking to your knitting but you never know when extra cash might come in handy.