Is China’s e-commerce revolution heading to Vietnam?
China’s global dominance in e-commerce has been over a decade in the making. According to the World Economic Forum, China’s share of the global e-commerce market ten years ago was less than one percent. Today its share is 42%, dwarfing France, Germany, Japan, United Kingdom, and the United States combined. Global e-commerce has been expanding at an average rate of 20% a year according to the Economist. So, to what extent do we see this in Vietnam?
The explosion of e-commerce in China is dominated by three Chinese national champions (Baidu, Alibaba and Tencent), and is built on digitization and consumption-related mobile payments totalling US$ 790 billion in 2016. Alibaba now accounts for 11.18% of total retail spend in China, compared to Amazon's 3% of the retail action in the US. One day in China (Singles Day), can produce online sales of over US$25 billion (11 November 2017).
Where can I buy stuff?
The Vietnamese e-commerce market is primed for growth. For a start, there are not enough shshops for a young population with rapidly rising disposable income to buy things. There is one store per 54,000 people, compared with one store per 25,000 people in China and one store per 2,000 people in more developed markets. Vietnam has half the amount of stores per person as China and 25 times fewer than most developed markets. Additionally, Vietnamese population is well connected too - 130% of the population have mobile connection (so more than one phone per person) and 53% have internet connection (compared with 18% in Indonesia, for example). There are a lot of people as well, around 100 million and most of them are under 40 – and getting richer. A perfect storm…
As e-commerce transforms business and daily life (the e-commerce market grew at a compounded annual rate of 33% for the last two years and is expected to grow to around US$30 billion by 2026 (Vietnam's GDP was US$220 billion in 2017)). Vietnam is increasingly looking to leverage China’s dominance, experience and funding to develop its own national e-commerce champions.
For example, Sendo.vn, a popular online marketplace and part of FPT Corporation which is also Vietnam's flagship tech company and the official distributor of Apple products in Vietnam, raised US$51 million in August 2018 in funding. It is one of the largest funding to date with investors such as Softbank. The capital raised will be used for expansion by Sendo into a new B2C marketplace called SenMall, and its online payment service, called SenPay. Any similarity with China's TMall and Alipay?
Has anyone noticed?
At the same time, Alibaba, Tencent and Temasek have been investing in Vietnam's e-commerce ecosystem. Tencent (via JD.com) became the largest shareholder in the popular online platform Tiki.vn in January 2018, and has invested heavily in VNG (Vietnam's largest digital content provider). The market leading online platform in Vietnam, Lazarda, is now heavily backed by Alibaba and Temasek. Temasek has also invested in FPT Corporation.
With the interest and support of the Chinese and Asia tech giants, and Vietnam’s e-commerce market continuing to grow and grow - who will bet on a Vietnamese Singles Day breaking all South East Asia sales records in the next year or two?
What does that mean for IP rights holders? Well, expect to feel similar pains from the sale of counterfeit and other unauthorised goods as were felt in the earlier days of Alibaba in China. Given Alibaba's experience in handling such issues now, it may be that those growing pains are short lived - but rights holders should ensure that their rights are all present and correct, and primed for action should the need arise.
• World Economic Forum
• Enterprise Innovation
• The Independent