South Korean startups are increasingly arriving or expanding in Vietnam to tap growing demand as digital transformation accelerates in the country.
Vietnam is emerging as the fastestgrowing country in ASEAN and is attracting growing interest among South Korean startups. These have been diversifying their ventures across various sectors, strategically aligning their operations with the unique characteristics of the local Vietnamese market. While numerous traditional conglomerates and medium-sized South Korean companies are busy relocating their production facilities to Vietnam, it is notable that the influx of South Korean startups in Vietnam is growing at a faster pace than these relocations. “Vietnam is a huge market for startups, especially international ones, including those from South Korea,” said Mr. David Kim, CEO of The Invention Lab. “The local market has become smaller with stiffening competition, so South Korean players seek others with huge potential.”
STRONG STARTUPS
The startup community in South Korea recognize the significant potential Vietnam holds, exemplified by edtech startup YAHO LAB. Having entered Vietnam in 2020, the startup, renowned for its online platform connecting children with reliable tutors, is preparing to bolster its footprint in the country. It made waves in Vietnam’s edtech market last year by introducing a unique platform that links parents with verified tutors for in-home education. Its innovative app, YAHO!, incorporates play-based learning and it has established itself as the exclusive partner of Daekyo’s Eye-level programs, offering personalized one-onone tutoring. These achievements underscore YAHO LAB’s commitment to advancing education, with more innovations on the horizon. “We see immense potential in Vietnam’s investment environment, especially the edtech sector,” said Ms. Seonhee Yoon, Chief Operations Officer (COO) and Co-Founder of YAHO LAB. “This potential stems from a growing economy, a trend towards dual-income households, and an increasing need for high-quality education services. The demographics in Vietnam enhance this potential, with about 74 per cent of families having dual incomes and over 20 per cent of the population of nearly 100 million being children aged under 14.”
We see immense potential in Vietnam’s investment environment, especially the edtech sector. This potential stems from a growing economy, a trend towards dual-income households, and an increasing need for highquality education services.
Ms. Seonhee Yoon Chief Operations Officer (COO) and Co-Founder of YAHO LAB
Reviewty, meanwhile, is a startup running a cosmetics community and commerce platform targeting female consumers. Mr. Park Jin Kam, CEO of Reviewty, said its mission is to improve awareness among Vietnamese people about beauty and healthcare and become a healthy venue where users can share their experience and concerns. “Our next step is to create an ecommerce platform where buyers can undertake a seamless shopping process, from deciding what product to buy to making a purchase, while creating a channel where brands, vendors, and consumers are all connected,” he added.
Elsewhere, Go2Joy started out in Vietnam in 2016 and is a mobile online-tooffline commerce platform that connects local hotels and guests. It has found a great deal of success in Vietnam and attracted large volumes of investment capital. Other South Korean startups such as OKXE.Vn, Hiloca, Gomi, and SpaceT have also been actively boosting business activities in the country.
Figures from the General Statistics Office of Vietnam (GSO) show that, as of the end of November, South Korea held top spot among countries and territories investing in Vietnam. With 9,830 projects and total capital of $84.11 billion, it maintains a significant presence in the country’s investment landscape. Approximately 8,000 businesses from South Korea are also operational in Vietnam, providing tangible evidence of the appeal among the former’s startups to establish and develop ventures in the latter.
The recently-inaugurated Korean Startup Center (KSC) in Hanoi is a noteworthy initiative aimed at fostering the advancement of South Korean startups and fostering cooperative efforts between these startups and Vietnamese businesses. Its establishment represents a significant leap in science, technology, and innovation cooperation between the two countries. The primary goal of the center is to facilitate the entry of South Korean startups into Vietnam, promoting the exchange of experience in developing investment-led startups. This development underscores the trajectory of future bilateral ties, emphasizing technology and innovation as pivotal focal points. “The establishment of the KSC in Vietnam, home to one of the most dynamic startup ecosystems in Southeast Asia, is expected to help startups in both countries thrive together,” said Mr. Woo Young Hwan, Vice President of the Korea SMEs and Startups Agency (KOSME).
Vietnam is a huge market for startups, especially international ones, including those from South Korea. The local market has become smaller with stiffening competition, so South Korean players seek others with huge potential.
Mr. David Kim CEO of The Invention Lab
HUGE POTENTIAL
South Korean startups are actively showcasing their endeavors across various sectors, with a particular focus on technologyrelated fields. Mr. Sang Cheol Jeong, President of VIVACE Consulting & Accelerator, underscored the mutual benefit for South Korean startups entering the Vietnamese market, emphasizing fintech as a key area of interest. Given Vietnam’s advanced state in regard to digitalization, widespread mobile use, and young population with rising incomes, the convergence of mobile technology and fintech is poised for significant growth in the country. “Specifically, fintech provides capital and technology and also human resources,” he added. “South Korea has a lot of well-developed fintech startups. They could be invited by the Vietnamese Government to replicate what they have successfully done in South Korea. The government and the country’s private financial sector could quickly adopt advanced technologies and skills into the financial services industry, which in turn will improve efficiency of the industry as a whole.”
Vietnam presents numerous opportunities for South Korean startups to explore the country’s edtech sector. Ms. Seonhee spoke of the positive reception YAHO LAB’s web platform has received in Vietnam, accumulating over 20,000 service hours through word-of-mouth marketing. Despite global investment challenges, such as stagnant markets and rising interest rates, the undeniable growth potential in Vietnam’s education market is attracting many global investors.
There has been a clear trend of South Korean startups investing in Vietnam, inspired by the success of those that came before. Anticipating even more entrants, venture capital funds from South Korea, including Nextrans, Wayne Hills Ventures, STIC Investment, Smilegate, and others, are actively seeking potential startups in Vietnam to add to their investment portfolios.
To attract foreign startups, especially from South Korea, Vietnam is committed to building an open and integrated startup ecosystem. Ms. Seonhee highlighted Vietnam’s supportive environment for foreign startups, citing pro-business policies and a dynamic, youthful population creating an ideal setting for young companies like YAHO LAB. “The country encourages innovation, inviting foreign startups to test new technologies, replicate successful models, develop markets, and attract investments,” she said. “This was evident during the recent Season 6 of Shark Tank, where many foreign startups, especially in green technology and educational technology, received significant attention.”
However, Vietnam’s startup ecosystem still needs improvements to create the most favorable conditions possible for creative startups to get underway and develop. In addition to legal frameworks and supportive policies, Vietnam’s startup ecosystem needs innovation support centers as the nucleus in mobilizing, exploiting, linking, and optimizing resources locally and centrally, from the private sector and also from abroad. “While challenges exist, such as the lack of distinct laws for online platforms leading to the application of the same policies as offline businesses, the Vietnamese Government has shown an understanding of technology and new business models,” Ms. Seonhee said. “YAHO LAB continues to work closely with the government to navigate these challenges. This cooperation contributes to the success of foreign startups and increases the attractiveness of the market among foreign investors. Our focus remains on benefiting children and parents in Vietnam through our services.”
In addition, Mr. Sang Cheol emphasized the importance of implementing suitable measures to facilitate the entry of South Korean startups into the market. He highlighted the need to establish a robust foundation for cooperation between South Korean startups and Vietnamese businesses. Vietnam’s banking sector is the mainstream provider of financial services, but as the economy develops as incomes grow the capital, securities, and insurance markets will all expand. “And there will be a greater need for developing fintech solutions for these types of market-oriented financial services,” he said. “If private entrepreneurs from Vietnam and the Vietnamese Government work together to cooperate more actively with star fintech players from South Korea, there will be more investment flowing in.” ◼
Article Name: Thriving together South Korean startups like what they see in Vietnam
Publication: Vietnam Economic Times