The author Do Son Duong is Co-founder and CEO of Toong –a professional co-working space chain in Vietnam. Duong was MD of Richard Moore Associates, a New York-based brand consulting firm, in Vietnam. He has participated in numerous brand consulting projects for big corporations.
Co-working spaces have been sprouting up in Vietnam over the past three years. However, people are skeptical about this model due to Saigon Hub’s closure and the gloomy business results of similar models. Is Vietnam’s market not ready for the co-working space or is the strategy of existing co-working spaces not effective enough?
How it works
An effective co-working space consists of two parts — the first one is tangible facilities for work, and the second one is the community of people working there.
Professional facilities for working is an obvious need but only counts for the appearance of a co-working space while the community actually makes up its soul. The soul, therefore, becomes the decisive factor for the success or failure of a coworking space. From this aspect, it’s clear that identifying the right group of customers is critical to the development of co-working spaces.
Due to the disappearance of Saigon Hub and the limited number of members working in similar models in Vietnam’s market, those who are interested in Vietnam’s startup ecosystem may be skeptical about the success of this model.
Why it works
However, with a closer look into the community working at Saigon Hub and existing models including Hub.IT, Hatch, we can easily recognise the young age of those startups. From my viewpoint, Saigon Hub, Hub.IT and Hatch act more like incubators while Work Saigon and Saigon Coworking are smaller spaces. Therefore, it is still too early to make a negative evaluation on the potential of the co-working space model in Vietnam based on these startups.
This model was introduced to improve the quality of working environment for people who work from nine to five and beyond, every day. Apart from their homes, people spend most of their time at work. Thus, the quality of working environment has a great impact on their own quality of living.
Let’s think about a small company of five to ten people or independent workers: How can they create an inspiring working space with professional working and entertaining facilities, or an inspiring culture at work? It is not easy, is it? Working in co-working spaces can efficiently satisfy all those needs. Also, it can generate more cooperative opportunities between members from different backgrounds.
A co-working space, therefore, should be seen as a professional service for entrepreneurs and enterprises including startups who are starting to gain revenue. Such startups need a more economical and efficient solution for a high-quality working environment, a more mature image to project to partners and to attract skilled employees.
Vietnam is ready, even if people think it isn’t
In the macro view, I see that Vietnam is ready for the co-working space model. Statistics has shown that 30 per cent of Vietnam’s population is between the ages of 20-30, 13 per cent is managing startups that are under 3.5 years (Vietnam Chamber of Commerce and Industry Report). The number of small and medium size companies is approximately 324,808, and there are 300 newly registered enterprises in Hanoi and Ho Chi Minh City in Vietnam, as of April 2015.
In addition, the strong tidal wave of cultural exchange from over 100,000 students studying abroad every year and the cultural integration through the Internet have encouraged the enhancement of living needs, including a more evolved working environment.
I believe it is the right time for the co-working space model in Vietnam, but it needs a pioneer to educate the market. It is this challenge that professional and large-scale co-working spaces such as Toong in Hanoi and Dreamplex in Ho Chi Minh City, who have made their debut recently, have to rise to.
Providing a service for a need people are unaware of
A closed working culture, coupled with the misunderstanding between professional co-working space and similar models including incubators, maker space, or even coffee shops with rental service in the past few years, has given the wrong perception to a majority of the people.
In the early days, many came to our co-working space simply to have a cup of coffee.
In Toong’s case, we have earned positive cash flow at the first outlet after three months of launching. This success is very encouraging because Hanoians are considered to be traditional, conservative and reluctant to change their way of doing things. Two months after its debut, the space has received a funding of over US$300,000 to develop the second outlet. This expansion is under our plan to educate the market by actual experience and accelerate market readiness.
I often tell my colleagues and partners that we are providing a service for a need that our target customers are not even aware of. From the psychological aspect, people tend to resist change and say “No” to what they have never heard before. Therefore, if Vietnamese are directly asked if they need a co-working space, the response would be mostly in the negative.
Many new business models had to deal with resistance and skepticism at their launch: Amazon in 1997, Alibaba in 1999 or Airbnb in 2008, being a few examples. However, they have now become market leaders in their industry because they had courage enough to overcome the barrier of market perception.
If we apply this basic marketing mindset and follow the market, we will easily come to the conclusion that the co-working space model does not have potential in Vietnam. But I believe that a strong brand is one that leads the market’s needs. If you want to be a leader, it is critical for you to be able to lead and inspire others.
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Image Credit: Toong