An employee of the VNG tech group walks past a logo at the headquarters in Ho Chi Minh, December 8, 2023 (AFP/Archives/Nhac NGUYEN)
Essential in Vietnam, the tech group VNG wants to become a player in the global online gaming industry, illustrating the new international ambitions of entrepreneurs in this country, long focused on its domestic market.
Gone are the days when its founder, Le Hong Minh, traveled across Vietnam on a motorcycle with a handful of friends to tour the country’s 5,000 internet cafes and stick up advertising posters for his online gaming start-up, Vinagame. It was in 2004.
Renamed VNG, in 2014 the group became the first Vietnamese tech company to reach a capitalization of $1 billion and in August filed an application for listing on the Nasdaq, the stock market holy grail for companies in the sector.
“The objective that I set for my team is that within three to five years we will be a global player in the game,” explains the 46-year-old manager from his offices on the banks of the Saigon river, in Ho Chi Minh City, the economic capital of the country.
To do this, “we need to be visible on the world stage and attract capital and talent from around the world,” he emphasizes to AFP.
Employees work on computers on December 8, 2023 at the headquarters of the VNG tech group in Ho Chi Minh (AFP/Archives/Nhac NGUYEN)
Already present in Thailand and Indonesia and more marginally in China, VNG initially wants to expand into Latin America and the Middle East.
Because the Vietnamese market has already become too small for him for a long time.
– Messaging leader –
In addition to online gaming, VNG is also a major player in mobile payment, cloud and messaging in Vietnam through its Zalo application, used by as many as 75 of the 100 million inhabitants.
If the country has, like many others, a youth eager for new technologies, Zalo has established itself as an everyday tool for the entire population, instead of the majority of applications Western.
“Zalo is very practical to use,” emphasizes Ha Thi Minh Hoan, a 74-year-old retiree. “As we get older, we stay at home a lot and that allows us to send photos, chat and laugh with others. Life would be monotonous without it.”
The founder of the tech group VNG, Le Hong Minh, during an interview with AFP at the company’s headquarters in Ho Chi Minh (AFP/Nhac NGUYEN)
Gaming, however, continues to be VNG’s core business, representing 80% of its turnover. The group, which employs 4,000 people, releases no less than ten new products per year.
The search for new international markets thus represents “a logical evolution”, believes Lisa Hanson, CEO of the Niko Partners firm, specializing in the Asian online gaming market.
For Huy Pham, lecturer at RMIT University in Ho Chi Minh City, the markets are today attentive to proposals coming from Vietnam, which are experiencing “increasing dynamics”.
The Vietnamese electric vehicle manufacturer Vinfast made a grand debut on the Nasdaq in mid-August, even briefly overtaking General Motors and Ford in capitalization… before a severe correction.
– Pitfalls –
The path is also likely to be strewn with pitfalls for VNG, believes Mr. Huy.
Because if the group already counts among its shareholders the Chinese giant Tencent – shaken on Friday on the stock market following Beijing’s announcement of new restrictions on online games -, its accounts remain in the red.
According to documents sent to the American stock exchange authority SEC, VNG suffered a loss of $27.4 million in the first half, after losses of $86.7 million for the whole of 2022.
Entry into new markets, with all the product adaptation requirements that this implies, “will increase costs… and losses”, at least initially, notes Mr. Huy.
According to the specialized agency Bloomberg, VNG has also postponed its entry into the Nasdaq, initially expected for the fall, pending more favorable conditions.
But Le Hong Minh assures that his determination is unbreakable.
He remembers that day in 2002 when, as a young “gamer”, he was able to leave his still underdeveloped communist country to participate in the World Cyber Games in South Korea.
“The ultimate goal is to compete with the best in the world, right?” he notes. Today, “Vietnamese companies have gained a lot in skills and confidence. We must look beyond our borders.”
© 2023 AFP
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