The Pioneers

Should you try and be the first into a market? Or should you enter an already established arena? As Nick Ross discovers there are benefits in both.

 

When Coco Beach opened in Mui Ne in 1995, it was the first resort to take advantage of the untouched stretch of sand that ran just north of Phan Thiet to the fishing village of Mui Ne. Fast forward 18 years and that whole area has either been parcelled up or developed. Yet Coco Beach co-owners Jutta and Daniel Arnaud remember the early days well. It was their discovery and then later their investment and risk that was to eventually catapult the area into what it has become today.


“[We found the beach] purely by accident,” recalls Daniel. “One day, crossing through Phan Thiet, our driver took a wrong turn and drove us down the road leading to a small fishing village called Mui Ne. As we stopped the car to ask directions, we got out and climbed over some small sand dunes that were bordering the road.”


What they discovered was “the most pristine, untouched and beautiful bay” they had seen in their travels. It was also the only beach they had discovered in Vietnam that was bordered by thousands of coconut trees.


The search for somewhere to open up a resort had started some time before. With a background working in hospitality and event management, the couple had dreamed of one day becoming their own bosses. In the early 1990s, Vietnam was an emerging destination, so they decided to fly over and see for themselves.


“We quickly realised the potential of more than 3,000km of seacoast,” says Daniel. “The geographical location — smack in the middle of Southeast Asia — promised optimal weather conditions, similar to those of Thailand. So we started travelling along the coast, from Ha Tien at the foot of the Mekong Delta to Tuy Hoa and Qui Nhon, in search of the perfect beach.”


Receiving an investment license in July 1994, 12 months later Coco Beach opened its doors to the public. They were officially the first ‘resort’ in Vietnam and they were also the first property to be connected up to the electricity line that had just been laid between Phan Thiet and Mui Ne.
Daniel adds: “It certainly was great to be the first and only [resort in the area], but after a year or so, we were on the lookout for new projects to help us develop Ham Tien and Mui Ne as a real tourist destination with a larger choice of accommodation. Our initial 17 rooms were not enough to attract the big tour operators’ interest in promoting the destination.”

 

The Challenge


When American-born Dr. Wade Brackenbury and his wife came to Ho Chi Minh City to set up the country’s first chiropractic clinic, Wade was moving to his fourth country in Asia. Despite having already set up clinics elsewhere in the region, Vietnam proved to be the hardest nut to crack. Getting his license alone took a year — the various authorities involved had never licensed a chiropractic clinic before.
He also faced another challenge of the first-timer, “to learn how to hire and work with good Vietnamese employees, and to create a positive, effective team”. It is a challenge he seems to have overcome. Eight years later he has managed to keep much of his original staff.
“Being the first in is more difficult [than entering an established market],” explains Dr. Wade. “We spent a lot of time, money and effort to set a legal precedent for our form of healthcare. We also took a very real, but calculated, risk that our model of treatment would be well-received in this country. There is a very real price both financially and emotionally that you need to be willing to [pay] in order to be the first in your industry in Vietnam.”


He adds: “What was helpful for me was that I had set up some of the first of these types of clinics in Malaysia more than a decade before. That experience was an advantage. [Together with my wife] we knew it would be hard to do, and we had realistic ideas on how to make it work, based on our experiences and success in other, less difficult Asian countries.”

The Pioneers

First In


As most business owners will tell you, there is certainly an advantage if you can say you’re first in. Indeed as Ralf Matthaes of market research firm TNS explains, if you’re there for the long haul and have a long-term strategy, then it can pay dividends. But “any company that goes in [first to a market] for a quick buck is going to burn”. It’s all about creating longevity.


Such is the case with the present free-for-all that seems to be taking place in Myanmar. Having set up a branch of TNS in Yangon, according to Ralf there is certainly a feeling that “the vultures are coming”. Yet, it’s not quite like that. With the world economy currently in a prolonged recession, “everybody is looking for growth”. Ralf personally helped bring Coca-Cola into Myanmar and already has 15 FMCG (Fast Moving Consumer Goods) clients who are either in the country or on their way.


He adds: “How many countries of 60 million people have suddenly opened up in the world? Myanmar is a very unique, special place.”
With Myanmar today almost identical to Vietnam in 1995 — when the then-emerging tiger economy was the investment flavour of its day — there is one big difference between the two nations. In Myanmar, says Ralf, “10 percent of the urban income class is wealthy. 20 years ago nobody was wealthy in Vietnam. There are as many cars in Yangon [now] as there are in Ho Chi Minh City.”


At the same time, a third of the country’s population lives below the poverty line, meaning that the general consumer in Myanmar does not have any purchasing power beyond what they require for their daily needs.


The result is that the first entry companies have to think long-term and “work on brand building and on gaining trust. So, it’s not like you’re coming into Myanmar all of a sudden with a good product and a good price. The consumer doesn’t have money.”

 

Bring on the Competition


For Jutta and Daniel, convincing tourists coming to Vietnam back in the mid-1990s to face the then six to eight-hour journey to an isolated stretch of beach was tough. They were lucky.


On Oct. 24, 1995, Phan Thiet turned out to be the best location in the whole of Southeast Asia to observe a total solar eclipse. The eclipse itself was “spectacular” and the event attracted some 1,500 scientists and about 50,000 viewers both local and from overseas. Together with Jutta’s work attracting the attention of the main German tour operators, and the local inbound tourism agencies from Ho Chi Minh City and Hanoi, the eclipse “helped tremendously… and placed Phan Thiet on the world map”.


Over the next few years other resorts came to the area. At first, says Daniel, “This helped to open up new markets and increased visitor numbers.” Later it forced them “to remain on top of the game through structural improvements, renovation, creation of additional services, new decoration ideas and better training of the staff.”


Says Daniel: “It’s always difficult to be the first one in creating a market, because everything has to be done from scratch… [When we started] there was no power, no telephone, no trained staff, no specialised supplier in the market. We had to get over all those hurdles while the people who followed just had to build and open.”


Dr. Wade agrees — being first in is not always ideal. He offers the following advice, “If [you are the first in] purely for financial reasons or the business opportunity, it might not be worth it. If you think that way, then you are most likely underestimating the obstacles and suffering you will have to endure.”


However, if you really desire to do something, something that might possibly make a difference, “then make sure that you will be able to be happy here while doing it.


“It usually takes a lot more time and money than it seems it would at first. You will most likely be working hard, and for a longer time than you expected before you are successful.”

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