Invest in Hanoi....NOW!

The Hutch Report took a fascinating trip to Hanoi, located in North Vietnam. The country has been identified by the civil war that lasted from 1955 to 1975 and also the fact that the country is governed by a communist regime. For these reasons we really had no idea what to expect. Hanoi was an eye opener in many ways.

Millions of motorcycles and no rules!
The city of Hanoi has a population of about 7 million people, and of those 7 million about 5 million own motorbikes. That’s a lot of motorbikes and with so many on the road, it creates a large amount of commotion, confusion and turmoil. Crossing a road in Hanoi is a unique experience, however, it is not without a large number of fatalities each year.

Our initial intention was to research and discover the technology startup scene while we were there and find out if there were any trends that could be interesting to follow leading to potential investments. We made a few contacts, some meetings and had some interesting discussions. Many of the ideas we heard about were mostly generic ideas that have been used elsewhere and could be catered to Vietnam in particular. For example, Vietnam’s travel and tourism industry is developing at a rapid pace so it was not surprising to learn about many apps being developed to help support that development and help tourists discover everything Hanoi and Vietnam have to offer.

While discovering different parts of the city and country it became clear that with the rapidly developing economy, fuelled in large part by the growing tourism sector, it was clear that roads, and traffic policing have not kept up with the increasing number of vehicles on the road. The high traffic congestion in Vietnam is not without its pittfalls and has become a hazardous issue that results from the excessive number of motorbikes and limited infrastructure capacity.

The road system has fallen behind population growth and the rising number of vehicles and motorbikes on the streets jockying for position, result in gridlock and traffic jams, even during non-peak hours. We had a first hand experience driving around the Old Quarter of Hanoi where it seemed like everybody had the “I am just going to keep pushing forward no matter what is in front of me” attitude in order to get where they were going. In a way we could understand this mentality as to take any other option would mean being stuck in place for quite a while.

Watching all of this from a spectator point of view was actually quite fascinating albeit at times quite stressful. The energy in the city was electrifying. You could feel that something was happening to this city before our eyes. It refocused our attention from technology startups to basic needs and improvements that could benefit the city and population.

While travelling through different quarters of the city I spotted a Harley Davidson dealership/showroom and quite a large one. It got me thinking about Harley Davidson’s business strategy for attempting to crack this market. What was their motivation for being there? Did they think that a city with 5 million motorbike owners would automatically tradeup to a Harley Davidson? Hardly the best choice of transportation once you have had the experience of driving around the city.

The truth is that the heavy motorbike density is directly related to how expensive car ownership can be. Car owners have to pay roughly 300 million Vietnam Dong(VND), the equivilant of about$13,250. Yet Harley Davidson prices range from VND 336 million (US$15,900) for Sportsters to VND1.17 billion (US$55,400) for Touring models. I couldn’t imagine that a large portion of the population was ready to trade up to a Harley just yet. Therefore almost 95 percent of registered vehicles are motorbikes or scooters, and as many as 9,000 new motorcycles join the roads each day.

It is not surprising that with the large number of vehicles and motorbikes on the road, there are a very large number of traffic accidents and fatalities. For this reason, a law was introduced in 2001 where wearing a helmet became mandatory for all motorcycle drivers on specific roadways such as national highways. However most of the helmets that are available in Vietnam are made of cheap and low quality plastic, which doesn’t offer sufficient protection. According to the World Health Organization (WHO), 80 percent of the helmets currently being used fail to meet national quality standards.

Being focused on this display of motorbiking madness led us to make quite a few observations and brainstorm basic business ideas for those wanting to take Hanoi head-on.

Replacement Parts - There are parts shops that exist and are usually all located together in one street in the city. The market is wide open for someone able to provide a network of shops throughout the city providing replacement parts.

Self Service Motorbike Washing locations - We saw many people washing their bikes on the sides of the roads or in shop doorways with an old hose and brush but no real designated areas. This is a service ripe for development. A chain of automated or self service motorbike washing locations.

Motorbike Personalization Service - With so many motorbikes it is easy to get yours confused with somebody else’s, therefore a service that personalizes a motorbike could take off.

Motorbike modifications - We saw many motorbikes and scooters with a variety of things strapped to them. A company that provides baskets and bespoke solutions for specific customer needs could fill a void.

More affordable helmets providing the proper protection - We mentioned the fact that not everyone was wearing a helmet, although mandatory and those that were, were not being provided sufficient protection.

Education - One big thing lacking is driver education. Many drivers have not been provided the necessary amount of education in order to protect themselves and others from road accidents. The government would benefit greatly by this and support it yet no one has set anything up to improve the level of education on a large scale.

Accessories - We saw hundreds if not thousands of bikes lacking simple accessories such as mirrors. It is surprising but a large number of the population use smartphones so you could also imagine accessories such as a holder on the bike in order to use the GPS services thereby avoiding the possibility of an accident should the phone be in your hand.

Motorbike Rentals - For those not able to yet afford a motorbike, an inexpensive rental could be the solution.

Parking Stands - Most bikes are just placed off to the side of the street. It would be wise and more organized for the city to provide designated bike stalls where motorbikes could be chained up and protected from theft.

AAA Service - A membership business providing on call repair service to its members who have broken down somewhere in the city.