Adding Value in Vietnam

The recent Palme Vietnam trade show held in Ho Chi Minh City allowed many audio, lighting and A/V manufacturers to get up close and personal with this part of south east Asia for the first time. To many, it’s a virgin landscape, a great unknown, although everyone is aware that this long, 331million sq-km strip of Indo China is providing interesting economic statistics in terms of growth and development.

After all, 60 per cent of the country’s more than 86 million-strong population is under the age of 35, and with a rapidly rising expected GDP of between 6.5 to 7 per cent for 2010, consumerism is beginning to take hold. Bosch may be a relative newcomer to the pro audio industry, having acquired Telex Communications in 2006, but Bosch Communications now has a head start on its competition courtesy of great investments made in the appliances, automotive, security and software sectors, and the market research the company has pooled as a result. Big is possibly beautiful for once.

It’s no wonder therefore that The Bosch Group has fully committed itself to the south east Asian region, having completed its hi-tech Singapore HQ last year as the hub for envisaged growth and expansion. The Asia Pacific region accounted for 20 per cent of Bosch Group’s total sales in 2009, making it the second most important region for sales after Europe, and sales projections suggest further growth to a 30 per cent share by 2015. Examples of the kinds of investment that the manufacturer is making as a result include the construction of a new site for the Gasoline Systems plant alongside a headquarters for the company’s newly created Software and Engineering Centre (SEC), which was recently created to develop engineering applications such as embedded software, IT and mechanical design intended to support the Bosch group of companies globally. The decision to invest in the SEC wasn’t made lightly, and Vietnam was only selected after an extensive study of 14 cities in eight countries across three continents. Ultimately, Bosch acknowledged that the good infrastructure facilities and available talents of the Vietnamese workforce set it apart from the rest.

Meanwhile, the construction boom ensured that the power tools division enjoyed year on year growth of 84 per cent in 2009, while security systems business has also benefitted with consistent double digit growth owing to the major infrastructure projects taking place. The thorough knowledge that these divisions possess in Vietnam, together with solid local market contacts has been the catalyst for the growth of the Communications division, and after careful consideration, Bosch Communications recently appointed Visco as its added value reseller in Vietnam. Again – the decision wasn’t taken lightly. Newly created trade shows that marry manufacturers with local suppliers are akin to speed-dating, but the Bosch method of finding the right sales partners is calculated and measured. Devoid of passionate impulses, it is almost like an arranged wedding.

Visco is an old hand when it comes to doing business in Vietnam. Created in 1994 by David Chua and Kim Dung, the company has streamlined its business model from general trading to that of solution provider in both the communication and security sectors, together with some product line distribution through reseller channels.

Less is evidently more, as the company now numbers 110 personnel spread across its three offices in Ho Chi Minh City, Hanoi and Da Nang. The company also distributes Eiki, Extron, Orion, Lutron, Alcatel-Lucent, Panduit, Polycom, Fermax, Sensormatic, Wisi Matv, Sapura and JVD. Its continued successful penetration into numerous construction projects means that Visco has to provide a full catalogue of products and services to its many clients in order to successfully tender for business opportunities. In addition to Electro-Voice and Dynacord, Visco also offers Bosch Security’s full range of extra-low voltage electrical systems and Mr Chua is now on the lookout for complimentary stage, architectural and decorative lighting to add to this impressive line-up.

Mr Chua emigrated from his native Singapore to Vietnam in 1988, where he is very much settled with his wife and family. He is also an astute businessman. ‘Vietnam is very different from the other countries in the region,’ he explains over tea in Ho Chi Minh City’s District Three.

‘Although we have to distribute some product brands through strategic resellers and partners, we must still perform the role of a systems integrator for those projects where finance and skills are highly demanded, which require the full integration of systems, or projects that demand a total package of all extra-low voltage systems. We serve a wide spectrum of customers, such as government departments, the hospitality sector, education, transportation, entertainment, retail and events. After 16 years of operation in Vietnam, Visco is now enjoying the close relationships it has built with government bodies and private-sector firms in addition to overseas investors and consultants. But to be fair, we have earned these good relationships through hard work, thorough attention to detail and experience.’

The company’s long list of reference projects, such as the Nam A Bank, City Hall, Tan Son Nhat international airport and Vietnam News Agency in Ho Chi Minh City, in addition to the Hyatt Regency apartments and Life Resort Hotel in Da Nang, is testament to this assertion.

The recent foray by Visco into sound, light and visual products marks a reassuring trend of development within the Vietnamese market. Pro audio exports have largely been stunted here owing to the language barrier, perceived tricky logistics, a lack of understanding of the local market and an entertainment industry that is strictly controlled by the government.

‘Vietnam is on the verge of becoming next Asian Tiger,’ furthers Mr Chua. ‘I’ve witnessed over 20 years of extraordinary transformation, and now see that it is the time to introduce pro audio, lighting and visual products into this market. We are essentially a one- stop solution provider for a full range of Extra Low Voltage (ELV) electrical systems. With Bosch it’s easy as we can offer our clients CCTV, PA, access control, intrusion, fire alarm, congress and language interpretation and distribution systems in addition to pro audio systems. The Bosch brand is synonymous with reliability and performance and the lifespan of a product represents remarkable value for money. We often integrate these systems with others from other prominent manufacturers. For some large projects we provide up to 20 systems that we design, supply, install and ultimately maintain.’

With the construction industry currently up 11 per cent year-on-year, infrastructure developments tend to lead the way for Visco, but Mr Chua is keen to point out that the company is also being invited to bid for an increasing number of tenders from universities, hospitals and traffic control projects. Not only has the company expanded its product catalogue to cater for this increasing demand, but its clients are now beginning to take it out of Vietnam.

‘Vietnam is taking the lead of the Indochinese countries and so there will be a natural extension of developments into neighbouring Laos and Cambodia,’ he explains. ‘As such we opened an office in Phnom Penh this year in order to fully supply our corporate accounts.’

The company’s long-standing relationship with Bosch has now been strengthened by Visco’s naming as a value added reseller for the Dynacord and Electro-Voice brands. It appears to be a harmonious working relationship, in which the supplier is happy to provide full support to its Vietnamese vendor.

‘Bosch is always providing our staff with training, which in turn increases everyone’s product knowledge,’ Mr Chua enthuses. ‘In addition, Bosch also hosts practical and live demonstrations to our potential customers, while both Bosch and Visco collaborate when promoting new product launches, seminars and trade shows in order to create market and brand awareness. I work closely with Yit Ming Chan, who is the VP of sales for Bosch’s ASEAN region.’

The conferencing market has been earmarked as a potentially huge prospect by both Visco and Bosch, as Mr Chua explains. ‘Vietnam is a lengthy country, running some 2,300-km in length from north to south, and consisting of 58 provinces and five centrally controlled municipalities. The conferencing market has great potential here as it helps to reduce travelling times and corporate costs, while providing immediate response to issues, allowing more effective use of time. Launched earlier in 2010, the CCS900 conferencing system combines excellent acoustics, superior component design and intuitive use and has been earmarked to spearhead our joint marketing initiatives.’

In terms of BGM and PA speaker systems, Mr Chua has noticed that traditional ceiling speakers are making way for column and wall mounted models. ‘The expectation levels of end-users are increasing, so this is good news as we are now introducing the Bosch VariArray in addition to the ergonomic EviD speakers and EV powered and passive systems. As the market becomes increasingly affluent and more foreign investors enter Vietnam over the coming years, expectation levels will definitely increase. Although the consultants are aware of digital technology, many users aren’t aware of the differences that exist between digital and analogue, so we have some way to go here in terms of training and marketing.’

In 2009, the Bosch Security Division experienced a healthy double-digit growth in Vietnam during what was a financially challenging year for many manufacturers. Vice president of sales Chan Yit Ming takes responsibility for all the business units under the Bosch Security and Communication Systems umbrella, and attributes this success to the close working relationship the manufacturer enjoys with Visco.

‘The Vietnamese government also helped as their counter crisis measures assisted our sales,’ he explains. ‘Many overseas investors are experiencing higher costs and risks in both China and India. At the same time, Vietnam is beginning to boom and so many of them are shifting their investment to Vietnam where there is a large hard-working population and labour rates are attractive. Naturally, when investors come, they need more offices and factories and so this is the reason why the construction sector is booming. We witnessed the same trend in China and India during the last decade.’

The comparisons to China are evident and Bosch has invested heavily there in recent years in terms of manufacturing most products from automobile parts to washing machines and power tools. ‘Vietnam is comparable to China, as Hanoi is like Beijing – it is the hub for government projects and activities whilst Ho Chi Minh City caters for the private sectors in the same way that Shanghai does,’ continues Mr Chan. ‘But you also have Da Nang, with its beautiful coastline that will be transformed by tourism, drawing great investment for its hotel and entertainment outlets. The language barrier was certainly an obstacle in China, but we quickly overcame this as many Chinese learnt English very quickly, and we’re seeing the same trend here in Vietnam.

‘Vietnamese workers also possess useful analytical and technical skills and for those that they are lacking, we provide training for them via our regional training academy, which is open 12 months of the year, and in which different experts come to teach almost every other week. As such, we have invited our customers, consultants and staff to join the classes and they have found them very useful. For our own staff we have implemented a scheme in which to groom junior and senior managers for leadership roles in Vietnam.’

Bosch not only produces best in category networking products, it also ensures that its dealer network communicates as a team that draws upon its collective experiences, as Mr Chan continues. ‘Bosch will be hosting ASEAN specific events to promote cross-fertilisation between countries, in which we hope to share our best practices and experiences. We also aim to intensify the training of IP knowledge and systems integration of our products, and with increasing IT/IP and network connectivity, we will see more IT/IP integrated security and communication systems coming into the market.

‘Our expertise and knowledge here will allow us to differentiate us from our competitors. At the moment most of our competitors lack investment in these areas, as they are just emerging from the economic crisis.’ Not only do Bosch and Visco clearly understand the Vietnamese market from the joint perspectives of a manufacturer, reseller and system integrator – they seem to be leading it forward to the next chapter of development.

www.visco-vn.com

www.boschcommunications.com

www.boschsecurity.com