Feb 15, 2013

Vietnam - Start-up plans canceled in economic crisis

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VietNamNet Bridge – In previous years, young people tended to start up their own business after finishing school. However, the big difficulties in the economic crisis have made them shrink back.

Youth dare not take risks

Nguyen Duong, who works for a technology development firm in Hanoi, said he has been cherishing the plan to set up a business of his own for the last several years. The company Duong works was set up by Duong and the other four friends many years ago. But Duong always wants to be independent from them.

However, it is now seemingly not the right time for him to start up.

“The national economy has fallen into bad conditions. We have few orders, while partners have always been late in making payment,” Duong said about the current situation.

“If I started up right now, the business would die young. The workshop premises rent and the regular expenses alone could still be a burden on me,” he explained.

“A lot of small companies have gone bankrupted because they are not financially capable enough to survive the difficulties. Therefore, the best solution for now is to wait and see.

In fact, the high employment rate in recent years has prompted new university graduates to run business of their own instead of working as hired workers. However, many of them have got discouraged just after some failures.

Nguyen Tam, who graduated from the Hanoi Economics University two years ago, still cannot find suitable jobs. She decided to run a small business herself, applying for becoming a sales agent of a New Zealand’s ice cream brand.

However, Tam finally decided to give up the business plan, after she found out that the material facilities, retail premises rents alone would cost VND100 million, an overly high sum of money for a student.

“I think I just can arrange some VND50 million. However, the bigger worry is that I am not sure if I can sell ice cream in such current difficult circumstances, when people all have to fasten their belt and cut spending on non-essential goods. Meanwhile, the ice cream has been unaffordable to the majority of Vietnamese people.

The barriers

Thuy Trang in Dong Da district in Hanoi has been selling clothes on Internet for the last two years. However, she still ponders if she should open a retail fashion shop.

Trang understands the big advantage of selling goods online: she doesn’t have to pay for retail premises rents. However, this is not the optimal solution, because Vietnamese customers do not have the habit of buying goods via Internet.

“They (customers) always want to see the products with their eyes before deciding whether to buy the products,” she explained. Meanwhile, her house is on a small valley, which makes it difficult for customers to look for the house. Therefore, she wants to display clothes at a shop facing the street.

However, Trang still cannot fulfill her plan. Since the retail premises rents have been sky high, she would have to sell products at high prices to make profit. Meanwhile, Trang is afraid that the high prices would keep customers away.

“Clothes shops have been mushrooming. Meanwhile, there are more sellers than buyers. I feel discouraged about my plan and I am now still selling goods via Internet,” Trang said.

Tien Minh, 30, in Cau Giay district, said he wants to open a café which serves HD films and high quality drinks, after he witnessed the great success of a similar model in HCM City. However, Minh has been told to rethink the plan. In the current conditions, non-essential goods and services would be selling very slowly.

Bao Han

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