How a Street Vendor's Son Became One of Vietnam's Top Tycoons
(Bloomberg) -- When Nguyen Duc Tai, the son of a street vendor, said he was going to revolutionize Vietnam’s mobile phone industry, few people gave it a second thought.
“Everybody laughed at me,” says Tai of that time in 2009.
But Tai was true to this word. His Mobile World Investment Corp. became the country’s top seller of mobile phones and one of the biggest listed stocks. The company now has a market value of $1.7 billion.
So when Tai said that he was going to overhaul the country’s food industry, this time people listened.
“The future of groceries is very clear,” a t-shirted Tai, 49, said in an interview in Ho Chi Minh City. “It’s not a question of whether I succeed or not. It’s a matter of how long it takes.”
Tai’s success as an entrepreneur has come from trying to modernize Vietnam. For mobile phones, he opened what he says was the first high-street chain where customers could have a sense of security about the devices’ quality and origins. And in the world of food shopping, he’s trying to replace Vietnam’s traditional wet markets with grocery stores.
Tai opened his first such outlet in Ho Chi Minh City in 2016, selling vegetables, meat and fish with clearly labeled origins, and other essential items such as noodles and drinks. In wet markets, food is sold outdoors in venues that aren’t always clean. Buyers don’t necessarily know where it comes from, and the prices aren’t fixed.
The chain -- called Bachhoaxanh -- now has 376 stores in the city.
“Our dream is to take 10 percent of the $60 billion grocery market by 2022,” Tai said. That would be twice his company’s almost $3 billion in revenue last year.
Of course, Tai has been down a similar road before. Fifteen years ago, a global mobile phone boom had skipped Vietnam, because handsets were too expensive.
“At that time, only executives or rich people could buy a cell phone,” Tai said. “Owning one seemed impossible to many people, and I thought we needed to do something to change that.”
So in 2003, he quit his job as a strategic director at a phone company to start his own business. He opened three stores in small alleys in Ho Chi Minh City, but they failed after a few months because of their locations and inability to win customers’ trust, Tai said.
In 2004, he tried again, establishing Mobile World with four friends. This time, he opened his stores on major streets and sold devices with transparent origins.
Mobile World had 1,065 outlets throughout Vietnam and a 45 percent share of the country’s smart-phone and mobile-phone market as of the end of April, it said. At the end of 2017, there were almost 120 million mobile phone contracts in the country, more than the population of about 94 million. Sales of mobile phones have surged with the country’s economy.
“Opportunities came very fast and the market developed more quickly than I could imagine,” Tai said.
Tai grew up poor in Ho Chi Minh City, where his mother was a street vendor who sold sticky rice and rolled rice pancakes. Those early struggles left him with one goal: to have a better life than his parents did.
“I always wanted to think big and do big,” Tai said.
Mobile World’s stock has surged more than sixfold since listing in 2014. Of 10 analysts covering the company, nine say it’s a buy. Mobile World was the only Vietnamese firm on the Forbes list of the best 50 big Asian public companies last year. “Now my dream is to have $10 billion in revenue by 2022,” Tai said.
For sure, it hasn’t been all smooth sailing. Bachhoaxanh contributed only 3 percent to Mobile World’s sales in the first four months of 2018, with the company’s leaders acknowledging that the chain is still in the “trial and error” phase. The grocery business posted negative Ebitda of 60 billion dong ($2.64 million) in the first quarter, prompting the company to close three outlets and cancel the opening of seven others, local media and brokerages cited Tai as saying at the company’s analyst meeting in May. The company also reduced its planned new store openings for this year to 500 from 1,000.
“Bachhoaxanh is still in the uncertainty stage,” said Nguyen Duc Hieu, an analyst at Viet Dragon Securities JSC in Ho Chi Minh City. “This is not an easy industry as it requires a good supply chain, which is very hard now because there aren’t enough suppliers big enough to provide fresh meat or vegetables. The market is big, but execution isn’t easy.”
Still, Tai won’t be too put off by the growing pains. While he had only slightly more than $30,000 when he started his business, he’s now worth about $53 million from his shareholding in Mobile World alone, according to data compiled by Bloomberg. And as he gets richer, he’s become less interested in the trappings of wealth, he says. Mekong Capital’s Chris Freund, an early investor in Mobile World that has since sold its stake, describes him as a “very casual” entrepreneur, noting that on a business trip abroad, Tai and three others shared just one room.
But for Tai, the t-shirt isn’t about being frugal. It’s simply a matter of using his time best as he seeks to build his grocery empire.
“It’s very tiring thinking about what to wear,” Tai said. “I would prefer to spend that time thinking about how to develop the company.”
©2018 Bloomberg L.P.