Business Survival in HCM

Welcome to VN economics.

In Tan Binh there is street that used to have 29 shops selling industrial sewing machines. They were all within about a 100 mts of each other.

Its crazy its like someone think i know, open a business.... what shall i open?
Ahh next door have phone or coffee shop... lets open one of those

To be successfuly with the level of competition that close by you have to either be selling a unique product that no one can easily copy... of cheaper than anyone else.

I wondered that too.....
It’s money laundering.   Coffee shops are cash businesses & just sell coffee & juice.   Just a few beans & add water.

At the end of the week/month the owner turns up to the bank with the takings.   Most of the money would be ill gotten gains from people in cushy govt jobs. 

Personally I know “people” in the tattoo & gym business that do exactly the same thing.   The Tattoo game in Australia is the one of the best rorts.  The outlaw bike gangs have that sewn up.

The gym near me here,,,it’s about 500 sqm floor space on a main road.  Only has about 60/70  regulars paying $15 a month.   Imagine the monthly lease on that place , plus the expensive equipment. 

It would barely pull $1000 a month from the regulars &  Only a few walkins @ $1 a head.     

That doesn’t look like positive cash flow to me.    That also explains why a lot of businesses here change hands every few months.   One premises might  have housed a hairdresser, cafe,  shoe shop, Phone store ....all in the space of 12 months. 

A lot of it’s due to the “dream” of owning your own business.  A VN guy I know told me if someone can just open a business , put I sign out the front & stand there .......he’s made it.    If it all folds, at least he’s had his 15 minutes of fame.   It’s the mindset of people.

I read in  Vietnam insider that a survey estimated that possibly 73% of businesses could file for bankruptcy if the pandemic lasts until September...😳

That’s THIS September.......id say next September we’ll still be dealing with it.

Jlgarbutt wrote:

In the building where I am now, three empty shop houses all with signs for rent outside. 3800 USD per month. Now if I was the owner i would reduce the rent ... Some money each month is better than none. All these shop houses have been empty for a couple of years.

If the shops stay empty, they raise the rent to recover from the loss. It will take a while before Vietnam recovers.
When comparing, what other countries put in the economy to restart some economy, then you might get an idea, how bad it is. No, it wasn't Covid.
The economic crises worldwide was predicted, years already.
As long foreign productions stay on China, nothing will improve

colinoscapee wrote:

Welcome to VN economics.

In Tan Binh there is street that used to have 29 shops selling industrial sewing machines. They were all within about a 100 mts of each other.

Good point buddy, I've asked my girl many times why open the same shop next door to each other?

Here is her answer (she has had a coffee shop and a street snail restaurant) if you have a shop you may get a few people coming to your street to visit you if you get a shop where there is many of the same shops everyone knows where to go to get that item.

So in HCMC you have a sports products road, phone road, picture framing road, camera shop road, underwear shop road, dress shop road, snail & sea food road etc so when VN want something they flock to that area knowing there are many many shops to look at just like the area where the electronics shops are every street for many blocks sell everything you can think of in electronics.

Same goes for Saigon square all sell the same crap but everyone goes to that one space to go and buy.

I ask but what about the competition how do you make money? her answer is everyone comes to your street and there is 8.4mill in HCMC

Same for bar's if many bar's in same area every one flocks to that area,, good example is Bui Vien street every one goes there knowing there are many bars, clubs etc

Crazy to us westerners but common sense to them.

I had 2 similar experiences.

1.........ex wife said she wanted to open a short time "love" hotel just outside her home town Tran Bang & she guaranteed 100% it would bring in 1,000 usd a month. So we built it (I paid for it) on a dirt track just off the main road. First months takings was as she said about 1,000 usd. Within 3 months there were at least 10 other places in competition to her built within a 2km radios! From then on no one made any profit, just enough to get by.

2........ex wife wanted to open a coffee shop beside our then apartment Q12 (this time I played no part in it) the street was about 1/2km long & she was coffee shop # 21 in a street of 20 coffee shops already in that street & I could see none of them were exactly stowed out with customers!.
For cafe sữa she was charging 12k. For that they came bought 1 coffee, sat all day with free wi fi & AC, drank countless glasses of that iced tea & watched TV if football was on. Rent for the place was 350usd a month! need I say more! 1 year later to the day she managed to get some other sucker to take it on. Her losses for the year stood at 5,000usd

Getting back to the previous post, what I cant understand is for example in the sewing machine street, all the shops are selling exactly the same sewing machines at exactly the same price, so how do you decide which shop to go to & buy a sewing machine?

Andybris2020 wrote:

colinoscapee wrote:

Welcome to VN economics.

In Tan Binh there is street that used to have 29 shops selling industrial sewing machines. They were all within about a 100 mts of each other.

Good point buddy, I've asked my girl many times why open the same shop next door to each other?

Here is her answer (she has had a coffee shop and a street snail restaurant) if you have a shop you may get a few people coming to your street to visit you if you get a shop where there is many of the same shops everyone knows where to go to get that item.

So in HCMC you have a sports products road, phone road, picture framing road, camera shop road, underwear shop road, dress shop road, snail & sea food road etc so when VN want something they flock to that area knowing there are many many shops to look at just like the area where the electronics shops are every street for many blocks sell everything you can think of in electronics.

Same goes for Saigon square all sell the same crap but everyone goes to that one space to go and buy.

I ask but what about the competition how do you make money? her answer is everyone comes to your street and there is 8.4mill in HCMC

Same for bar's if many bar's in same area every one flocks to that area,, good example is Bui Vien street every one goes there knowing there are many bars, clubs etc

Crazy to us westerners but common sense to them.

50,000 business go broke every year, it's easy to see why.

They have their own logic as to how they do things, but profit margins are so very,very low.

I can only take some educated guess at these actions:

1. If my neighbor is making money, I can to = increased competition = less profits.  In addition, I have seen where neighbors are envious and jealous and will not stand their neighbors being more successful than them.  For example, I bought a water filtration system from the USA and put it in my in laws home so they would not have to buy bottled water.  They were happy, but I was told the people selling water were not going to be happy.  But at least they were not in competition.  But on that note, I offered to buy bread machines for Mom to make breads etc. and sell.  That was shot down immediately.  No, we can't do that, our neighbor, who has a store selling food items would hate us and talk bad about the family = bad press to all neighbors.  Oh the horror.  I just laughed. Whatever.
2. Let's be real, I bet these people are not operating and abiding by all the laws, regulations, licenses, payroll, taxes etc.  As the revenue drops, they need to find a way to maintain cash.
3. Money laundering, no doubt.