Analysing Yahoo’s dominance in Vietnam

Staggering statistics from an excellent Mercury News article illustrate the hold Yahoo has over the internet content market in Vietnam.

Ninety-five percent of Vietnam’s Internet users — now topping 23 million — rely on Yahoo’s sites and services.

Young people squeeze into Yahoo-sponsored Internet cafes, tapping away at keyboards day and night. The company’s Mail and Instant Messenger technology — on PCs and mobile phones — are part of the daily rhythms of the country.

Yahoo’s 360 Plus blogging service is a platform for millions of Vietnamese to gossip about celebrities and write endlessly about their love lives.

Only people from Mars don’t know about Yahoo,” said Hoang An, 21, one of countless fans of the portal, which has one of the country’s most potent brands.

Vietnam has a fast-growing internet population, thanks to young population and high ownership and usage of smartphones. On the flip side it is hugely complicated with the government imposing a ban on a host of international websites, most notably Facebook, although it is easily circumvented leading to claims that “Vietnam’s answer to China’s Great Firewall is more of a smoldering bamboo fence — an inconvenience more than an outright prohibition”.

More than that, however, is the government’s willingness to meddle in online affairs. It recently took on Facebook with a social network of its own and has introduced curfews limiting the use of internet cafes by school children and young adults. 

Yet despite the chaos and intervention, Yahoo has huge visibility in the country.

The article continues, revealing many of the reasons behind this unlikely scenario, and how it has avoided the type of issues that have be-seized the company and its rivals in China.

The Sunnyvale-based company has managed in Vietnam to avoid the clashes over censorship that Google and Chinese officials engaged in earlier this year when Google stopped filtering politically sensitive searches. And Yahoo has sidestepped the kind of public relations nightmare it endured a few years ago in China, when the company’s employees handed over e-mail account information of two pro-democracy journalists to authorities.

Learning from past mistakes, Yahoo embarked on a new strategy in Vietnam that includes parking the personal data of its users in Singapore — where it is not subjected to Vietnam law.

Company executives hold regular face-to-face meetings with high-level officials in Hanoi to nip potential problems early.

And Yahoo has worked hard to create locally flavored content to build on its success among the masses.

Vietnam, which looks to the Internet giant to help it develop its tech economy, has been receptive to Yahoo’s operations, partly because it is more dependent on multinational companies than is China, observers say. Vietnam, after all, does not have a Baidu, China’s homegrown search giant.

The article includes quotes from Yahoo executives.

“In Vietnam, we understand it’s very important to make sure we are doing the best we can to provide a local experience (online) — and to protect the data of users,” said Rose Tsou, Yahoo’s Taipei-based senior vice president of its Asia Pacific region. “We make sure we maintain a good relationship with the government. We have a very open channel. We find that workable so far.”

“We have to respect the local laws, but we have to protect our users,” said Yahoo spokesman Duc Anh Dam. “It’s a fine line.”

While on the issue of censorship:

The company says it will pull down posts in response to complaints if the content is racist, sexual or “violates the rules or local laws” — but the decision is made in Singapore, not Ho Chi Minh City, where government officials could pressure local employees, Yahoo says.

Yahoo provides another line of defense for users, who can keep blog posts private by deciding who has access to what they write.

Finally, there is one further reason for its success, the fact that it assists the Vietnamese government. The company also acts as a technology adviser to officials on issues such as Internet law.

Vietnam needs a powerhouse tech company like Yahoo to help the country advance in information technology, said Phuc Than, Intel’s former country manager, who is now managing director of DFJ VinaCapital. While Vietnam’s government brooks little political opposition, its officials are more flexible than those in China, he added.

One final item to note to emphasise the success of brand Yahoo in Vietnam:

Now the company is so popular that a Vietnamese firm markets a face cream labeled “Yahoo” and cheap mobile phones from China sold in Vietnam come pre-loaded with pirated Yahoo Instant Messenger software.

As has been noted and blogged about before, Vietnam is one of the up-and-coming markets in Southeast Asia – a market which itself growing in status globally given the influence Indonesia, Philippines, Malaysia and Singapore enjoy in the global online space.

Vietnam is particularly noteworthy as it represents the type of internet development of the future with mobile internet, smartphones and 3G all playing a key role in getting the public online. With a population in excess of 85 million, Vietnam is not the size of near-neighbour Indonesia, but it does have the potential – given its history of outsourcing and labour – to become an important internet market of the future, one which Yahoo is tactically well positioned to enjoy.