On a quick walk from the hotel district of Ho Chi Minh City to the Reunification Palace — where the North and South of Vietnam became one country after the Vietnam War — tourists pass by vendors selling street food, pop-up tables with this week's lotto tickets and taxi drivers pitching to everyone who walks by in the hopes of securing a fare.
It's this kind of vibrant capitalism found throughout cities in Vietnam that tech startups around the world tend to admire.
"It is pure grit and hustle," said Bobby Liu, senior director at the Topica Institute, a Vietnamese education technology startup.
Liu has lived in Vietnam since 1997 and has been part of the local tech scene since 2011. For years, he was a participant in the country's burgeoning startup scene that was regarded as having a great deal of potential.
In the past 18 months, this potential has been accelerated by the trade war between the U.S. and China, according to people in Vietnam's tech industry and regional investors with stakes in the country.
With China and the U.S. at odds — and tech companies and money caught in the middle — Vietnam has emerged as one of the beneficiaries of the trade war. The country's startup scene continues to experience healthy investment from both China and America, buttressed by increasing interest from a diverse group of Asian investors as well as major tech companies in the U.S. and China, experts said. The broader boost to Vietnam has been strong enough to strain the country's existing infrastructure.
The most high-profile change came when Google announced in late August that it would move production of the Pixel phone from China to Vietnam, marking a significant on-the-ground moment in the U.S.-China trade war.
Then, Grab — the Southeast Asian equivalent of Uber — announced plans to invest $500 million in Vietnam over the next five years.
The announcements offered a public confirmation of what tech investors and executives in the region had already known for years — Vietnam's market had begun to flourish. It is now the third-largest startup market out of 10 ASEAN countries, according to anew report from Cento Ventures, a Singaporean venture capitalist firm. Two years ago, it was sixth.
Nikhilesh Goel, co-founder and chief operating officer of Validus Capital, a Southeast Asia investment firm, said Vietnam has been boosted by American investment that has shifted its focus away from China, but noted that the country's good fortune is the result of years of changes — both public and private — that have resulted in pre-trade war success stories like Momo, an epayments company, and Tiki, an ecommerce company.
"We must not forget that Vietnam is a fast-growing market in its own right and has the right conditions for the startup scene to grow and mature regardless," Goel said.
Liu credits Vietnam's success to three elements: an extended period of peace, the country's "Hanoi Hustle" and the Viet Kieu, ethnic Vietnamese who are returning to Vietnam with greater frequency.
"Vietnam hasn't really experienced any kind of economic peace for a long time," Liu said. "This is something new, an opportunity to [discover] the possibilities."
Vietnam spent roughly 100 years in a state of conflict. The 20th century was marked by the fight against French occupation, after which the country navigated the destruction from the American-Vietnamese war, then fought off an attempted invasion from China and a war with Cambodia to oust the genocidal Khmer Rouge regime.
The political upheaval displaced millions of people, leading to diasporas of Vietnamese living abroad. For example, in 1979, the Jimmy Carter presidency opened the American border to allow 14,000 peoplefrom Laos, Cambodia or Vietnam to enter the country each month.
The estimated number of Vietnamese-Americans in the United States is about 1.6 million people (including American-born children of immigrants).
In recent years, those people or their children are starting to return to Vietnam in greater numbers.
These people are "a source of capital - through remittances and investment - but more importantly of knowledge, ideas and connections," Eddie Thai, a Partner at 500 Startups, told the regional tech publication Tech In Asia.
Vietnam began to see an extended period of peace beginning in the early 1990s, and on July 11, 1995, the country normalized ties with the U.S. — and started to emulate one of its successful neighbors."When Vietnam first opened up in 1995, it had a pretty strong relationship with Singapore," Liu said. "I call it the Singapore framework. You can see that there are a lot of similarities to how Vietnam is developing to Singapore."
The Singapore model meant strong support from the government. Amra Naidoo, the co-founder of Accelerating Asia, a program that helps startups, said Vietnam's government has played a crucial part in fostering the country's startup scene.
"The Vietnamese government has thrown its weight behind initiatives introduced to bolster the fledgling startup ecosystem," Naidoo said. "In recent years, programs such as the Vietnam Silicon Valley, Saigon Innovation Hub and Business Startup Support Center have been established to accelerate and form the nucleus of this growth."
She also pointed to the ripple effects of an increased investment in education and a larger increase in foreign direct investment.
But the government's support remains a mixed bag for the broader tech industry. Vietnam's single-party Communist government maintains a tight grip on power, often highlighted by crackdowns on online dissent. In January, the countryrolled out a law that requires foreign tech firms like Facebook and Google to store data locally. The policy elicited concern from free speech advocates who worried that Vietnam's powerful government could use the law to further clamp down on speech.
The China Gambit
Vietnam's tech industry has also been able to turn something of a trick when it comes to China. Chinese money has flowed into Vietnamese startups, but Vietnam is also seen by other investors as not being overly reliant on their neighbor to the north.
While startups have received money from major Chinese companies including Tencent, Alibaba and JD.com, all of the major startup exits (when a startup is acquired by another company or goes public and repays its investors) have been facilitated by companies outside of China, according to the Topica Institute.
Daniel Song, a senior associate at the South Korean venture capital firm Access Ventures, said investment in Vietnam was driven by the South Korean conglomerates known as Chaebols (such as Samsung) who paved the way for more diverse investors.
According to Song, when Access first entered the market four years ago there was only a few Korean venture capital firms in Vietnam. Today, there are close to 15 South Korean firms actively investing in Vietnam.
"he most interesting startup market "has clearly become Southeast Asia, specifically Vietnam," Song said. "It goes back to familiarity with the market.