We've seen Vietnam, year by year become one
of the fastest growing economies in Southeast Asia.
Vietnamese consumers are very aspirational.
You've got millions of people riding motorbikes
and they wanna be riding inside cars.
Vingroup, Vietnam's biggest conglomerate
has really tapped into that.
The founder and chairman
aspires to be the Elon Musk of Vietnam.
Vuong is Vietnam's richest man
with outsized ambitions.
He wants to sell cars not only to the Vietnamese,
but also Americans and other consumers around the world.
And so with his company VinFast,
Vuong is planning to build an electric car factory
in North Carolina with an initial investment
of $2 billion.
US President Joe Biden has praised Vuong's plan,
but finding success in one of the world's
most competitive car markets won't be easy.
I think it's a huge uphill battle for VinFast
to build brand recognition in the US.
For a consumer to try something new,
to buy a VinFast vehicle
that hasn't really been tried and tested,
it's a huge hurdle for consumers to jump over.
Pham Nhat Vuong wants to promote his own business,
but he also wants to contribute
to Vietnam's image as a rising power.
In Southeast Asia, no car company has been able to do that.
If VinFast is successful that goes very well
with the ambition of the Communist Party of Vietnam.
But if they fail, it will be a very, very hard blow
to Vingroup and also to the national economy.
The fall of what was Saigon
marked the end of America's disastrous intervention
in support of South Vietnam.
After the Vietnam war ended in 1975,
the north took over the whole country
and they imposed the same
socioeconomic model across Vietnam.
That means Vietnam adopted a centrally planned economy
with the state sector playing a very dominant role.
There were almost no foreign-invested
or private sectors back then.
But that kind of policy led to poor economic development
with a high rate of poverty,
and there was a lack of even essential consumer products.
In the late 1970s and 80s,
Vietnam's economic troubles were exacerbated
by a trade embargo imposed by the US
and international isolation following
Vietnam's military intervention in Cambodia.
Fearing the collapse of the regime,
the Communist Party of Vietnam adopted
the Đổi Mới or economic reform policy in 1986.
That means they allow foreign investment and also
the private sector to play a bigger role in the economy.
The private sector in Vietnam has been growing very strong
over the past 30 years.
Now they account for about 40% of Vietnam's GDP
and contribute about 30% of Vietnam's tax revenues.
And more importantly, it accounts for about
60% of jobs in Vietnam.
So they play a very important role
in keeping the economy growing.
But the key issue is that most of the private companies
in Vietnam are small and medium-sized enterprises.
Vietnam really needs strong leading private companies,
to lead the national economic development
and Vingroup is one of such national champions.
Vingroup is the country's biggest private
company with a market capitalization of $11 billion.
In 2021, its total assets accounted
for about 5% of Vietnam's GDP.
What makes Vingroup so successful today
is that its businesses and brand reach
into every aspect of Vietnamese life.
You can have a Vietnamese born
into a Vingroup-owned hospital.
They can eventually go to a Vingroup school
and eventually a university
that's operated by VinUnivestiy as well.
They can live in a Vinhomes and shop in Vinmalls as well.
The Vingroup umbrella covers
over a dozen businesses
and the Vietnamese government points to the company's
growth and success as a sign of Vietnam's modernization.
Vingroup is one of the key players whose strategy
is aligned with the strategy of the government.
They have been mostly a real estate developer.
That means they have been relying on natural resources,
land, to grow the company.
There have been concerns about the possible
environmental risks of one planned Vingroup project.
In 2019, the government approved a $9 billion residential
and tourism project on reclaimed land in the coastal
Can Gio district of Ho Chi Minh City, despite concerns
that it might damage the mangrove forest nearby.
In July 2020, a group of environmentalists,
academics and researchers signed a petition
calling for an independent assessment of the project.
So we have a large part of forested area,
and then you have, you have a small city
and along the city you have a beach
and then they want to reclaim this land.
The project is not removing the mangroves,
however it can have some side effects
especially on the hydrology
and sedimentary dynamics of the mangroves.
Depending how the project will be done
it can change how the water can flow in.
If this project is preventing sediment to reach
the mangrove, then the mangrove will retreat.
The mangrove forest is really the buffer
between the sea and Ho Chi Minh.
If the mangrove forest disappears, then the impact
of sea level rise, storm surge,
will be much more important for Ho Chi Minh City.
While some believe that the political
connections of Vingroup's founder Pham Nhat Vuong
are crucial to the company's success,
this is something Vuong himself has denied.
And in fact, he says he really wants to stay away
from politics, but you know, a lot of people in Vietnam
don't really believe that because it's really hard
to be as successful as they've become
without really political support.
Vuong sees himself as a patriot entrepreneur.
He wants his Vingroup to be really successful,
to really make a mark on the world stage.
Pham Nhat Vuong studied mining and geology
at a university in Hanoi before he was sent
on a scholarship to study in Moscow.
After graduating in 1992, he moved to Kharkiv in Ukraine
and set up a company making instant noodles
and other dried food.
That company was a huge success
and it distributed way beyond the Ukrainian borders
to other nations there in Eastern Europe.
And eventually he sold that company to Nestle.
Now he wouldn't disclose to us how much he sold it for,
but we think it was over $150 million.
The fortunes of Vietnam were also improving.
Following the government's economic reforms
and the US lifting its trade embargo in 1994,
the country's private sector started to flourish.
And so after accumulating his initial wealth,
Vuong went back to Vietnam in the early 2000s
and started investing in real estate.
He saw immense opportunities in the country back then.
He started to build a lot of real estate projects
across the country and helped to transform the skylines
of these cities, especially in Hanoi and Ho Chi Minh City.
He went down to Nha Trang, which is a coastal beach city
and there was an island there just off the coast
and he decided to build a fancy five-star resort there,
something that most Vietnamese had never seen.
In 2012, Vuong's real estate
and tourism companies merged to become Vingroup,
making him Vietnam's first billionaire.
Real estate remains the cash cow of the group.
Most of Vingroup's other businesses are making losses.
They have to rely on real estate to fund
the operation of the whole group and also the expansion
of Vingroup into other sectors.
So what do you think of the cars?
It's incredible. To create something
in such a short space of time,
it's really, really incredible. It really is.
VinFast is a miracle for Vietnam.
In 2017, Vingroup launched its automotive unit
VinFast, a step towards Vuong's goal to turn the group
into a technology company by 2028.
They basically built the state-of-the-art plant
from scratch, out of a swamp
and they did it with breakneck speed.
You've got really cool robotic arms all around the factory.
You see very few employees on the ground there,
it's all done by these machines,
even down to the painting of it.
VinFast's approach was a really good one.
They hired an Italian company to work on car designs.
They licensed BMW engines.
They basically rolled off their first car
off the assembly line within 24 months.
The prime minister was there.
He declared it fantastic, a great day for Vietnam's growth.
The Vietnamese government,
they want to turn Vietnam into a upper,
middle-income economy by 2030
and a high-income economy by 2045.
One of the problems for them is that they have not been
able to develop some key manufacturing sectors
to provide the momentum for the economy.
In the past, the state wanted to rely on state-owned
companies and they didn't live up to the expectations.
So they would like to have major companies,
especially private ones to take over this role.
They believe that the automobile industry
is a high-tech industry and it can generate
spillover effects across the economy.
While Vietnam's car market is still dominated
by foreign players like Toyota,
Vinfast has helped to grow the local automobile industry.
As the only domestic car brand,
it sold 82,000 gas-powered cars in three years,
a decent share for an upstart car manufacturer
in a relatively small market.
In 2022, the company announced its next big plan:
to stop making gas-powered cars by the end of August
and focus on electric vehicles.
You won't find their electric vehicles
on the road here yet, but VinFast is about to become
a major player in North Carolina.
The startup based in Vietnam is only a few years old,
but wants to go worldwide.
The transition into EVs is the future trend
and in the EV sector there have not been
a lot of established players yet.
So if they can do fast and do well,
they can become one of the market leaders.
Going global, especially to the US is a logical step.
The Vietnamese market is still too small
and the infrastructure is not ready for their EV business.
The US is the second largest market for cars,
and they have advanced infrastructure systems.
And they also want to make use of some
financial incentives from the US government.
I think the key question now is whether
they will be successful with that effort or not.
VinFast has said it plans to break ground
on the factory in North Carolina
in September and it's on track
to begin EV production in the US in 2024.
The company has received 73,000 orders
for their electric cars, but it has ambitions
of delivering as many as 1 million cars globally
within five to six years.
Starting a factory in the US and anywhere around
the world, it's a huge undertaking.
Obviously you have to build the building
and you have to buy the equipment.
But I think where the challenge lies
is really in the last mile.
There are around 30,000 parts in a vehicle.
So it's not a very easy feat for them to overcome,
They've been building cars in Vietnam.
But coming here, the US, the challenge is how well
they marry all those parts together
to ensure there's quality.
The US is one of the most competitive
auto markets in the world.
Chinese EV makers such as Geely and Nio
haven't cracked it after years of trying,
but VinFast might have a geopolitical advantage.
We have seen a remarkable trajectory in the relationship
between the United States and Vietnam.
Unlike China, American politicians
are more likely to support an automaker from Vietnam,
a country that's had closer ties to the US,
despite their history.
But VinFast still faces competition from Tesla
as well as the likes of GM, Ford and Honda,
who all plan to roll out new EVs in the next five years.
We're not competing with any EV companies.
We would like to take market share
from the internal combustion engine vehicles.
Not everybody can afford to buy
$100,000, $150,000 EVs, right?
You are talking about Tesla, aren't you?
And many others.
The future of mobility is here.
VinFast EVs, they're looking to launch
two to three models.
And the pricing range is between
$40,000 to $60,000.
That's really comparable to a Model 3 from Tesla,
but half the price of the Tesla Model S.
So they're really targeting the mass market,
not really the premium market.
And that is the right strategy, I think.
Because for an automaker to be successful and be profitable,
they need to build scale.
The question is, can they convince American consumers
to plunk down $41,000, $51,000 on a car
made by a brand from Vietnam
that they've most likely never heard of.
Agreements are in place to raise at least
$4 billion globally to fund the planned
North Carolina EV factory and US rollout.
And to ensure VinFast's success,
Vuong has committed $2 billion of his own money,
but he may have to invest much more.
A typical automaker spends upwards of $10 billion
just on marketing expenses alone.
So the question is will VinFast have the capital resource
to allow them to make that strong push into a new market
and sustain that capital investment over time.
If they can source continuous flow of capital
and allow them to execute the strategy,
they can be successful.
For Vingroup and especially their VinFast business,
I think they are now facing a cliff.
If they can jump over the cliff,
they can reach a land of opportunities
and they will become an international player.
But the risk is that if they fall off the cliff
it will be a disaster not only for themselves,
but also for the national economy as well.
Vietnam and both Vingroup want to be on the world stage.
They want to modernize.
These are narratives that they share.
So at the end of the day how much will the government
support VinFast's plans, especially if they need funding,
especially if things go south.
I think those are really big questions
that we don't know yet the answers to.