I returned from Vietnam on Friday. It was my first visit and it will not be the last.

I was keen to learn more about the country and the opportunity it offered New Zealand’s growing AgTech sector. Catching up with Mitchell Pham, founder of Kiwi Connection in Ho Chi Minh city, was a great place to start. You can find out more about this great initiative from an earlier blog post.

Great New Zealand product placement in my Hoi An hotel

Great Kiwi product placement in my Hoi An hotel

We discussed the Vietnam opportunity for NZ Tech in general and AgTech in particular. I was not surprised to learn that New Zealand is not the first global cab off the rank in the country’s emerging AgTech sector. Our old friends, Israel, are well ahead of us in the game. Sound familiar? It’s the same story in Silicon Valley and numerous other global Ag-focused sectors. It’s something that New Zealand needs to learn from.

Israel has developed a very well connected ecosystem which encompasses startups, investors and Government agencies. They think Global from Day 1. They develop strategies for new market entry and then work as a pack to ensure that they create friction. They make repeated return visits to that market and they share the same story. In Vietnam, they have used their similar climate as a key talking point. As I sweated profusely in the humid air on the Rex Hotel’s rooftop bar, I thought about the hot, but arid and dry conditions in Tel Aviv and Jerusalem. These Israelis are great story tellers!

In the Mekong Delta, I had the opportunity to visit a variety of crop producing entities. These ranged from paddy fields of rice to banana, coconut and exotic fruit plantations. I saw some of the most fertile growing conditions I have ever seen. The thousands of canals that make up the Delta make this a truly amazing rice and fruit bowl. Yet it faces long term challenges.

Today, labour is widespread and cheap and there is not a lot of evidence of farm automation in the field. Vietnam however is facing the same demographic challenge that faces many other Asian countries. Younger people are abandoning rural areas for the cities. Urbanisation is on the move and in time this will impact on agriculture. This is a key opportunity for AgTech businesses. Fewer people means that modern day technology will have a much more significant role to play in increasing sustainable agriculture production.

New Zealand’s AgTech sector is particularly well-placed to take advantage of this opportunity. Fonterra has done an extremely good job at promoting NZ dairy in Vietnam. When my female vintage Vespa driver in Ho Chi Minh commented on the quality of Fonterra product, this was confirmed. Interesting then to note that last week, Danone Vietnam announced that they were closing down their operations in the country. As a division of one of the world’s largest dairy players, this says a lot about Fonterra’s presence and strategy.

For New Zealand commentators unaware of Danone’s move, semi-officially, the reason for Danone Vietnam closing down its operations include the Vietnam’s Government’s policies to cap prices of powdered milk products for children under six years and the ban on advertising of infant formula for children under 24 months over more than two years. Less officially, Danone Vietnam has only a small % of market share and has decided to focus elsewhere. I consider this a major Fonterra win.

Fonterra’s significant presence in Vietnam does raise an important question – and perhaps option. Is there an opportunity for New Zealand’s AgTech sector to leverage that presence to build out a platform for future growth? Is that how Israel might approach such an opportunity? Just sayin’.

Growing urbanisation is not the only condition that Vietnam shares with some other Asian counties. Speaking to an ex-pat Kiwi businessman in Hoi An, it became clear that a spot of bribery and corruption is not unheard of in Vietnam. Having spent 12 years running a software business in India, I am personally very aware of the challenge that this poses western businesses seeking to establish a presence in these markets. It is not part of our business culture. In India, I employed local lawyers and accountants to deal with offialdom. In Vietnam, there is a new partner to be had.

It is in short one more reason why the Kiwi Connection initiative has such an important role to play. Today, Kiwi tech businesses including Augen Software, Orion Health, insurance technology company HealthTech and manufacturing technology company Shapeshifter are located together at Quang Trung Software City in Ho Chi Minh, Vietnam’s largest technology park. I would strongly recommend any Kiwi AgTech company looking to enter this market to seriously consider the Kiwi Connection option. Doing it DIY can be a real challenge in such a market. Having access to support and local knowledge cannot be under-estimated.

The Vietnam opportunity however is real. My own take is that when viewing Vietnam as a viable investment option, it should be part of a wider ASEAN strategy. Often, businesses head straight to Singapore when considering an ASEAN hub. Cost however is much more significant and Vietnam has the benefit of a 90+ million population. Capital is also available and I am sure that Mitchell will have more to say about this in the coming months. I witnessed numerous significant infrastructure developments taking place last week with funding coming in from Japan, Singapore and South Korea. A rapidly growing Vietnam is on their collective roadmap.

After a week of learning and dialogue, I believe it’s time for New Zealand’s AgTech sector to collectively assess its opportunities in this unique country. Time then to start preparing that story.