BUSINESS: Vietnam's taxi turf battles
Battle in the Streets
All is fare in the ongoing struggle for Ho Chi Minh City's taxi customers
With a cheap Seiko dangling off his wrist and a plain yellow T-shirt clinging
to his chest, 45-year-old Allan Ho obviously doesn't wear his wealth on his
sleeve. Although his Ho Chi Minh City-based Vinataxi Ltd. pulled in millions
of dollars in revenues last year, Ho doesn't have the time or the inclination
to care what he looks like. One of his drivers has apparently just been roughed
up by toughs from a rival taxi company and, for a moment, Ho doesn't care
what he sounds like either.
"You're talking about competition? I'm talking about fair competition. Real
competition,'' snaps an emotional Ho, flicking back a lock of unkempt hair.
"I'm from Hong Kong, you know, and I know what's competition. I can win in
fair competition any time, but they can't beat the hell out of our drivers."
No one said establishing market beachheads in Vietnam's commercial capital
would be pleasant, although on paper it seems Ho has had it easy. A former
Hong Kong property developer, Ho invested $ 2 million in the early 1990s
to launch what he calls Ho Chi Minh City's first radio-taxi service. The
investment is already paying off -- last year, Vinataxi generated about $
3.5 million in revenues. Headquartered in an unused government aircraft hangar
near the city's Tan Son Nhat Airport, Ho's Vietnamese partner is the formidable
Ministry of Transportation and Communication.
Across town is the headquarters of archrival Southern Airports Services Co.
(SASCO), which operates Airport Taxi. There, Director Pham Hoang Ha denies
his company plays rough. "It is completely wrong to say that Vinataxi drivers
are sometimes harassed and beaten up at the airport," says Ha. "Our company
has no monopoly at the airport."
Nevertheless, despite the airport's proximity to the Vinataxi office -- and
the absence of any rule designating it as one cab company's exclusive area
-- Ho seems to consider Tan Son Nhat as Airport Taxi turf and urges Vinataxi
drivers to leave as soon as they deliver customers. But while the airport
situation is a sore point between the two companies, businesspeople are grateful
for the recent warp-speed development of Ho Chi Minh City's taxi services.
Until a few years ago, the taxi choice came down to pedal-powered cyclos,
which still jam the lively streets, or rickety 1950s and 1960s American and
French cars kept running by creative roadside mechanics and the will-power
of their drivers. "You should see those taxis," says a diplomat who frequently
visits Vietnam. "You can still see them in the countryside. They are creaking,
and I wonder how they still run."
Today air-conditioned taxis whisk away passengers and, in the early days
of the rivalry, even the other company's fares. "Things had gotten so bad
that the operators used to listen in on each other's radio frequencies and
send a cab faster, to steal another passenger," says a banker who prefers
the new taxis to driving along the city's dusty, congested roads.
Ho was attracted to Vietnam by the lack of taxi-industry regulation and the
absence of services that businesspeople take for granted. "The taxis then
had no meters, no air conditioning, no radio paging, no headlights," he recalls.
He set up Vinataxi with 30 radio-equipped cars in 1992 and has since expanded
to 180 modern Japanese vehicles. A truly competitive market was born in October
1993 when Airport Taxi set up shop. That outfit now sports 200 late-model
Japanese and Korean cars, including limousines, says Ha. Scheduled to join
the fray this year is Saigon Taxicabs, with 100 vehicles.
While the war for customers will likely escalate, the companies have already
found themselves battling for drivers. Vinataxi cabbies keep 30 percent of
the fare and all tips, adding up to paychecks of $ 300 to $ 500 a month.
Airport Taxi, which used to pay a monthly salary of $ 80, recently launched
a similar pay scheme in an attempt to stem what Ho calls a driver exodus
to Vinataxi that occurs each time he advertises for new drivers.
Quality Vietnamese cabbies are a precious commodity. In a country with a
downsizing state sector and a demobilizing army, unemployment is high, but
Ho insists that his drivers must have at least five years' driving experience,
possess no criminal record, undertake a driver's course and pass an English
test, which he directs. Courtesy is paramount: two passenger complaints,
and the cabbie is sacked.
While Ho's taxi venture has been successful so far, his luck has not been
so good in another project. In 1993 his Hong Kong-based company, Golden Class
International Ltd., invested $ 1.8 million in Pacific Airlines, which was
to fly the lucrative route between Ho Chi Minh City and Taipei. But when
official relations between Vietnam and Taiwan, Vietnam's largest investor,
improved, state carrier Vietnam Airlines began flying the route, as did China
Airlines. Such competition has made life difficult for Pacific Airlines.
Golden Class, which Ho chairs, has lost about $ 1.2 million from this misadventure.
But Ho is fighting back, claiming he was denied access to the airline's books.
His reaction reveals the tenacity with which he pursues his taxi business.
"That is my character," he says. "I don't give up. I take a risk, I want
a fair return. The feeling in my heart says that I should fight. Out of 100
investors who come here, 95 cry. I lost my shirt with the airline, but I'm
still smiling. But notice, it is a small smile."
Says Philippe Colin, executive director of Beta Vietnam Fund, which has taken
a stake in Vinataxi: "He is truly entrepreneurial, and even though he has
faced adversities and problems, he has turned his operation into a highly
Airport Taxi's Ha is reluctant to talk about the competition with Vinataxi.
"It is not completely right to say that the rivalry between Airport Taxi
and Vinataxi is very hot," says Ha. "In business, we pay most attention to
the service toward clients."
As for Ho, he plans to sell his company in a few years and retire to Canada,
where he has citizenship. But before that, he wants to take one more gamble:
setting up a jockey club in Ho Chi Minh City with Stanley Ho, the casino
king of Macau. Only time will tell if that turns out to be as successful