News / Asia

    More American Brands Heading to Communist Vietnam

    Workers prepare a Starbucks coffee shop for its opening in Vietnam's southern commercial hub of Ho Chi Minh City, July 30, 2013.
    Workers prepare a Starbucks coffee shop for its opening in Vietnam's southern commercial hub of Ho Chi Minh City, July 30, 2013.
    Marianne Brown
    McDonald's is the latest global brand to announce it will open stores in Vietnam, a communist country increasingly drawing the attention of American chain stores.

    Vietnam’s business climate has a mediocre reputation, trailing China and Thailand on the World Bank’s Ease of Doing Business Index, but ahead of Indonesia and India.

    The economic growth rate hit a 13-year low last year and a recent survey by the International Labor Organization showed more than half of young workers are affected by poor quality employment.

    But the bad economic news has not taken the sheen off the market for big U.S. brands. This year alone, Starbucks opened its first of two stores and McDonald’s recently announced it would open a store early next year.

    “We see that in Vietnam now we have KFC, we have Starbucks, Pizza Hut, Subway, Lotteria and the other fast food chains and brands. I think the economy is growing quite healthy and the political is quite stable so that’s why I think it’s the right time for McDonald’s to come to Vietnam now,” said General manager Thinh Nguyen.

    All of these brands have started off in the country’s biggest metropolis, Ho Chi Minh City. The city is Vietnam’s economic heart, and Ho Chi Minh’s population is generally more wealthy.  In 2010, per capita GDP was $2,800, around twice the national average.

    Starbucks said the price of a latte was affordable for ordinary Vietnamese. Its $3 coffees are on par with equivalent Vietnamese branded stores Highlands and Trung Nguyen.

    Unlike many Western countries where processed fast food is considered an affordable, yet unhealthy convenience, in Vietnam foreign franchises have a different reputation. Here, most customers are young people and well-to-do families.

    “More than 60 percent of Vietnamese people are under 30 so they are in love with big brands like McDonald’s, Starbucks, any sort of famous brands in the world,” said Nguyen.

    McDonald’s announced entry to Vietnam sparked controversy because the local licensee is the son-in-law of Vietnam’s prime minister. Nepotism and crony capitalism have drawn widespread criticism among Vietnamese.

    McDonald’s defended its choice of Henry Nguyen, saying he had an impressive business background and proven record with new businesses in the country.

    While his political connections were obviously an asset, Adam Sitkoff from the American Chamber of Commerce said Nguyen had the market experience and knowledge that brands like McDonalds were searching for.

    He pointed out that Nguyen worked in the food and beverage [F&B] industry before he met his well-connected spouse, helping establish brands like Pizza Hut, Coffee Bean and Tea Leaf, and Subway in the country.

    “When we think about nepotism in Vietnam, we think of unqualified people getting jobs that they shouldn’t and this is not a case of this at all. This is somebody that would be hired for this anyway, I really believe that,” said Sitkoff.

    For brands that are headed to Vietnam, Sitkoff cautioned that doing business well in Vietnam took time.

    “Vietnam doesn’t have a very strong rule of law. It doesn’t have a fair and impartial court system. It doesn’t have certain types of investor protections that people in more developed countries are used to. It hurts the ability for a lot of businesses to come in and operate,” he said.

    One of the biggest challenges for businesses is finding good landlords. Much of the land is state-run, owned by a state-run company or a ministry. Often, landlords demand extra money on top of official rent or terminate leases so they can copy the business model and open their own store.

    Starbucks had a strategy it rolled out in many countries to tackle this issue, said General Manager of Starbucks Vietnam Viet Idea Food & Beverages Patricia Marques.

    “We have dedicated a lot of time to educate landlords, to invite the landlords to visit our location in District 1 [Center of Ho Chi Minh City] for them to observe what the brand can do for their piece of real estate. For the amount of traffic that our stores bring I believe landlords want to have us. They don’t want to copy us, they want to have us,” said Marques.

    Sitkoff said it took a long time for Starbucks to come to Vietnam because the company was not sure the local population could afford its products. However, as young people hunger for famous names, he expects more brands will follow suit.

    Marques from Starbucks is similarly optimistic. She said competition only brought more interest from the customers, so that can only be good for business.

    You May Like

    US Leaders Who Served in Vietnam War Look Back and Ahead

    In New York Times opinion piece, Secretary of State John Kerry, Senator John McCain and former Senator Bob Kerrey say as US strengthens relations with Vietnam, it is important to remember lessons learned from war

    Who Are US Allies in Fight Against Islamic State?

    There is little but opportunism keeping coalition together analysts warn — SDFs Arab militias are not united even among themselves, frequently squabble and don’t share Kurds' vision for post-Assad Syria

    Learning Foreign Language Helps US Soldiers Bridge Culture Gap

    Effective interaction with local populations part of everyday curriculum at Monterey, California, Defense Language Institute

    This forum has been closed.
    Comment Sorting
    Comments
         
    by: OzNaj from: London
    August 21, 2013 4:44 PM
    Abandoned economic communism long ago, a hybrid model allows the integration of said system into a globalist community.

    by: MallRat from: USA
    August 16, 2013 11:58 AM
    Oh yeah, the strip mall-ification of Vietnam. Is that really progress?

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Vietnamese-American Youth Optimistic About Obama's Visit to Vietnami
    X
    Elizabeth Lee
    May 22, 2016 6:04 AM
    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video Vietnamese-American Youth Optimistic About Obama's Visit to Vietnam

    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video First-generation, Afghan-American Student Sets Sights on Basketball Glory

    Their parents are immigrants to the United States. They are kids who live between two worlds -- their parents' homeland and the U.S. For many of them, they feel most "American" at school. It can be tricky balancing both worlds. In this report, produced by Beth Mendelson, Arash Arabasadi tells us about one Afghan-American student who seems to be coping -- one shot at a time.
    Video

    Video Newest US Citizens, Writing the Next Great Chapter

    While universities across the United States honor their newest graduates this Friday, many immigrants in downtown Manhattan are celebrating, too. One hundred of them, representing 31 countries across four continents, graduated as U.S. citizens, joining the ranks of 680,000 others every year in New York and cities around the country.
    Video

    Video Vietnam Sees Strong Economic Growth Despite Incomplete Reforms

    Vietnam has transformed its communist economy to become one of the world's fastest-growing nations. While the reforms are incomplete, multinational corporations see a profitable future in Vietnam and have made major investments -- as VOA's Jim Randle reports.
    Video

    Video Qatar Denies World Cup Corruption

    The head of Qatar’s organizing committee for the 2022 World Cup insists his country's bid to host the soccer tournament was completely clean, despite the corruption scandals that have rocked the sport’s governing body, FIFA. Hassan Al-Thawadi also said new laws would offer protection to migrants working on World Cup construction projects. VOA's Henry Ridgwell reports.
    Video

    Video Infrastructure Funding Puts Cambodia on Front Line of International Politics

    When leaders of the world’s seven most developed economies meet in Japan next week, demands for infrastructure investment world wide will be high on the agenda. Japanese Prime Minister Shinzo Abe’s push for “quality infrastructure investment” throughout Asia has been widely viewed as a counter to the rise of Chinese investment flooding into region.
    Video

    Video Democrats Fear Party Unity a Casualty in Clinton-Sanders Battle

    Democratic presidential front-runner Hillary Clinton claimed a narrow victory in Tuesday's Kentucky primary even as rival Bernie Sanders won in Oregon. Tensions between the two campaigns are rising, prompting fears that the party will have a difficult time unifying to face the presumptive Republican nominee, Donald Trump. VOA national correspondent Jim Malone has more from Washington.
    Video

    Video Portrait of a Transgender Marriage: Husband and Wife Navigate New Roles

    As controversy continues in North Carolina over the use of public bathrooms by transgender individuals, personal struggles with gender identity that were once secret are now coming to light. VOA’s Tina Trinh explored the ramifications for one couple as part of trans.formation, a series of stories on transgender issues.
    Video

    Video Amerikan Hero Flips Stereotype of Middle Eastern Character

    An Iranian American comedian is hoping to connect with American audiences through a film that inverts some of Hollywood's stereotypes about Middle Eastern characters. Sama Dizayee reports.
    Video

    Video Budding Young Inventors Tackle City's Problems with 3-D Printing

    Every city has problems, and local officials and politicians are often frustrated by their inability to solve them. But surprising solutions can come from unexpected places. Students in Baltimore. Maryland, took up the challenge to solve problems they identified in their city, and came up with projects and products to make a difference. VOA's June Soh has more on a digital fabrication competition primarily focused on 3-D design and printing. Carol Pearson narrates.

    Special Report

    Adrift The Invisible African Diaspora