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

Ebola Death Toll Nears 5,000 as Virus Advances

West Africa bears heaviest burden; Mali toddler’s death raises new fears More

Jordan’s Battle With Islamic State Militants Carries Domestic Risks

Despite Western concerns that IS militants are preparing a Jordanian offensive, analysts call the kingdom's solid intel a strong deterrent More

Asian-Americans Assume Office in Record Numbers

Steadily deepening engagement in local politics pays off for politicians like Chinese-American Judy Chu More

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.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video Comanche Chief Quanah Parker’s Century-Old House Falling Apart

One of the most fascinating people in U.S. history was Quanah Parker, the last chief of the American Indian tribe, the Comanche. He was the son of a Comanche warrior and a white woman who had been captured by the Indians. Parker was a fierce warrior until 1875 when he led his people to Fort Sill, Oklahoma, and took on a new, peaceful life. As VOA’s Greg Flakus reports from Cache, Oklahoma, Quanah’s image remains strong among his people, but part of his heritage is in danger of disappearing.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid