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

How to Safeguard Your Mobile Privacy

As the digital world becomes more mobile, so too do concerns about eroding privacy and increased hacking More

'Desert Dancer' Chronicles Iranian Underground Dance Troupe

Film by Richard Raymond is based on true story of Afshin Ghaffarian and his friends More

Researcher: Obesity Poses Complex Problem

Professor at Symposium on Obesity, Diabetes and Metabolic Syndrome says problem involves more than calorie intake, warns of worldwide health impact 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.
Scientists Say Plankton More Important Than Previously Thoughti
X
George Putic
May 26, 2015 9:26 PM
Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video US-led Coalition Gives Some Weapons to Iraqi Troops

In a video released Tuesday from the Iraqi Ministry of Defense, Iraqi forces and U.S.-led coalition troops survey a cache of weapons supplied to help Iraq liberate Mosul from Islamic State group. According to a statement provided with the video, the ministry and the U.S.-led coaltion troops have started ''supplying the 16th army division with medium and light weapons in preparation to liberate Mosul and nearby areas from Da'esh (Arabic acronym for Islamic State group).''
Video

Video Amnesty International: 'Overwhelming Evidence' of War Crimes in Ukraine

Human rights group Amnesty International says there is overwhelming evidence of ongoing war crimes in Ukraine, despite a tentative cease-fire with pro-Russian rebels. Researchers interviewed more than 30 prisoners from both sides of the conflict and all but one said they were tortured. Henry Ridgwell reports for VOA from London.
Video

Video Washington Parade Honors Those Killed Serving in US Military

Every year, on the last Monday in the month of May, millions of Americans honor the memories of those killed while serving in the armed forces. Memorial Day is a tradition that dates back to the 19th Century. While many people celebrate the federal holiday with a barbecue and a day off from work, for those who’ve served in the military, it’s a special day to remember those who made the ultimate sacrifice. Arash Arabasadi reports for VOA from Washington.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.
Video

Video On Film: How Dance Defies Iran's Political Oppression

'Desert Dancer' by filmmaker Richard Raymond is based on the true story of a group of young Iranians, who form an underground dance troupe in the Islamic Republic of Iran. This is the latest in a genre of films that focus on dance as a form of freedom of expression against political oppression and social injustice. VOA’s Penelope Poulou has more.
Video

Video Turkey's Ruling Party Trying to Lure Voters in Opposition Stronghold

Turkey’s AK (Justice and Development) Party is seeking a fourth successive general election victory, with the goal of securing two-thirds of the seats in Parliament to rewrite the constitution and change the country's parliamentary system into a presidential one. To achieve that, the party will need to win seats in opposition strongholds like the western city of Izmir. Dorian Jones reports.
Video

Video Millions Flock to Ethiopia Polls

Millions of Ethiopians cast their votes Sunday in the first national election since the 2012 death of longtime leader Meles Zenawi. Mr. Meles' party, the Ethiopian People's Revolutionary Democratic Front, is almost certain of victory again. VOA's Anita Powell reports from Addis Ababa.

VOA Blogs