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

ASEAN Ministers to Push for S. China Sea Agreements

According to documents obtained by VOA Khmer, ministers will stand up for 'freedom of navigation, unimpeded lawful maritime commerce, trade and over flight' More

Puerto Rico Defaults on $58M Debt Payment

Payment was due Saturday, default is first in country's 117 years as a United States possession More

Turkish Public Fears Jihadists More Than Kurds

Turkey facing twin threats of terrorism by Islamic State and PKK Kurdish separatists, says President Erdogan’s ruling AK Party 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.
Iraqi Yazidis Fear Death of Their Communityi
X
Sharon Behn
August 03, 2015 2:23 PM
A year ago on August 3, Islamic State militants stormed the homelands of Iraq’s Yazidi minority, killing hundreds of men and enslaving thousands of women. The scenes of desperate Yazidi families crowding on the top of Sinjar mountain without food or water spurred Kurdish fighters into action, an emergency airlift and the start of the U.S. airstrike campaign against the Islamic State Sunni extremists. VOA's Sharon Benh reports from northern Iraq.
Video

Video Iraqi Yazidis Fear Death of Their Community

A year ago on August 3, Islamic State militants stormed the homelands of Iraq’s Yazidi minority, killing hundreds of men and enslaving thousands of women. The scenes of desperate Yazidi families crowding on the top of Sinjar mountain without food or water spurred Kurdish fighters into action, an emergency airlift and the start of the U.S. airstrike campaign against the Islamic State Sunni extremists. VOA's Sharon Benh reports from northern Iraq.
Video

Video Bangkok Warned It Soon Could Be Submerged

Italy's Venice and America's New Orleans are not the only cities gradually submerging. The nearly ten million residents of the Bangkok urban area now must confront warnings the city could become uninhabitable in a few decades. VOA Correspondent Steve Herman reports from the Thai capital.
Video

Video Inclusive Gym Gets People With Disabilities in Fitness Spirit

Individuals with special needs are 58 percent more likely to be obese than the general population. According to the U.S. Centers for Disease Control, they also have an increased likelihood of anxiety, depression and social isolation. But a sports club outside Washington wants to make a difference in these people's lives. With Carol Pearson narrating, VOA's June Soh reports.
Video

Video Astronauts Train Underwater for Deep Space Missions

Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Special Olympics Show Competitors' Skill, Determination

Special Olympics competitions will wrap up Saturday in Los Angeles, and the closing ceremony for athletes with intellectual disabilities will be held Sunday night. In a week of competition, athletes have shown what they can do through skill and determination. VOA's Mike O'Sullivan reports.
Video

Video Civil Rights Leaders Struggled to Achieve Voting Rights Act

Fifty years ago, lawmakers approved, and U.S. President Lyndon Johnson signed, the Voting Rights Act of 1965. The measure outlawed racial discrimination in voting, giving millions of blacks in many parts of the southern United States federal enforcement of the right to vote. Correspondent Chris Simkins introduces us to some civil rights leaders who were on the front lines in the struggle for voting rights.
Video

Video Shooter’s Grill: Serving Food with a Touch of the Second Amendment

Shooter's Grill, a restaurant in Rifle, Colorado, attracts visitors from all over the world as well as local patrons. The reason? Waitresses openly carry loaded firearms as they serve food, and customers are welcome to carry them, too. VOA's Enming Liu and Lin Yang paid a visit to Shooter's Grill, and heard different opinions about this unique establishment.
Video

Video Despite Controversy, Business Owner Continues Sale of Confederate Flags

At Cooter’s, a store in rural Sperryville, Virginia, about 120 kilometers west of Washington, D.C., Confederate flags are flying off the shelves. The red, white and blue battle flag, with 13 white stars representing the Confederate states, was carried by southern forces during the U.S. Civil War in the 1860s. The South had seceded from the Union over several key issues of disagreement, including slavery. VOA’s Deborah Block has the story.
Video

Video Booming London Property a ‘Haven for Dirty Money’

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Hometown of Boy Scouts of America Founder Reacts to Gay Leader Decision

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.

VOA Blogs