VietNamNet
Bridge – More and more international
brands are seeking the way to penetrate the Vietnamese market through
franchising contracts. Analysts believe that 2012 would be another bustling
year for franchising deals.
The US
Baskin-Robbins ice cream producer has returned to Vietnam with a very
impressive record: just within the first 10 days since the opening in late
2011, the ice cream imports, which were scheduled to be sold within four
months, were sold out.
With
the unexpected encouraging sales, Ngoi Sao Xanh Food Joint Stock Company, the
franchised Vietnamese partner of Baskin-Robbins, has every reason to believe in
the feasibility of the plan to increase the number of ice cream shops from
three now to six by the end of 2012.
Nguyen
Thanh Nam, General Director of Ngoi Sao Xanh has committed to open at least 31
ice cream shops by 2015.
In
fact, Baskin-Robbins once set foot in Vietnam in 1994, which was then brought
to Vietnam by a Viet Kieu (overseas Vietnamese). However, the brand later had
to leave Vietnam because of the loss and unfavorable conditions with the high
import tariff of 70 percent.
The low
market demand and the unfavorable conditions were also the reason that made
KFC, a roast chicken brand, which arrived in Vietnam in 1997, also suffered
loss for seven consecutive years.
However,
the franchising market has been developing very rapidly in the last five years.
A lot of well known brands in the world, like Goloria Jeans Coffees, Lee’s
Sandwiches, Jollibee, BBQ, Pizza Hut, Bud San Francisco mostly in the food
sector, such as fast food, bread, pizza, coffee and ice cream, have penetrated
the domestic market.
Experts
have pointed out that the size of the Vietnamese market has been increasingly
big. The demand and the taste of consumers have changed significantly.
Vietnamese people from well off families now tend to use foreign products, a
tendency which is called the “thirst for high-class brands.”
Meanwhile,
the presence of well-known brands in Vietnam, in their return, has also helped
enlarge the market.
Sources
have said that McDonald is also seeking the way to Vietnam. However, the fast
food company still has not found suitable partners in Vietnam. Experts say that
McDonalds want the partners who have financial capability, good knowledge about
the market and have influential relationships.
Beth
Solomon, Deputy Chair of the International Franchise Association based in
Washington in the US, has noted that the US businesses like Vietnam because
they understand that this is a suitable market for franchising deals with young
population and the consumers who like changes and renovation.
In late
2011, she once led a group of 10 businesses which owned 18 brands in the food
sector, to Vietnam to seek partners. She would lead another group of businesses
in the education, retailing and healthcare sectors to Vietnam in 2012.
Vietnam
has had 96 franchised systems so far since 1996, when Jollibee from the
Philippines appeared in Vietnam. The figure is really modest if compared with
other countries, such as Japan and China (more than 2600), India, the
Philippines, Australia (more than 1000).
Nguyen
Ba Binh, the doctoral fellow at the New South Wales in Australia, has noted
that the Vietnamese franchising market in Vietnam now can be described as
“potential”, while it has not witnessed a boom like in other countries.
Sean T.
Ngo, Chief Executive Officer of the HCM City based Vietnam Franchise Ltd, also
agreed that franchising activities in Vietnam remain weak. It’s partially
because the franchisers are mostly targeting newly emerging markets with high
population such as China or India, instead of Vietnam.
Source:
TBKTSG
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