Vietnam - Why doesn’t Starbucks choose a Vietnamese partner?

VietNamNet Bridge – It’s understandable why the US Starbucks decided to set up its first shop in Vietnam in HCM City, a commercial hub. Meanwhile, it’s enigmatic why it did not choose a Vietnamese partner, but a Hong Kong one-- Maxim’s Group.

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Why?

Unlike many other foreign fast food brands, which penetrate the Vietnamese market through Vietnamese partners, or run business under franchising contracts, Starbucks has decided to choose a foreign one.

Analysts have commented that this shows the wise business strategy Starbucks is following, which aims to find the best solution for every specific market. Starbucks cooperated with domestic partners when it tried to enter Chinese or Indian markets, because in the countries, drinking coffee was not a popular habit. Meanwhile, the “coffee culture” in Vietnam has been existing for a long time.

Vietnam is not only a big coffee producer and exporter, but it also has an assertive coffee culture. Therefore, the top priority of the US coffee brand is not looking for a partner which can help run marketing campaigns to popularize the coffee culture among consumers, but a partner who has a high capability of managing a chain of coffee shops. Meanwhile, this is not the job Vietnamese enterprises are keen on.

Maxim Hong Kong proves to be a good choice for Starbucks. Established in 1956, the group now has 760 shops providing diversified services, which include Chinese, European, Asian chains and Japanese restaurant chains. It is estimated that Maxim Hong Kong serves 630,000 clients a day.

This was also the group which brought Starbucks brand to Hong Kong and Macau. First setting its foot in Hong Kong in 2000, Starbucks has had 110 shops there after 10 years of development.

The group is also running a lot of fast food, cake and coffee chains. Maxim’s Mooncakes has always been the Number One moon cake in Hong Kong brand since 1998.

The move of Starbucks of choosing a partner who has been cooperating with it for the last many years, and has much experience in management, showed that Starbucks understands the Vietnamese market very well.

Failure awaiting Starbucks in Vietnam?

Arguments have been raised about if the coffee giant would succeed in Vietnam.

Nghiem Ngoc Thuy, a Vietnamese modern girl, and many her friends do not feel worried about the appearance of the giant from the US. They don’t think that the presence of Starbucks in Vietnam would change the traditional way of Vietnamese people enjoying coffee.

VietQ.vn, a website of the General Directorate for Standards, Measurement and Quality Control, has quoted its sources as saying that Vietnam is the place where the French coffee culture is dominating. This is the market with the large popularity of the two domestic coffee brands and the pavement coffee shops everywhere.

Thuy said that the coffee price at her shop is very “reasonable” which is affordable to the majority of Vietnamese people, while the quality is still very high. This explains why the coffee has been favored by the people from different classes in the society, from the ones who come on luxurious cars, to the office workers and students.

She believes that expensive coffee would be reserved to the rich and the members of millionaires’ families.

Dang Le Nguyen Vu, the owner of Trung Nguyen Coffee Group which is running 55 coffee shops nationwide, said he does not see the arrival of the “friend from the US” as a threat.

“Will the people of a country with the low GDP per capita and specific coffee taste will accept Starbucks?” he questioned.

Compiled by C. V

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