A booth at the Vietnam International Retail and Franchise Show at the Saigon Exhibition and Convention Centre. (Photo: VNA) HCM City (VNA) - Dozens of franchises are beingestablished in Vietnam and more new brands are expected to enter the market inthe near future, according to experts.
Figures from the Ministry of Industry and Trade show that 172 brands haveregistered as foreign franchises to Vietnam, with over 50 percent in the foodand beverage sector.
The majority of franchisors are from the US, Australia, the Republic of Korea,Singapore, Thailand, Japan, Hong Kong (China), Canada and the Philippines.
Sean T.Ngo, CEO of VF Franchise Consulting, Asia’s leading franchising andlicensing consulting company, said that, with the country’s high economicgrowth rate, its population of 90 million and high spending power, Vietnam hasbecome an increasingly attractive destination for international franchisingbusinesses.
In the Philippines, for instance, there are over 1,500 franchises, and morethan 600 in Singapore, a country of only five million people.
“So you can imagine the potential growth for a country like Vietnam,” he said.
Nguyen Phi Van, chairwoman of Retail and Franchise Asia, said Vietnam rankedeighth of the top 12 markets identified by International Franchise Associationas the most valuable markets for international expansion.
The sectors with themost franchising potential are food and beverage, education, health andnutrition, business services, hospitality, fashion, beauty and skincare,entertainment, children’s services, and convenience stores, she said.
Besides giant brands like KFC, Starbucks, McDonald’s, Baskin Robbins andDomino’s Pizza, which are present in Vietnam, many other large foreign brandsparticipating in the Vietnam International Retail and Franchise Show thatopened in HCM City on June 1 are seeking franchisees in Vietnam.
They include Little Caesars, the largest carryout-only pizza chain in theworld; Element Fresh, a leading casual dining brand in Shanghai; Presotea from ChineseTaiwan; the US’s The Boiling Crab restaurant; and The Edge, a HongKong-based learning centre designed to help students get into the topuniversities in the US, UK and Canada.
As the country continues to open up and develop, The Edge foresees a hugemarket potential for education franchises as well, and is currently seekingqualified franchisees to enter the market.
“We would like to find a partner that can develop both North and/or South Vietnamfor us with an initial number of one to two centres for each territory. Weforesee that market demand would give rise to an additional one to threecentres by 2022,” said Philipp Steinke, a representative of The Edge.
The Republic of Korea’s Lock&Lock is also seeking franchisees to expand itsnew convenience product brand P&Q (Price & Quality) in Vietnam,according to Jay Jeoung, overseas sales general manager of Lock&Lock CoLtd.
P&Q made its debut in Vietnam last month with the opening of its firststore at the Nowzone Trading Centre in District 1.
Sean said to develop a sustainable franchise business, the first step isfinding the right business partner and making sure the franchise fits Vietnam.Even if it is a good fit, local adaptation is required.
“Secondly, supply chains are very important, especially in the food andbeverage industry where you have to import your materials. For example, in thebubble tea market you have to import Taiwanese tea in addition to otheringredients. So you can start to see that if you can control the costs, you canimport it at affordable prices.”
“We all know that Vietnam, like many other Asian countries, is veryprice-sensitive. Every little increase in the price will affect the demand forproducts,” he said.
Van from Retail and Franchise Asia said the Vietnamese franchise market wasstill young, and businesses do not have much understanding and experience inthe franchising business.
It would take patience and proper training for Vietnamese partners to adapt andbecome aligned with international standard business practices, she said.
The ninth Vietnam International Retail and Franchise Show at the SaigonExhibition and Convention Centre until June 3 features 309 booths of 265companies from 14 countries and territories. It expects to attract 40,000buyers from Vietnam and neighbouring countries.
The event also includes the 2017 Go Global Start-Up Competition, seminars andbusiness matching programmes. -VNA
VNA
