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Foreign Franchises Interested in Vietnam Market Entry

Posted: 30th May 2012 09:03
By Marco Azzaro

Several franchising brands are beginning to view the Vietnamese market more favorably than in past years. According to the country’s Ministry of Industry and Trade, up to 70 foreign brands have registered their franchising business in Vietnam and franchising growth is up 30 percent.
Most of them are consumer brands focused on youth and middle class consumers. Brands such as KFC, Pizza Hut, Lotteria, and Jollibee have been pioneers in the Vietnamese market, but other well-known fast food brands from the United States – such as McDonald’s, Starbucks, Focus Brands and Melting Pot – are reportedly seeking a way into Vietnam or looking for suitable Vietnamese partners.
 
KFC is still the leading fast food franchising chain in Vietnam. The company set up its first shop in HCMC in 1997 and, since then, the number of KFC outlets in Vietnam has reached 1,000 and it expects to double in size by 2015. The fast food chain now holds 60 percent of the fast food market in Vietnam, with many shops located at advantageous positions.

The F&B retail sector is estimated at US$33.7 billion for 2011 and is set to grow 18.9 percent per year until 2014.

As Sean T. Ngo, managing director of Vietnam franchises, said in a recent meeting focused on the franchising market in Vietnam, the purchasing power has increased rapidly, while Vietnamese consumers have also gotten used to fast food brands. Furthermore, franchising chains have said it is now much easier to look for Vietnamese partners because they have become more professional.

Vietnam has become a target market for franchising chains also because of the rapid increase in the number of middle class consumers which is expected to double by 2015 and it is creating demand for premium branded products and services.


Dezan Shira & Associates is a specialist foreign direct investment practice, providing business advisory, tax, accounting, payroll and due diligence services to multinationals investing in China, Hong Kong, India, Singapore, and Vietnam. Established in 1992, the firm is a leading regional practice in Asia with twenty offices in five jurisdictions, employing over 180 business advisory and tax professionals. For professional advice on doing business in Vietnam, please contact Dezan Shira & Associates at info@dezshira.com or visit www.dezshira.com.