Vietnam's Retail Market Booms (17/3)
17/03/2011 - 31 Lượt xem
Vietnamfranmart.com, a center which helps customers seek franchise and business opportunities, said that in the first three months of 2011 it received requirements from more than 30 foreign brands which were looking for domestic franchise partners. Most of them are operational in fields such as food, cosmetics and clothing, for example Math Monkey, Nelson's, Chocolate Graphics, Burger King, Foot Solutions, Tousles Jours, Villa&hut, MamaFu's, Pizza Hut, Andersen's Ice Cream and Glamour Secrets. Also in the first quarter of 2011, the center was required to provide franchise information to more than 200 customers, including domestic companies and individuals, which wanted to buy a foreign franchise. Tran Tinh Minh Triet, the managing director of Vietnamfranmart.com, said that in the first three months of 2011, 15 foreign brands in fields such as food and kindergarten registered to be operational in Vietnam and the franchise cost has decreased to US$3,000-5,000, suitable to the financial capacity of domestic small and medium-sized companies.
Both the demand for and the supply of franchises in Vietnam are increasing. In the recent period, many foreign brands have come into Vietnam. This offers Vietnamese small and medium-sized companies opportunities to approach a new business model that has a high probability of success.
In the opinion of experts, however, the presence of numerous foreign franchises has created competitive pressure on a number of domestic brands which are developing or will develop in the form of franchises. So far, only a few domestic brands have chosen to develop according to the franchising model by opening store chains selling products such as coffee, noodles, mobile phones, bread and cakes. One reason is that domestic companies do not dare to invest in franchises. They do not know much about franchising techniques and lack qualified human resources in this field. Moreover, they do not yet have a comprehensive franchising plan/strategy. Most domestic companies are concentrating only on technical aspects, i.e. how to create high quality products and increase production output while lacking knowledge in the field of distribution network development.
Another obstacle to franchise development in Vietnam is that due to their poor knowledge of franchising, domestic companies do business their own ways and when an incident occurs, they deal with it quite differently in comparison with franchisers. The presence of numerous franchise shops has pushed up retail space prices in urban areas, especially in favorable places. This is also a factor hindering the development of franchises in Vietnam. International franchisers said that in Vietnam, franchises are not yet thoroughly protected by the law, and for this reason, franchising remains undeveloped here. In their opinion, franchising in Vietnam must be developed cautiously and gradually to avoid risks.
Harish Babla, the managing director of the Franchise Mind Corporation (USA), said that a franchise race in Vietnam has begun and all brands have joined the competition for market share, which requires not only high speed but also advanced professionalism. Predicting the future of franchising in Vietnam, the International Franchise Association (IFA) said that Vietnam will be the fastest developing franchise market in Asia because of the young population and a high-potential retail market. Notably, Vietnamese investors are dynamic and open to new brands and new business models. Potential areas for franchising development in Vietnam include food services such as fast food, coffee and bakeries, training services, services for children and retail services.
Many workshops and training courses have been organized for domestic companies and individuals to improve their knowledge about franchising activities. Recently, the Franchise Mind Corporation (USA) and Vietnamfranmart.com said that with support of the US Commercial Service of the US Consulate General in Ho Chi Minh City, they will organize two training courses on franchising in March and April 2011. The first training course themed "Making great progress by franchising" is designed for companies which are doing or will do business according to the franchising model to learn knowledge and experience in establishing and managing franchises in accordance with international standards. The second training course entitled "How to choose the right franchise brand" is designed for companies which are looking for a franchise or applying for a master license to become an official representative of a franchise brand./.
Source: VEN.
