VF Franchise Consulting is beginning a series of brief articles that highlights the best franchise opportunities by country within the Association of Southeast Asian Nations (ASEAN), a region consisting of over 650 million people and includes the countries of Brunei, Cambodia, Laos, Myanmar (Burma), Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. As a region, ASEAN has the fifth largest economy after the US, China, Japan, and Germany.
Today’s focus will be on the best franchise opportunities for the Vietnam market. To start off, let’s highlight some of the key economics and demographics about Vietnam:
Source: CIA FACTBOOK
The country’s large population (97+ million and ranks #15 in the world), high urbanization rate, high literacy rate, young population (over 60 percent of the population is under the age of 30), and rapidly rising incomes over the past two decades equates to significant spending power now and much more so in the next decade.
What is also impressive about Vietnam is that it is on track to have the 20th largest economy by the year 2050, according to a recent Goldman Sachs report. The country has also benefited from having one of the highest GDP growth rates over nearly two decades with an average growth rate of 6.6%, the highest of the six largest economies in ASEAN.
The Ministry of Industry and Trade (MOIT) reported that 235 foreign brands had registered their franchising businesses in Vietnam as of May 2020.
These foreign brands are primarily in Food & Beverage (F&B), Education, Retail, Convenience Stores (CVS), Fitness, Health, Lifestyle, Entertainment, Services, and Hospitality (e.g. hotels chains)
All the major brands are present, including McDonald’s, KFC, Lotteria, Pizza Hut, Starbucks, Burger King, Domino’s Pizza, Texas Chicken, Jollibee, Pizza Company, Chili’s, Hard Rock Cafe, Haidilao Hot Pot, MK Hotpot, Baskin Robbins, Dairy Queen, 7-Eleven, Circle K, Wall Street English, Mathnasium, Kumon, Uniqlo, H&M, Louis Vuitton, Cartier, Gucci, Prada, Chanel, Rolex, Rolls Royce, Mercedes Benz, Marriott Hotels, IHG, Accor, Sheraton, and many more
Consumers are also pro-Western with special preference for franchises from the US, United Kingdom, Canada, Australia, New Zealand, France, Italy, Spain, Germany, etc.
Online purchases and delivery are rising rapidly and represent very good opportunities for brands that can leverage these channels
GrabFood proved to be the most popular delivery app in Vietnam with 79 percent of users, followed by Now (56 percent), Go Food (41 percent), Baemin (15 percent) and Loship (12 percent)
While Vietnam does have franchise laws, they are not seen as onerous by foreign franchisors
Key cities franchisors should enter initially: #1 Ho Chi Minh City (Saigon), #2 Hanoi, #3 Danang (distant 3rd)
X-FACTOR: Over 5M Vietnamese diaspora that have transferred not only money into the country (estimated remittances to Vietnam in 2019 was US$16.7 billion in 2019) but also helping to bridge cultures, fashion, retail, lifestyles, education, and of course, food & beverage)
Food & Beverage (fast food, fast casual, casual and fine dining, snacks and beverages, desserts)
Education & Training (young children, teenagers and adults) and other vocational training franchises (e.g. hospitality management, tourism, etc.)
Retail, fashion, and lifestyle based franchises (e.g. convenience stores, fitness & health, children’s entertainment, health supplements franchises, health and beauty spas, etc.)
The rapid increase in car ownership presents good opportunities for franchises that cater to this segment, including auto repair and maintenance franchises
Education franchises that are popular include English language learning centers and other languages (e.g. Mandarin), STEAM based learning (Science, Technology, Engineering, Art/Dance/Music, Math) including franchises in Robotics, Computer Programming / Coding, professional skills development training for adults, Information Technology (IT), Finance, and vocational skills training.
Be on the lookout for the next article about the Philippines.
About the author:
Sean T. Ngo is Vietnamese-American and has lived and worked in the USA for over 30 years and in Asia for over 15 years. He currently lives and works in Vietnam.
He is the Co-Founder of VF Franchise Consulting, one of Asia’s leading franchise consultancy.
Sean is a frequent speaker at various industry and government events in Singapore, Vietnam, Thailand, Philippines, Indonesia, Myanmar, South Korea, and Japan (and soon the UK)
He has lectured at various MBA Programmes in the topics of Franchising, Entrepreneurship, Project Management, and other subjects, and has taught at the Royal Melbourne Institute of Technology (RMIT), Australian Institute of Business (AIB), and Paris Graduate School of Management (PGSM).
Prior to co-founding VF Franchise Consulting, Sean worked in finance, marketing, and real estate in the US and has worked for many Fortune 500 companies, including Microsoft, Lockheed Martin, National Semiconductor, Coldwell Banker, and others.
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