Two-thirds of Vietnam’s 90 million population are under the age of 30, its cities are swelling and 34 percent of its people are internet users within easy reach of Western marketeers. Other big brands have sussed that out too. “There’s a big market here, a big part because of the demographic.” “McDonald’s doesn’t look at the conditions today, they look at the long-term potential of the market,” he said. Though this once “tiger” economy might appear to be losing its teeth, Nguyen is adamant McDonald’s hasn’t missed the boat. McDonald’s has not yet opened, so pricing information was not available, but Nguyen said he did not want to position it as a luxury brand. Burger King’s burgers go for as much as 85,000 dong. In Vietnam, a piece of KFC chicken costs about as much as a bowl of Vietnam’s trademark all-day meal, pho noodle soup, at 32,000 dong ($1.51), and a KFC meal is more than double that. But in developing economies, Western fast food has cachet and is often priced out of the reach of the masses. In advanced markets, McDonald’s tends to do well when the economy weakens because cash-strapped consumers trade down to cheaper food. Retail sales growth was 11.8 percent in the first quarter, the slowest since 2005, and 2012’s annual increase of 15.7 percent was just half the rate recorded two years earlier.
Vietnam recorded 4.9 and 5 percent economic growth, respectively, in the first two quarters of 2013, lackluster for a developing Asian market, putting it on track for its slowest annual expansion in 14 years.ĭebt-laden banks are struggling to lend and at least 120,000 businesses have closed since 2011, official data shows. “His marriage did not preclude him for participating in what was a very competitive selection process for our partner in Vietnam,” she said, adding that the company’s research into a new market can span years and it saw “great opportunities ahead” in Vietnam. McDonald’s spokeswoman Becca Hary confirmed that Nguyen had been discussing the franchise opportunity for many years, and said he made the shortlist out of a much larger group. He is the son-in-law of Nguyen Tan Dung, Vietnam’s prime minister since 2006, but insists that isn’t why he won the McDonald’s franchise deal. It means things are happening in Vietnam,” Nguyen told Reuters in an interview at his swanky office here in Vietnam’s most iconic building. “McDonald’s showing up here shows that Vietnam is a big deal to a lot of people. Still, the 40-year-old is convinced the local market is ripe for a McDonald’s franchise. While rivals have gained a firm foothold, McDonald’s is opening just as the economy falters and consumer demand is fading. The Golden Arches will first appear in Ho Chi Minh City in early 2014 and later in the capital Hanoi, but the expansion will be “step by step”, said Nguyen, who worked at McDonald’s in the United States as a teenager and again this year at a Singapore outlet. When he visited his hometown of Chicago, he would meet McDonald’s executives at the company’s headquarters in suburban Oak Brook, Illinois. He studied its business model as part of his master’s degree, and pursued the Vietnam franchise opportunity for a decade - even as he worked with rival Yum. Nguyen, a Vietnamese-American who set up Pizza Hut in Vietnam six years ago, says he has lived and breathed McDonald’s.
The super-rich are becoming household names in Vietnam, which showcased its first billionaire in June on the cover of its inaugural edition of Forbes magazine. Even Starbucks Corp SBUX.O debuted in Ho Chi Minh City in February and opened its second branch last week.Ĭapitalism has taken root in a country that many Americans associate more with an unpopular war than rising wealth. McDonald's is making a late entry into this market, where Yum Brands Inc YUM.N already has dozens of Pizza Hut and KFC outlets and Burger King Worldwide Inc BKW.N has 15 restaurants. Henry Nguyen gestures during an interview at his office in Vietnam's southern commercial hub of Ho Chi Minh City July 19, 2013.
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