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Tag: Vietnam

  • MobiFone gets new CEO

    MobiFone gets new CEO

    MobiFone has named deputy general director Nguyen Dang Nguyen as its new CEO in place of the disgraced Cao Duy Hai.

    Hai, 57, was removed last Tuesday for his role in the illegal acquisition of a TV firm in 2016 by the Ministry of Information and Communications, which runs the corporation.

    Nguyen also remains deputy general director in charge of technology area.

    Hai has also been sacked from the company’s board after being found responsible for “serious violations” in the acquisition of private pay TV firm Audio Visual Global JSC (AVG).

    According to the Central Inspection Commission of the Communist Party of Vietnam, Hai had been personally involved in the acquisition and signed many documents in violation of laws to come up with a deal that caused a significant loss to the government.

    MobiFone had made headlines in 2016 when it announced it was breaking into the pay TV market with the acquisition of a 95 percent stake in AVG.

    But the Government Inspectorate concluded the deal, which had not been approved by the government, had violated investment laws and caused an estimated VND7 trillion ($307 million) loss to the government.

    In a report on the deal last March inspectors said MobiFone had committed multiple violations in proposing the deal and AVG’s valuation.

    The ministry and MobiFone were responsible for the serious violations of the laws in assessing, approving and going ahead with the deal, the inspectorate said.

    MobiFone’s after tax profit dropped 26 percent year-on-year to VND1.95 trillion ($86.6 million) in the first half of this year as revenues fell 8 percent to VND14.7 trillion ($653.3 million).

    But the country’s third largest telco has said with the new CEO taking over it expects to achieve the full year’s financial targets.

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  • Big franchisors will gather in Vietnam for expansion plan

    Big franchisors will gather in Vietnam for expansion plan

    Eleven international franchisors will gather at the Sheraton Saigon Hotel next week, all looking for prospective country or master franchisees in Vietnam.

    Participating franchises are in food and beverage, education, services, and come from the US, Taiwan, Hong Kong, Singapore, and Japan. The event is organised by VF Franchise Consulting, a leading Asian franchise consultancy with offices in Vietnam, Singapore, Malaysia and Thailand.

    Nine of the 11 franchise brands are food retailers: Little Caesars, the US’s largest takeaway pizza chain, Coldstone Creamery, a premium ice cream chain from the US, Cha Ji Tang, a Taiwanese fragrant hot and cold herbal/flower tea chain, Yang Xiang Ting, a Taiwanese dim sum-conveyor belt concept, Fidele, an American-inspired seafood and pizza chain, Bing Girl, a Taiwanese sweet dessert, Machida Shoten, Japan’s number two ramen chain, Mennya Kokoro, a popular Japanese dry-ramen chain and Pronto, Japan’s leading Italian cafe and bar chain with more than 300 stores.

    The other two franchise companies are an education franchise from Hong Kong, The Edge Learning Center, and Sureclean from Singapore, which wants to expand one of the city state’s most successful hygiene and disinfection business into Vietnam.

    Sean T Ngo, founder and CEO of VF Franchise Consulting, says there are more than 200 foreign brands registered in Vietnam, and the number of international brands that seek to enter Vietnam continues to grow by between 20 and 25 per cent annually.

    “With more than 95 million citizens, it is a market that is not easily ignored by major franchise brands,” said Ngo.

    “Not only is food and beverage a fast-growing segment, it is also a market that seeks franchises in Vietnam in education and services. Goldman Sachs recently predicted that Vietnam will be the 20th largest economy in the world by the year 2050.”

    International franchises already present in Vietnam include KFC, Pizza Hut, McDonald’s, Lotteria, Burger King, Starbucks, Coffee Bean & Tea Leaf, PJ’s Coffee, Baskin Robbins, Dunkin Donuts, Texas Chicken and Popeye’s Chicken.

    Senior executives from all the brands will attend the Ho Chi Minh City event to meet with potential franchisees.

    Franchisees in Vietnam will need a minimum investment level ranging between US$500,000 and $1 millon to secure the brands.

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  • Behind dispute between traditional taxi and ride-hailing company in Hanoi

    Behind dispute between traditional taxi and ride-hailing company in Hanoi

    Three major taxi firms in Hanoi have recently joined forces to have their 3,000 vehicles operating under a single brand starting in October.

    Thanh Cong, Ba Sao and Sao Ha Noi are set to become G7 Taxi in a bid to take on ride-hailing behemoth Grab.

    In April representatives of top traditional taxi firms had sat down to discuss the idea of building one common ride-hailing app for all of them.

    Nguyen Cong Hung, chairman of the Hanoi Taxi Association, said: “Traditional taxis, each with their own app, are now trying to compete with Grab. But we are divided, therefore we need to unite.”

    The meeting came after logistics firm Phuong Trang announced it had invested $100 million in ride-hailing app Vato and leading taxi firm Mai Linh started offering benefits to attract drivers.

    In March southern taxi firms ComfortDelgro Savico and Vinataxi had merged to take on Grab.

    Vinataxi, the third largest taxi firm in HCMC, was confident the merger would increase its growth sixfold this year.

    But Grab is also busy.

    While the acquisition of Uber’s Southeast Asian business last March has allowed Grab to become the dominant player in the ride-hailing business in Vietnam, it is working to improve its strategies to compete with local taxi firms.

    The company introduced Grab for Business in Vietnam earlier this month, a service that helps a company track the trips its employees make to limit unnecessary trips and control expenses.

    Following the recent entry of Indonesia’s Go-Jek as Go-Viet, Grab is deploying various strategies to attract drivers by offering bonuses and opening stops with free wifi and coffee.

    ‘Huge unfairness’

    The Hanoi Taxi Association earlier this month wrote to Prime Minister Nguyen Xuan Phuc saying Grab’s operation has created a “huge unfairness in terms of business conditions which demolish traditional taxi businesses and cause instability in society.”

    It wanted GrabCar to be considered “electronic” to guarantee fairness and all GrabCar vehicles to carry the label “electronic taxi.”

    The Ministry of Transport has labeled GrabCar as “electronic taxi” in then newest version of its bill on transport regulations, but does not require its vehicles to carry the legend.

    In a report related to the bill, which is expected to be discussed at the next session of the National Assembly in October, the Central Institute for Economic Management says lawmakers should not use old standards to new business models.

    “It is a grave mistake to force Grab to operate as a traditional taxi,” Nguyen Dinh Cung, chairman of the institute said.

  • Don’t treat ride-hailing firms as taxis, Vietnam government advised

    Don’t treat ride-hailing firms as taxis, Vietnam government advised

    Forcing ride-hailing cars to work like traditional taxis is a serious mistake revealing a non-innovative mindset, a leading economist says.

    Nguyen Dinh Cung, director of the Central Institute of Economic Management (CIEM), criticized state agencies for a “managing mindset” that “is not yet innovated”.

    Cung was referring to the latest draft decree on transportation management, which asks ride-hailing firms like Grab, Fastgo and Vietgo to comply with many conditions that are applied to normal transportation businesses like taxi companies.

    He said firms that primarily used software cannot be called a transportation business and said the new move was not consistent with the country’s stated aim of removing at least 50 percent of current business conditions.

    Cung told VnExpress that the state managers must also think in terms of the market from the perspective of facilitating new technologies and business models instead of using administrative procedures to intervene in their business.

    While the latest draft has cut many conditions for the ride-hailing business, such as logos, paint colors, board signs, an operating center, communication equipment and uniforms for drivers, Cung said there were still several negative conditions.

    For instance, the draft decree requires ride-hailing firms to send their transport contract information to the Transport Department before providing their service.

    It also requires that ride-hailing firms have a team to manage and monitor traffic safety issues.

    Cung said such conditions were meant to give authorities more room to intervene in the operations of the ride-hailing firms.

    He has recommended to the Government Office that the draft is not approved and instead, the state tries to encourage new investment forms or business models with an open and fair environment in keeping with Industry 4.0 trends.

    Even if they don’t want to encourage the new technology-based business yet, the laws should not do away with such business models with irrelevant, old conditions, he told VnExpress.

    Prepared by the Ministry of Transport to replace the Decree 86/2014 on managing automobile transportation businesses, the fifth edition of the draft has been released for public feedback.

    The tussle between ride-hailing cars and traditional taxis has not cooled after the exit of Uber from the Southeast Asian market in March. Taxi firms have continued to complain about the unfair competition they are facing.

    They have also joined hands to fight the market onslaught of ride-hailing firms.

    The ride-hailing market has seen new entrants after Uber’s departure, including Aber, Fastgo and GoViet, which is an affiliate of Indonesia’s Gojek.

    Current market dominator Grab has expanded its service to include GrabFood and GrabCar Business, the latter targeting the corporate sector. These moves pose further challenges for long-standing taxi firms like Mai Linh, Taxi Group and Vinasun.

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  • Bose Vietnam experience makes debut with first store opening

    Bose Vietnam experience makes debut with first store opening

    Audio equipment brand Bose Vietnam has opened its first international-standard experience store, at Ho Chi Minh City’s Saigon Centre.

    Operated in partnership with Vietnamese mobile device retailer Mai Nguyen, the store offer ranges from audio devices such as headphones to home theatre systems, as well as professional equipments for restaurants, resorts and hotels.

    Christian Rojas, Southeast Asia sales director at Bose Corporation, says the brand is boosting its operation by bringing the latest equipment and designs to the store.

    Bose Vietnam debuted three years ago, through the Mai Nguyen store network.

    View the gallery below :

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  • Uber withdraws lawsuit against HCMC tax man

    Uber withdraws lawsuit against HCMC tax man

    Ride-hailing firm Uber has withdrawn its lawsuit over HCMC’s demand for $2.3 million in back taxes and fines.

    A tax department official said Friday that the HCMC People’s Court has suspended the case in which the Netherlands-based Uber B.V. had sued the department over its demand that the firm pays over VND53 billion ($2.3 million) in back taxes and fines.

    The official, who did not want to be named said that the suspension, which followed Uber withdrawing its lawsuit, was a positive development.

    He expressed hope that this would allow the department and Uber to sit down and resolve the issue of back taxes and fines. In case this does not happen, the department would resume efforts to force Ube to pay its dues, the official added.

    The department had previously attempted to collect the back taxes and fines by sending documents to local banks and asking them to deduct the dues from funds transferred to Uber’s bank account as a form of tax enforcement.

    This attempt failed because the firm had not opened any account in the country.

    In September last year, the Ho Chi Minh City Tax Department asked the Vietnamese branch of Uber International to pay VND66.68 billion ($2.91 million) in back taxes and fines for violating tax laws.

    However, the company appealed the decision, telling the General Department of Taxation as well as the Ministry of Finance that it was not subject to pay taxes under Vietnam’s double taxation avoidance agreement with the Netherlands, where it is based.

    Ride-hailing firm Uber Technologies Inc announced it had agreed to sell its Southeast Asian business to bigger regional rival Grab in March. The app company officially left Vietnam on April 8.

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  • Vietnam instant noodles consumption blooms

    Vietnam instant noodles consumption blooms

    Vietnam was the world’s fifth largest instant noodles consumer in 2017, consuming 5.06 billion packs.

    This marked a 2.8 percent increase from 4.92 billion in 2016, according to the World Instant Noodles Association (WINA).

    Vietnam had held the fourth spot since 2012, but this was taken by India last year, with a consumption of 5.4 billion packs.

    Other countries in the top five were China (38.9 billion packs); Indonesia (12.6 billion); and Japan (5.6 billion).

    With population over 93 million, Vietnam is second among 2017’s top 3 countries with the highest per capita instant noodles consumption at 53.5 servings; behind South Korea with 73.7 servings and above Nepal with 51.1 servings.

    In 2016, the average Vietnamese person gobbled 53 packs of instant noodles, higher than Indonesians at 49, Japanese at 44 and Chinese people at 38.

    Local enterprises have tapped into this huge market by partnering with overseas companies, increasing the options manifold for the Vietnamese consumer.

    Domestic instant noodle enterprises have reported rising sales, reflecting the increasing consumption.

    A representative of the Acecook Vietnam Joint Stock Company said that the company has seen an eight percent year-on-year increase in revenues in the first half this year.

    Similarly, the Colusa – Milike Food Joint Stock Company reported a net profit of $12.1 million in the first six months, a 10 percent increase from the same period last year.

    Globally, some 100 billion servings of instant noodles were sold in 2017, an average of 270 million packages consumed per day.

    FoodDive, an online news site in food industry, quoted an IMARC Group report as saying the global instant noodles market value reached $40 billion in 2017 and is expected to reach $55 billion in 2023.

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  • Vietnamese firms conspicuously absent as auto parts industry thrives

    Vietnamese firms conspicuously absent as auto parts industry thrives

    Vietnam enjoys a trade surplus in the auto parts industry, but domestic firms play no role in this success.

    The reason for this strange situation is that the market is dominated by export-oriented foreign invested enterprises, while domestic firms are shackled by a lack of policy and regulatory support, both officials and industry insiders say.

    Last year, the country exported $4.4 billion worth of auto parts and imported the same $3.5 billion, said Nguyen Thi Xuan Thuy, head of research at the Institute of Strategic Research and Policy under the Ministry of Industry and Trade.

    This trade surplus of $900 million mostly came from foreign direct investment (FDI) businesses, not local firms, she said at a recent conference.

    The FDI businesses, including Nissei, Furukawa, MTEX, FAPV and Pronics, produce in Vietnam and export auto parts to major auto makers in China, Japan, Korea, Thailand and the U.S, she added.

    Importers of made-in-Vietnam auto partsin percentageJapanU.S.ChinaKoreaThailandGermanyOther countries

    Meanwhile, for the automakers in Vietnam, 90 percent of the 30,000-40,000 parts to make a car are imported, said Pham Tuan Anh, deputy head of the Department of Industry under the Ministry of Industry and Trade.

    There is a lack of suppliers in Vietnam compared to other countries in the region, he added.

    Echoing Anh, Thuy said that Vietnam has 20 auto assemblers, but only 226 parts suppliers. Neighboring Thailand, meanwhile, has 16 auto assemblers and 2,390 suppliers.

    Many constraints

    Vietnamese companies in the auto parts industry face many challenges, and one of them is the lack of assistance in terms of legal framework, said Do Huu Hao, chairman of the Vietnam Society of Automotive Engineers.

    Regulations concerning parts suppliers are changed often and the tax policies are also unsuitable for the industry, he said.

    Another reason is that local manufacturers have limited financial capacity to compete with their foreign counterparts.

    The auto part industry is heavily dependent on imported material, but the low financial capacities of local suppliers prevent them from buying more of it, Hao said.

    These factors make cars made in Vietnam 10-20 percent more expensive that of Thailand or Indonesia.

    Vietnam’s total vehicle sales increased 3.9 percent to 21,466 units in July from a year ago, according to the Vietnam Automobile Manufacturers’ Association (VAMA).

    Total vehicle sales in the first seven months of 2018 dropped 4.1 percent from the same period last year to 148,536 units, VAMA said.

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  • ThaiBev to intensify Vietnam focus after lackluster 3Q

    ThaiBev to intensify Vietnam focus after lackluster 3Q

    Thai Beverage on Wednesday announced plans to double down on the Vietnam beer market after posting disappointing third-quarter results.

    It said it will focus on optimal use of its 54 percent stake in Vietnam’s largest brewery Saigon Beer Alcohol Beverage Corp (Sabeco), known for its Saigon Special beer.

    It is reported that although the firm acquired its stake in Sabeco last December, ThaiBev only began conducting due diligence of the brewery’s production facilities recently, after its current CEO, Bennett Neo Gim Siong, was appointed on August 1.

    The firm stated it was working on several areas to boost Sabeco’s performance, including procurement, marketing and R&D.

    ThaiBev officials said they were optimistic about Sabeco’s potential and profitability in Vietnam’s beer market.

    The latest announcement came after ThaiBev on Tuesday posted a net profit of 5.99 billion baht ($180 million) for the third quarter ending June 30, a 61 percent fall from 15.23 billion baht ($458 million) a year ago.

    The drop was attributed to several factors, one of them an increase in net losses from the non-alcoholic beverage business.

    Last year, Sabeco produced nearly 1.8 trillion litres of beer, recording sales of VND35.2 trillion ($1.56 billion) and an after-tax profit of VND4.95 trillion ($199.5 million).

    It exported 28.6 million liters of beer for over $15 million.

    Vietnam is the biggest beer market in Southeast Asia, consuming nearly four billion liters last year.

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  • Low apartment prices, high returns make HCMC a magnet for foreign investors

    Low apartment prices, high returns make HCMC a magnet for foreign investors

    High-end properties in HCMC, where prices are much lower than in major cities in neighboring countries, are attracting plenty of foreign interest.

    A high-end apartment in the city costs around $5,000 per square meter, but the same one in Hong Kong could cost four times, Nguyen Khanh Duy, director of residential sales at real estate service provider Savills HCMC, said.

    Buyers from China, Taiwan and Hong Kong last year accounted for 25 percent of transactions by foreign buyers, up from 21 percent in 2016, according to data from real estate consultancy CBRE Vietnam.

    “Chinese buyer demand for Vietnam properties in the first quarter of 2018 was more than 300 percent higher than the first quarter of 2017,” said Carrie Law, chief executive of the online Chinese real estate agency Juwai.com.

    The country is still lower on the preference list than Thailand or Malaysia, but demand is growing, Law said.

    According to Duy, what attracts many of these buyers to the country, and HCMC in particular, is the high return on property.

    It is currently 5-6.5 percent in Thao Dien ward and Thu Thiem Peninsula in District 2. This is higher than in other Asian countries, where returns are only 3.7-5.2 percent, he noted.

    Duy said the high returns and competitive prices of high-end properties are drawing high-income Vietnamese and international buyers to the city.

    The demand for high-end properties has been increasing and surpassed supply, and so there is potential more of this type of development in the next three to five years, he added.

    A CBRE report said the high-end segment accounts for the highest proportion of new launches in the second quarter — 54 percent.

    In the last three years 35,000 luxury apartments have come into the market. This is a major increase on 2012-14 when fewer than 10,000 units were on offer, CBRE said.

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  • Dip in Indian rates on rupee weakness dulls Vietnam offers

    Dip in Indian rates on rupee weakness dulls Vietnam offers

    Rice export prices in India fell this week as the rupee weakened, weighing on demand for the Vietnamese variety.

    Rates for India’s 5 percent broken parboiled rice fell by $3 per tonne to $389-$393 per tonne this week.

    “Rupee depreciation is allowing us to lower prices, but at the same time competitors are also lowering their quotes,” said an exporter based at Kakinada in the southern state of Andhra Pradesh.

    The Indian currency fell to a record low against the dollar on Thursday.

    Farmers in India had planted summer-sown paddy rice on 30.78 million hectares as of Aug 10, down 2.9 percent from a year ago due to scant rainfall.

    Monsoon rains in India are likely to be below-normal levels in 2018, a private weather forecaster said earlier this month, raising concerns over farm output and economic growth in Asia’s third-biggest economy, where half the farmland lacks irrigation.

    The falling rice prices in India also weighed on the market in Vietnam, the third largest exporter, but rates for the country’s 5 percent broken variety were unchanged at $395-$400 a tonne.

    “Trade is slow as Vietnamese prices are comparatively higher, especially compared with Indian prices … Exporters have lost their African customers to Indian rivals due to that,” a Ho chi Minh City-based trader said.

    Vietnam exported 444,235 tonnes of rice in July, down 17.4 percent from June, government customs data released late last week showed. That was slightly lower than a government forecast of 450,000 tonnes.

    In Thailand, the world’s second biggest rice exporter, demand also remained soft, traders said.

    Thailand’s benchmark 5 percent broken rice price was quoted at $390-$393, free on board (FOB) Bangkok, little changed from last week’s $390-$395.

    The commerce ministry on Wednesday said Thailand had exported 6.99 million tonnes of rice worth 3.52 billion baht this year by August 15, a 2 percent increase from a year ago.

    Meanwhile, Bangladesh, which had emerged as a major importer of rice since 2017 after floods damaged its crops, continued to procure rice domestically.

    In the 2017-18 financial year that ended in June, Bangladesh imported a record 5.7 million tonnes of rice. However, imports dropped sharply after the government imposed a 28 percent tax on shipments to support its farmers following a revival in local output.

    Rice at government warehouses stood at nearly 1.3 million tonnes, data from the country’s food ministry showed.

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  • Vietnam e-commerce site Sendo secures $51 million for expansion plans

    Vietnam e-commerce site Sendo secures $51 million for expansion plans

    Vietnam’s growing potential has helped nation’s leading C2C platform attract more venture capital funds.

    In the Series B funding round, the SBI Group and Daiwa PI Partners from Japan, Softbank Ventures Korea and the U.S.-based SKS Ventures were the new investors.

    Series B in venture capital financing refers to funding sourced to take a firm to the next level, past its development stage.

    All existing investors – FPT Group, eContext Asia, BEENEXT, and BEENOS – also participated in the Series B funding.

    Nguyen Dac Viet Dung, executive chairman and co-founder of Sendo, said: “The funding will help the company expand the C2C (customer to customer) platform Sendo, launch the B2C (Business to Customer) marketplace SenMall, and make SenPay the leading fintech platform in Vietnam.

    In a fast-growing e-commerce market, Sendo has differentiated itself by focusing on not only Hanoi and Ho Chi Minh City but also the hitherto untapped Tier 2 cities’ population, where 70 million Vietnamese people live.

    Sendo, which was established in 2012, currently has more than 300,000 sellers serving around 10 million customers nationwide.

    A report last April cited Bain, a U.S.-based global management consulting firm as saying online businesses were booming in Southeast Asia.

    Bain estimated that the region had 200 million digital consumers, or people who bought goods or services online, out of an adult population of 405 million. Vietnam, with a population of 93.7 million, accounted for 35 million of these consumers.

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  • Vietnam to expand banana farming for China export

    Vietnam to expand banana farming for China export

    A Vietnamese agriculture company, Hoang Anh Gia Lai Agriculture Jsc, is set to invest in another 5,000 hectares of land in Cambodia to grow bananas for export to China.

    It will invest VND976 billion ($42 million) in the project, the company said in a recent statement.

    Most of the bananas will be exported to China by ship or road. They will fetch VND22,000-23,000 (95-99 cents) per kilogram from September to March and VND13,000-14,000 (56-60 cents) at other times.

    While China has a demand for 15 million tons of bananas a year, the company has only been supplying 240,000 tons, Doan Nguyen Duc, CEO of Hoang Anh Gia Lai (HAGL) Agrico, said.

    But to reduce its excessive reliance on the Chinese market, Duc is also hoping to shift 20 percent of the company’s banana exports to South Korea and Japan.

    It expects to harvest over 106,000 tons of bananas and earn revenues of around VND1.7 trillion ($73 million) and VND983 billion ($42 million) in gross profit this year.

    The company already possesses 13,500 ha of farmlands in Vietnam, Laos and Cambodia. It is also a major producer and exporter of dragon fruit and chili.

    HAGL used to be a leading property developer in Vietnam, but restructured in 2010 to focus on rubber and livestock farming.

    HAGL Agrico has been growing fruits since 2016, and last year its passion fruit, banana, chili, and dragon fruit crops fetched revenues of VND1.6 trillion ($71 million), accounting for around 49 percent of HAGL’s total revenues.

    This year, the firm expects sales of VND3.7 trillion ($164.4 million) and gross profits of VND1.67 trillion ($74.2 million).

  • Global chains suffer as Vietnamese coffee lovers vote with their feet

    Global chains suffer as Vietnamese coffee lovers vote with their feet

    Local coffee shop chains are outmaneuvering international brands like Starbucks by catering to customers’ demands.

    Young customers are now choosing smaller brands like The Coffee House, Cong Ca Phe and Phuc Long as their to-go spot for affordable brews.

    Local brands not only offer many beverage options but also sophisticated interiors and unlimited and fast internet access to ensure they retain customers, Nikkei Asia Review quoted market researcher Nguyen Phuong as saying.

    All this has helped these brands become very popular among students and young working professionals, who can spend hours there yet feel welcome.

    Phuong said having knowledge of Vietnamese culture and consumers has helped the local brands attract customers.

    By changing their business models to fit customers’ tastes, local brands report growing and some are even looking to expand.

    Nguyen Hai Ninh, CEO of what is thought to be the fastest growing chain, The Coffee House, told Nikkei that he plans to open 700 outlets around Vietnam in the next five years, or around 10 a month.

    Just one month after the brand opened its first shop in Seoul last month, Cong Ca Phe plans to add two more stores in the South Korean capital.

    The chain, which debuted in 2007, has more than 50 stores around Vietnam, and intends to add one or two every month until 2020.

    Thuc Coffee, Urban Coffee Station and Phuc Long report 7 percent annual revenue growth.

    In contrast, international names like Starbucks have grown slower than expected in the Vietnamese market.

    Starbucks only has 38 stores after entering the market five years ago despite boasting huge numbers in neighboring countries such as Thailand (330 stores), Indonesia (320) and Malaysia (190).

    Meanwhile, NYDC, Gloria Jean’s Coffees, and Caffe Bene of Korea have all wound up or are close to doing so.

    Singapore-based NYDC closed its last store in July 2017, Australian brand Gloria Jean’s Coffee also closed its last store in April 2017 after a decade of slow growth.

    Caffe Bene now has only three outlets remaining, according to InsideRetail Asia.

    Talking about the reason for the failure of international brands in the domestic market, industry insiders said that high rents on premium land have raised the cost of retail prices, making their coffee less competitive than local ones.

    A local coffee shop owner told Nikkei that opening a 200-square-meter Starbucks store in Saigon requires an initial investment of $215,000, while Coffee House only needs $86,000.

    Sean T Ngo, CEO of VF Franchise Consulting, said Vietnam, a major exporter of Robusta coffee, imposes high import tariffs on coffee beans, and international coffee chains often use imported Arabica beans that raise costs significantly. Higher costs have driven many customers to domestic brands.

    Phuong said that another reason for the downfall is that old brands are slow to adjust their business models to match customers’ taste.

  • Chinese brands grab 39 percent of Vietnam smartphone market

    Chinese brands grab 39 percent of Vietnam smartphone market

    Xiaomi and Huawei were the two fastest growing mobile phone brands in Vietnam in the second quarter, technology industry analyst Counterpoint reports.

    They grew respectively by 363 percent and 193 percent, according to the HongKong-based company’s recent release.

    “Further, amid the US-China trade war, the RMB (renminbi) is weakening, resulting in cheaper Chinese products in Vietnam. This will favor the Chinese brands, which now hold around 39 percent of the market in Vietnam,” said Tarun Pathak, Counterpoint associate director.

    Vietnamese smartphone brands face stiff competition from not only Chinese but also other international brands, he said.

    The report noted that Xiaomi had only 1 percent of the market share in the second quarter of 2017, but it surged to 5 percent a year later.

    Overall, Chinese brands have a market share of around 39 percent in the form of Oppo (22 percent), Xiaomi (5), Huawei (5), and other smaller names.

    Besides, the report said Huawei has tied up with local gaming firm VNG to enter the industry.

    Varun Mishra, a research analyst, added that Chinese companies such as Alibaba, JD.com and Tencent have invested heavily in the Vietnamese e-commerce market, which would give a “further boost to the Chinese players who have leveraged both offline and online platforms to sustain growth in similar markets.”

    “While the Chinese players are actively targeting mid-tier segments, local players are being pushed toward the entry level segment.”

    South Korean giant Samsung still dominates the smartphone market with a 37 percent share.

    Vietnamese conglomerate Vingroup has also entered the market. Vingroup hopes to launch its phones next year.

    By the end of March 2018, Vietnam has 118.7 million mobile subscriptions, according to official data.

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