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Socialist Republic of Vietnam
Cộng hòa xã hội chủ nghĩa Việt Nam
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Table of Content I. Cultural Analysis 003
Executive Summary 003 Brief discussion of the country's relevant history 003 Geographical setting 003 Social institutions 005 Religion and aesthetics 012 Living conditions 013 Language 016 Intangible Aspects of the Culture 017
II. Economic Analysis. 018 Executive summary 018 Population 018 Economic Statistics and activity 021 Developments in Science and Technology 029 Channels of Distribution 031 Media 035
III. Product Market Analysis. 036 Executive summary 036 The Product 037 The Market 038 The Market Entry Plan 041 Pro forma financial statements and budgets 046
IV. Sources of information. 048
Cultural Analysis
I. Executive Summary
Socialist Republic of Vietnam, known as Vietnam, is country well-known for
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Vietnam War. After Vietnamese war, country was left out in the global society, however, once
they reestablish diplomatic ties with western countries, the economy of the nation grew fast.
Even though the nation is Socialist country; Vietnam is one of the safest places to invest in
South East Asia. Vietnamese are diligent and skillful so many Multi National Enterprises
around the world own a manufacturing factory in Vietnam for the comparative advantages.
II. History of Vietnam
Vietnam, like Korean Peninsula, was influenced greatly from China’s dynasties.
During the Imperial Era, French has invaded Vietnam and ruled for 60 years. Also Japan has
made their puppet government for 6 month but as the World War 2 ended, they were split into
Socialist Vietnam and South Vietnam. Vietnam went through war of their own and North
Vietnam, where socialist party was ruling, has dominated Vietnam. However, for economical
reasons, they are becoming friendly to western nations to get invested.
III. Geographical setting of Vietnam
A. Location
Vietnam is located in eastern part of Indochinese Peninsula sharing border with
Cambodia, and Laos. East side of Vietnam is South China Sea. Vietnam’s mainland is an S
shaped and it covers an area of 239,241 square kilometers.i
B. Climate
Climate of Vietnam differs due to the shape of its territory. However, in general
Vietnam enjoys its tropical monsoon climate where humidity is 84% throughout the year.
Northern part of Vietnam is in the temperate climate zone and Southern part is in the tropical
climate zone.
Climate of Northern Vietnam is cool and dry during November to April and hot and
rainy during May to October. Temperature varies between the seasons with a difference of 12
3
degrees centigrade in general. The very north part of Vietnam, where there is a border with
China, has all four seasons of spring, summer, fall, and winter.
South Vietnam has a mild temperature with a difference of 3 degrees centigrade
between the seasons. South Vietnam enjoys dry season through November to April and
expects much rain during wet season which usually is May to October.
Central part of Vietnam, where there are various climates due to coastal plains and
highlands, is warmer and more humid than the South during the middle of the year. Also it
gets cooler during the dry season.ii
However, due to the global warming, the climates are changing, it’s becoming more
unpredictable. There are sudden draughts or sudden extreme weather changes in Vietnam
these days. Also, from July to November, it is likely to be typhoons affecting coastal regions.
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C. Topography
Vietnam is separated into two different regions of the south and north. “Most of its
population lives on the 20% that is level ground: 40% of its 331,688 square kilometers is
mountainous, and the remaining 40% is hills. Approximately 25% of land is under
cultivation.”iv The Northern region is the mountainous terrain with abundant water resources.
The Red River Delta is the river that is surrounded by the mountainous region of the north
where it is muddy and rocky. Rivers and lakes surround the region. The South is the coastal
lowland where many of Vietnamese people reside. The Mekong Delta is located at the most
southern region of Vietnam. The area is sea level but it is abundant with crops.v
IV. Social Institutions
A. Family
1. The Nuclear Family
Recently Vietnamese families usually contain on average of four people to a family, 4
two parents and two children. Vietnam’s law on two babies per couple was scrapped in 2003.
As more couples have more than two babies, Vietnam returned to two child policy in year
2008.vi In cities, they tend to live as nuclear family as government encourages them.
However, in country side, as whole extended families form a village, they live in large family.
Even in cities, they support one another despite they live apart..vii
2. The Extended Family
In the past, the extended family played a greater role in Vietnam family structure.
Families would live under the same roof with the oldest having the most say in what goes on.
In the northern part of Vietnam and its other rural areas, there are many extended families still
living together.
3. Dynamics of the Family
a. Parental Roles
Being a country that had focused much on the extended families and its clans, there
were no exact parental rules due to the elder being the authoritarian. As time had gone, there
are parental roles in society. The father and mother must love each other to represent a good
family virtue in front of their children.
b. Marriage and courtship
There was a suggestion on age of when people should marry, “Young people were
advised not to marry before the age of twenty for males and eighteen for females and to have
no more than two children per household.”viii Due to the new laws that were passed on by the
government, males and females have had equal opportunities within the culture.
4. Female/Male Roles
In Vietnam, the law had passed expressing viewpoints on male and female roles in
the society and to become more of an equal. However within a family, the male is still
viewed as the authoritative one. As in many other countries, the male does the work of
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creating money while the wife has the duty of doing household chores and raising their
children, a stay home wife. However, especially in urban area, the role is changing as more
women are starting their career. Divorce was opposed against however after two years of
marriage divorce is possible due to certain circumstances: adultery, cruelty, abandonment, or
a criminal act on the part of a spouse.ix
B. Education
1. The Role of Education in Society
Vietnam in recent years has showed a tremendous growing rate in their economy.
Society has put a greater emphasis on education and its roles in society. Higher learning has
become quite important in the succession of greater viable jobs. “GDP growth increased 8.5%
in 2006, 8.2% in 2007 and 8.5% in 2009. In 2009, according to the Asia Development Bank
(ADB) in their latest late September, 2009 revision the bank predicted that growth would be
4.7% for all 2009. Growth in 2010 is projected at 6.5 percent according to the same source.”
xVietnam as any other Asian country put education as a top priority for the future of the
children.
a. Primary Education
Children generally start their education at pre elementary levels starting from the ages
of 18 months to 5 years. At the early age of they are taught the alphabet and mathematics.
After the completion they are admitted to a primary education system, which is considered,
and elementary school. Due to the early start of an education system, children have a high
literary proficiency rate.
b. Secondary Education
After primary education students are admitted into junior high schools where they
learn at a higher level. Along with the learning they have to pass a graduation examination.
Students then are admitted into high school where they start their secondary level of
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education. Students are admitted into different schools determined by their proficiency
examination and are then required to grasp the knowledge of many different subjects:
literature, mathematics, physics, chemistry, biology, history, geography, citizenship study,
foreign language, technology, information technology, and physical education. With a wide
variety of subjects, they become highly knowledgeable in various areas.
c. Higher Education
With a great emphasis on higher education, university exams are important in every
student’s lives. They take an exam for several hours being tested in a variety of subjects.
With the succession of passing the exams and entering a university, students then have the
option to go to a school of even higher learning often referred to as a doctorate program or a
post graduation education. “A person with a high school diploma may pursue either a 4-6
year academic program for a bachelor’s degree or alternatively a 3-year academic program at
a junior college. A junior college degree holder may then continue for an additional 1-2 years
to secure a bachelor’s degree. A student with a bachelor’s degree may pursue and additional
two years to qualify for a master’s degree and 3-4 years more to obtain a doctorate.”xi
Although education is strongly emphasized there still is a lack of PhD’s.
2. Literacy rates
With such stress on education, the literacy rate of Vietnamese people is high except
for the students who live in rural areas and are not offered the amount of education of people
in the city.xii
C. Political System
1. Political Structure
All Vietnamese Political Organizations are under control of Vietnamese Communist
Party. The most distinctive part of Vietnamese political structure is that “there is no
separation of powers between executive, legislative, and judicial branches”.xiii However,
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according to the Constitution, for legislative, National Assembly holds the most power.
2. Political Parties
Vietnam has just one political party, Vietnamese Communist Party. People who
escaped from Vietnam after Vietnam War has created communities and supported
demonstrations against the government, but Vietnamese Communist Party determined this act
as ‘terrorism’. As Vietnam adapted capitalism like China, another communist nation, Vietnam
is trying hard to maintain their only party system. It is actually beneficial to receive FDI for
one party system is stable.xiv
3. Stability of Government
As mentioned earlier, Vietnam is one of the safest places to invest in South East Asia
for the stability of its government. There are some communities against the government
outside Vietnam, but majority of Vietnamese are confident with the government for they
believe the government has defeated foreign power. Ho Chi Minh, father of Vietnamese
Communist Party, is still being loved by the people.
4. Role of Local Government
Vietnam is divided in the 58 provinces and three major cities, Hanoi, Ho Chi Minh,
and Haiphong. Like Korea, districts, towns, and villages vote for their People’s Council.
However, every candidate is reviewed by the Vietnamese Communist Party before people get
to vote. Local council protects the constitution, law, and has control over local armed forces.xv
D. Legal System
1. Organization of the judiciary system
The Supreme People’s court, the local people’s courts, the military tribunals, and
other tribunals under the law of Vietnam make up the judicial system of Vietnam. The
National Assembly can open up special tribunals in special cases.xvi
2. Code, common, socialist, or Islamic-law country?
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Vietnam is a Communist country. Its laws are also made by National Assembly,
where most members are in the Vietnamese Communist Party. As the official name of
Vietnam represents, Socialist Republic of Vietnam is socialist, also communist country.
Public norms are mainly influenced by teachings of Confucius, and teachings of Ho Chi
Minh. Laws are based on socialist theory and advanced theory, which developed after
adapting capitalism.
3. Participation in patents, trademarks, and other conventions
Vietnam is fully aware of intellectual property like other countries. There are specialized
attorneys in Vietnam for intellectual property protection in Vietnam, as more Multi National
Enterprise invests in Vietnam.xvii
E. Social Organization
1. Group behavior
Like other Asian countries that were affected by Confucianism, Vietnam has group
oriented behavior. Vietnamese are very family oriented and relaxing when they are not
working. They are very committed to groups they are associated, both family and work-wise.
However, like other communist countries, Vietnamese are committed to their government.
2. Social Classes
For Vietnam is a socialist nation, there should not be any social classes. However, as
the nation adapted capitalism and allow private assets, there exists different economic status.
The government does not mention about these classes as they are communist party, but in the
real world there is different class level. Vietnamese pay different taxes according to the size
of their house or income like Korea, but the government does not want to reveal it for it will
go against the principles of communism.xviii
3. Clubs, other organizations
There are some organizations that Vietnamese love to be a member of. Such
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organizations have ties with the government. However, to make a public organization or a
club, people’s council has to scan the organization in prior. If not the public organization,
they make soccer clubs or clubs of their own interests.
4. Race, ethnicity, and subcultures.
Vietnam is formed by 54 different ethnic groups. The largest one is Viet, which is
87% of all population. Other 53 ethnic groups all together are 8 million. In Vietnam, not only
by ethnic group but also the location of people varies the quality of life they live in. Those
people living in delta areas and mountain areas differ on their income so they tend to move to
lowland cities. Vietnamese government is trying to support those people who are scattered in
mountain areas and minorities by government driven programs such as health care program.
Also officially they are trying to help minorities to keep their tradition.xix
F. Business customs and practices
1. Greetings
As many other Asian countries, an introduction is a formality in Vietnam. A
handshake is used at the beginning and end of each meeting. When the hand is not present, a
simple bow of the head is a gesture of saying hello, and in which then the other person shall
put out their hand for a shake. Along with the handshake a business card is usually given to
each other. In Vietnam, the business card is viewed as an important item and is presented
with two hands. The receiving end shall then take the business card with much interest and
read the card with more than just a mere glance. The first initial meeting should be on the
basis of getting to know each other more than to plunge into business talks.
2. The Role and Development of Relationships
There is a great emphasis in the role and development of relationships in Vietnam.
The initial meeting is important, as it will entail a development of interest. The appearance is
important; the two parties meeting should dress conservatively. An appointment should be
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made much prior the meeting date. Vietnamese people are very punctual and expect others to
do so as well. As in many Asian countries, there is a hierarchy rule; in business meetings, the
most senior should display their presence in the room by entering first.
3. Relationships in Business: Elements of success
In order to succeed in a business between two people in Vietnam, a lot of patience
and interest is required. Relationships are important between those of the Vietnamese. A
person should take interest into the other person’s life by getting to know and taking interest
in their family and affairs. They should never make promises that they can’t keep.
4. Gift-Giving
Gift giving is common in the business world. In Vietnam gifts are usually given at
the end of the meeting and certain gifts are presentable. Something small and that carries the
other party’s company logo is appreciated. Gifts should be something inexpensive, as it can
seem as bribery if something expensive were to be given. Sharp objects such as knives and
scissors should not be given because in the Vietnamese culture, something sharp indicates the
cutting of a tie. Lastly, a gift should not be wrapped in black because the color is associated
to funerals and death.xx
V. Religion and aesthetics
A. Religion and other belief system
1. Orthodox doctrines and structures
Most of Vietnam’s religion is not originated in Vietnam but came from outside their
nation. Even though Confucianism and Daoism were introduced to Vietnam in early stage,
Buddhism was introduced the first and gained more popularity. Buddhist in Vietnam turned
out to be 85%, rated as number one religion. Ever since Communist Party loosens restriction
on religion on 1989, there are growing numbers of Buddhist monks. Roman Catholic and
Protestant together is 8%. However, because Vietnam is Communist country, there are some 11
regulations stopping missionaries to deliver sermon freely. The constitution mentions about
freedom of religion but those religions that are threat to their system is restricted. Vietnamese
priests, including monks and pastors, are registered in the Communist party, and sermons are
checked by people’s council before given out to the public. As a Communist nation, they
restrict any kind of sermons that are against the government.xxi
2. Relationship with the people
As mentioned earlier, Buddhism is a major religion in Vietnam and like many other
countries, there are new religions based on the Buddhism. For example, Cao Dai and Hoa
Hao is reformed Buddhism, which are gaining popularity in the rural population. When there
was prosecution of religion, many religions were changed in order to avoid pressure from the
government.
Different ethnic groups have their own religion too. For example Cham and other
minorities living in Mekong Delta region believe Islam. Protestant missionaries are focusing
on Highland minorities and achieving some success.xxii
3. Which religions are prominent?
Buddhism is the prominent religion in Vietnam as 85% of Vietnamese are Buddhist.
Christianity, combining Roman Catholic and Protestant is 8% and growing, but most of them
are Roman Catholic as French Empire once ruled Vietnam and the government prosecuted
Protestant as they considered this as religion of United States of America.
4. Membership of each religion
VI. Living conditions
A. Diet and Nutrition
1. Meat and Vegetable Consumption rate
According to the Food and Agriculture Organization of the United Nations,
Vietnam’s meat consumption per capita is growing as their economy grows. Vietnam’s meat 12
consumption per capita in year 2002 was 28.6kg where it was 16.1kg in year 1990.xxiii Also
vegetable and fruit consumptions are rising too as well.xxiv In year 2005, vegetable
consumption of Vietnamese in a year was 83.8kg, fruit consumption was 61kg, and meat
consumption was 34.9kg.xxv
2. Typical Meals
As Vietnam was invaded by many countries throughout the history, their food are
influenced by those countries. Beef was first introduced to Vietnam when Mongolians
invaded Vietnam. 1,000 years of Chinese influence taught Vietnamese to make noodles, stir
frying, deep frying, and also use of chopsticks. French brought baguette, pate, coffee, butter,
and cakes. Americans brought ice cream during the Vietnam War.
Vietnamese main dish is rice and they make noodles out of rice as well. Their main
consumption is rice and they make side dish. Their most famous dish, Pho, is now sold in
many different countries. They developed their meals using ingredients and cooking skill they
acquired throughout their history. Nouc mam is Vietnamese sauce they use in nearly all their
dish, making Vietnamese dish tastier. Its salty fish sauce and that differentiates Vietnamese
dish to that of Chinese dish. They also make sandwiches using pate and baguette, and enjoy
coffee and ice cream as dessert.xxvi
3. Malnutrition rate
Vietnam’s malnutrition rate is reducing annually but compare to neighboring country,
it is still high. Number of underweight children below age 5 was 18.9% last year and the goal
for this year is 18%. However, number of stunted growth is 32.6% which is still high and the
goal is to reduce it to 30% this year.xxvii
4. Foods available
Vietnam is well-known for its production of rice. Farmers can harvest three to four
times a year making them second place in exporting of the rice. Also because of its climate,
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they have plentiful of fruits and vegetables. The government is trying to encourage the
number of stock farmer too. Fishery in Vietnam is abundant as there are 2 major rivers, and
South China Sea right next to the country.
B. Housing
1. Types of House Available
There are house, apartment, shack, cabin, hut, water house, boat house, and tent as
types of house in Vietnam. Some live in traditional house of their races and some dwell in
apartments in the cities. People living in water house or boat house are those who live close
to water or have no option because of money.
2. Do most people own or rent?
House means more than a property in Vietnam. It has been that way and will be that
way. Many people own the house and those who came to city looking for a job rents house,
but try to own a house some day. 25% of Vietnamese live in houses with poor condition
according to Saigon Times Daily and it’s getting harder for them to own a better house as the
prices are skyrocketing. 75% of new houses are made by individual and those people make
houses build more expensive housing for their benefit. Change in policy is required and
Vietnamese government is working to improve people’s quality of life.xxviiixxix
3. Do most people live in one-family dwellings or with other families?
Except for the low income family, most Vietnamese tend to live in one-family
dwellings. In case of bigger houses, the whole family tends to live together.
C. Recreation, sports, and other leisure activities.
1. Types Available and in Demand
The leading sport in Vietnam for centuries was martial arts. Due to previous wars,
martial arts were a common sport to learn. As time has progressed, the leading sport in the
country is now football (soccer). Soccer being a world sport, it has sparked a great interest in
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Vietnam. Along with soccer, many people enjoy the recreational activities such as:
badminton, tennis, ping-pong, volleyball, and chess. Besides sports, Vietnam next best
interest for recreational activities is media and its films.xxx
2. Percentage of income spent on such activities
There is growth of money spend on leisure activities. According to the report of AC
Nielson and CANCHAM, 40% of Vietnamese living in the city said they are spending more
money of leisure.
D. Social security
Social Security in Vietnam is not quite the same as that of in the US. Social Security
was signed and passed by Prime Minister on February 16th, 1995. Being a new concept in
Vietnam, the growth rate is quite impressive. People are constantly applying for their social
security for its benefits. From 2000 to 2001 there was a growth rate of 27% and the
following years have had great outcomes also. Such growth was due to the minimum wage
rate increasing in the past couple of years. Due to being a new program implemented within
their society, the spending rate is far greater than that of the incoming rate. Although there
has been a great increase in percentage for people singing for the benefits of social security, it
may be a bit longer until it becomes fully successful.xxxi
E. Health care.
“Viet Nam's healthcare system has undergone great changes over the past decades.
Almost non-existent just 10 years ago, Viet Nam's healthcare system now boasts a health
index higher than those of other developing nations with the same per-capita Gross Domestic
Product (GDP).” Vietnam being a fast developing country, it is only possible that they would
implement a healthcare system in their country. The lifespan of people have risen
tremendously from a low 38 in 1945 to 67. A new policy called Doi Moi (new change) also
changed Vietnam’s healthcare perspective. There was a ban on private run hospitals. With
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the new policy changes, after hour practices were open. Doctors can now do after hour
practices as in house calls. Patients themselves find this practice more of a convenience, as
they do not have to attend to hospitals during the daytime when they are busy. In 14 years,
there was an increase of 2 doctors to every 10,000 citizens of Vietnam. They can now
operate on difficult operations such as: kidney transplants, heart surgeries, and conjoined twin
separations.xxxii
VII. Language
A. Official Languages
Vietnam has one official language, Vietnamese. However, for its diverse ethnic
group, some minorities use Chinese, Khmer, Cham, and other languages, unofficially.
Vietnamese is hard language to learn for foreigners. For every syllable, six different tones can
be used and different tone changes meaning of a word.xxxiii
B. Spoken versus written language
Although Vietnamese is completely different language compare to that of western
countries, they use Roman alphabet and accent marks as their written language. Their writing
system is called quoc ngu, which was created by Roman Catholic missionary in 17th century.
Before quoc ngu, Vietnamese were using chu nom, which was similar to that of Chinese
characters.xxxiv
C. Dialects
Vietnamese has some differences in verbal language according to the regions.
However it is minor difference like Dallas and New York. They can still understand each
other.
VIII. Intangible Aspects of the Culture
A. Time
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Vietnamese are somewhat notorious on not being on time. Especially government
officials are bad on keeping the time. If you call police they arrive after the incident is done.
It is called the Vietnam Time. However, they are getting better as the government is
becoming more pro-business, and people are getting used to capitalism. Now things are
changing faster in Vietnam and they understand the value of time as well.
B. Space
In Vietnam, it is very hard to find people close to each other except for dating, or
riding motorcycle. As the climate of the country is tropical, humidity and the heat keeps
people away from each other. People are warm hearted, but they might not like people close
to one another.
Economic Analysis
I. Executive Summary
Vietnam is a communist nation adapting to capitalism. Ever since Vietnam recovered
its relationship between United States on December 1995, Vietnam’s economy started
boosting. However, Vietnam’s effort to be a wealthy nation goes back to 1976, where they
allowed people to farm in their private land and sell whatever’s left. This movement towards
the free market is called ‘Đổi mới’, slogan for Vietnamese new economy policy since 1986. It
is similar to China’s Deng Xiaoping’s cat theory, as socialist idealism fail to fulfill the need of
people; they receive good things from capitalism to recover economy. Right now, Vietnam is
a member of World Trade Organization and their economy is growing rapidly.
Since 1992, South Korea and Vietnam had an official relationship despite Korea
participating in the Vietnamese war against Vietnam’s current government. However, after
1992, relationship between Korea and Vietnam dramatically improved. Trade scale of Korea
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and Vietnam in the year 2007 was 6 billion USD and is growing annually. Vietnam is a very
attractive place to invest as the nation is still an emerging nation with potential. Trading
between two countries is increasing and the number of Koreans investing in Vietnam is also
rising.xxxvxxxvi
II. Population
A. Total
There is no exact number to define the population of Vietnam due to the mountainous
regions in which people reside however; it is estimated to be at 85,100,100 (2007est.)xxxvii
1. Growth Rates
Vietnam considered to be fast rising country, the population growth rate is at 1.23
percent.xxxviii
2. Number of Live Births
The infant mortality rate is at 22.26 deaths per 1000 deaths. For males it is estimated at
22.64 deaths per 1000 and 21.84 deaths per 1000 for females. Through the years the death
rate has steadily been dropping where as it was at 30.83 in 2003.
3. Birthrates
The birthrate of infants is estimated at 19 per 1000 births.
A. Distribution of Population
1. Age
The CIA Factbook distributes the population into three categories: 0-14 years, 15-64
years, and 65 years and above. The 0-14 years group amounts to 25.6 percent (male
11,994,692/female 10,939,088), 15-64 years having the largest amount of 68.8 percent (male
30,746,066/female 30,922,425), and the 65 years and above category to be at an estimate of
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5.5 percent (male 1,903,504/female 3,065,355). This is according to the updated research
done in 2010.
2. Sex
At birth, the ratio of males to females is at 1.115 to 1. As the years pass by the
number of males steadily decline. From birth till the age of 15, the number of males to
females drops to 1.1 to 1. During the years of teens to adults (15-64 years) the ratio drops yet
again to .99 to 1. When Vietnamese in the community become seniors, the male to female
ratio drop significantly to .62 to 1. With the number of males steadily dropping in numbers
compared to females, the current ratio is at .99 males per female, according to CIA Factbook.
3. Geographic areas (urban, suburban, and rural density and concentration)
Vietnam is a country that is split into the north and south in the geographic regions.
4. Migration Rates and Patterns
There is no set pattern to describe how the Vietnamese migrate within their country
however due to the Vietnam War the Vietnamese had to migrate within different sections in
their country. “In the north, intensive US bombing of major industrial cities led to a dispersal
of the population from urban areas, while a government-sponsored program resulted in the
resettlement of nearly 1 million Vietnamese from crowded areas in the Delta to less densely
populated regions in upland areas of the country. In the south, migration was primarily from
the countryside to the cities, as millions of peasants fled their villages to escape the effects of
the war or to seek employment in the affluent cities of Saigon and Da Nang.”xxxix
After the war, the Vietnamese government recalled for a new program, which would
allocate their people within different regions of their country to re establish their economy. It
was an effort to change the communist republic to a socialist republic. People were relocated
to urban areas near the borders of the cities. After the war had concluded, many had
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immigrated to the United States. There were 593,213 registered Vietnamese people in the
United States by 1990.
5. Ethnic Groups
According to various internet sources, there are 54 different ethnic groups within
Vietnam. Of the 54 different ethnic groups, the Kinh partake 86 percent of the whole
Vietnam.
(http://asiarecipe.com/vietgroups.html)
III. Economic Statistics and Activity
A. Gross National Product
According to the US department of state Internet site, Vietnam’s GDP is at $84.98
billion (2008). The Real growth rate is at 6.23 percent. As stated previously, being a
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country that is still considered to be one of the fastest growing countries, the GDP will only
increase.
B. Personal Income per Capita
2008 is the most recent year for information recorded for Vietnam’s GDP and its
incomes; the per capita income is recorded at $1,024. Although $1,024 may not seem much,
at the current currency exchange rate; 1 USD is converted to 18,731 VND (Vietnamese
Dong).
C. Average Family Income
An average family makes an income of $32. A trifling fact is that although a family
household has such low income, the families in Vietnam still manage to save an average of
$6, according to Asia Times online.
D. Distribution of Wealth
1. Income Classes
There are many different income classes within Vietnam. There are a variety of
occupations which include farmers that prosper from the cultivation of the countries
resources such as rice. Along with farmers there are private business owners and government
employees. The income varies greatly upon their occupation. Some people need to have
second jobs at night time to support their family.
2. Is the distribution distorted?
The distribution is greatly distorted. There are people who encounter odd jobs such
as those who work in sweatshops compared to those who work in offices. The comparison of
incomes from the different occupation varies greatly.
E. Minerals and Resources
Vietnam has been mining minerals such as coal, phosphate, cement, iron ores,
chromites, gold, tin, and kaolin for a very long time. Recently they are producing oil and
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natural gas. Most mines that are currently mining are placed in the north near the
mountainous regions. Agriculture-wise, their main crop is rice, ranking them number 2
(sometimes number1) in exporting rice. Although they are abundant with natural resources,
they have poor skills in mining, so the country is not enjoying all of it. However, these
abundant resources can be strength to a country’s future.xl
F. Surface Transportation
1. Modes
There are many different types of transportation systems in Vietnam. The many
different methods include: trains, buses, cars, boats, and airplanes. The transportation system
is well connected throughout all of Vietnam. Depending on which destination is desired, all
means of transportation is frequently used and the availability is high. There are seven ports
and harbors throughout Vietnam.
2. Availability
The availability rate of transportations in Vietnam is considered to be high. Flights
as in any other country require an advanced reservation. Trains are used mainly for long
distance trips such from Hanoi to Ho Chi Minh City, which is an estimated travel length of 36
to 48 hours non-stop. For these long distance trips, compartments with beds to sleep on are
available for rental. Buses are the most frequently used means of transportation in which
there are buses available every 10 minutes. Cars are available for rent and for taxis.
“Vietnam is gifted with more than 17,000 kilometers of navigable waterways.”xli With such a
wide navigable route of water pathways, visits to the rural are frequently used using via boat.
Lastly, on every street corner, there are men on motorcycles, whom offer taxi services. They
are considered to be cheap and reliable, however a there is no flat rate, so a pre rate should be
determined.
3. Usage Rates
22
Usage rates of transportation vary. Buses are frequently used as it is considered to be
one of the main transportation used.
4. Ports
“There are 7 ports and harbors in Vietnam namely Cam Ranh, Dan and, Hai Phong,
Ho Chi Minh City, Hong Gai, Qui Nhon, Nha Trang.”xlii With 7 different ports available and
17,000 kilometers of navigable waterways we can conclude that boats are frequently used not
only for the sole purpose of tourism or transportation but also business methods. Many
different cargos must harbor at these ports.
G. Communication System
1. Types of communication
There are different types of communication system that Vietnamese use every day.
Vietnam’s main communication systems are telephone, mobile phone, internet, radio, and TV.
As we all know radio and TV are one-sided communications and it is essential when the
government wants to announce something to the public.
2. Availability of these communication types
In the city, it is very easy to make a phone line or buy a cell phone. Internet is also
easy to install for all you have to do is call a commercial Internet service provider.xliii
3. Usage rate
According to the 2004 research, there are 10,124,900 lines of telephones in use and
4.96 million mobile phones in use. Since 1997, when commercial Internet service provider
was allowed, the number of users has been growing. By the year 2009, the number of Internet
users have grown to 20,894,705 and there are five commercial Internet service providers. xlivxlv
H. Working Conditions
1. Employer-employee relations
“Vietnam has in place an extremely progressive national labor law which is designed to
23
regulate working conditions. The major challenge is to ensure that the labor law is being
properly and appropriately implemented.”xlvi Although Vietnam tries it’s hardest to implement
its rules and conditions to create a friendly work environment with set rules, it does not
always go according to plan. There still are illegal jobs that circulate around Vietnam. The
relationship between employer and employee varies from what jobs the employees are
employed in. Government jobs and established jobs can create a workplace in which the law
is enforced in however; ungoverned jobs can lead to uncomfortable work areas and cheating
of minimum wage e.g. sweat shops.
2. Employee participation
The employees of Vietnam are engaged into their work whether it is agriculture or
governmental jobs. The unemployment rate had dropped tremendously from the previous
year.
3. Salaries and benefits
Salaries are not that high compared to prospering countries such as the USA. The
average family income is only limited to $32. There are government jobs that give $200 a
month. “At present, the Vietnamese government provides no unemployment benefits.”xlvii
I. Principal Industries
1. What proportion of the GNP does each industry contribute?
It is hard to find information based on GNP for GDP is more commonly used for
objective result. Total GDP of 2009 was 95billion USD. Amount each industry contributes to
GDP is at chart below.
No Industry Amount Percentile
1 Agriculture, Forestry, and Aqua 19.4 billion USD 20.5%
2 Industry and Construction 38.3 billion USD 40.3%
3 Service including finance 37.3 billion USD 39.2%
24
TOTAL 95 billion USD 100%
(http://www.mof.gov.vn/Default.aspx?tabid=5991&ItemID=59186 Appendix 9)
2. Ratio of private to publicly owned industries.
After the change of the law, private and individual entrepreneurs have made up to 95
percent of the enterprises. However, the key industries are still held by state-owned
companies and they still out-profit any other type of companies.xlviiixlixl
J. Foreign Investments
1. Inflow and Outflow of Financial Resources
After Vietnam’s government started pro-business policies, it is attracting FDI into
Vietnam. In year 2009, when many other nations in the world were suffering from the global
economic crisis, Vietnam had 21.48 billion USD of FDI inflow.li Not only FDI but also as the
16th Consultative Group meeting in December of 2009 decided to assist Vietnam with 8
billion USD, Vietnam’s economy will be stabilized and boost once again.lii
2. Industries: spectrum of new, developing, mature, and decline
Graph below is an outlook of industries that foreign resources are investing on.
25
(http://www.vietpartners.com/statistic-fdi.htm)
As shown in the graphs, heavy industries and construction industry in year 2008.
K. International Trade Statistics
1. Major exports.
Major exports done by Vietnam are 71.084 billion USD (year 2009). Percentage change
compare to previous year is 14.5% increase.
2. Major imports.
Major imports done by Vietnam are 93.283 billion USD (year 2009). Percentage change
compare to previous year is 16.3% increase.
3. Balance-of-payments situation
As the amount of import is larger than export, balance-of-payment situation is at deficit of
22.199 billion USD (year 2009). Compare to last year, its 26.8% increase.
4. Exchange rates.
Vietnam is using the single exchange rate. They are using USD exchange rate. There are
State bank and commercial bank for exchanging currency. In case of trading they use State
bank rate which is 18,544 VND (31st May, 2010). Vietnam dong is being depreciated against
USD.liii
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L. Trade Restrictions
1. Embargoes
Ever since the Vietnam War, United States had embargo on Vietnamese economy.
However, United States lifted the embargo on Vietnam in 1994, as President Bill Clinton
signed the documents. Soon after, as the United States and Vietnam officially began trading,
Vietnam’s economy started boosting.liv
2. Quotas
As Vietnam joined WTO, there is no quota against Vietnam’s exporting lists.
3. Import taxes, tariffs. Customs duties
As Vietnam joined WTO, Vietnam is at the phase of easing the regulation upon
import taxes, tariffs, customs duties, and licensing. Although Vietnam was very protective
about its growing industries, to fulfill with the commitments of WTO, Vietnam is easing their
hard policies regarding imports.lv
M. Labor Force
1. Size
The labor force is estimated at 43.87 million workers.
2. Unemployment Rates
In 2010 the unemployment rate dropped significantly to 2.9 percent from a high 4.7
percent in 2009. Within one year the rank of unemployment rate dropped from 58th to 23rd.lvi
N. Inflation Rates
Inflation rate of year 2009 was 6.9%.lvii
1. Historical
Vietnam has not implemented Capitalism until recently so there is not much to talk
about.
2. Modern
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Since Vietnam started trading with the world and United States, the country enjoyed
rapid growth of economy. First the government did not react to this appropriately letting
inflation at its worst level. In year 2008, inflation rate was at its highest (23.115%) within a
decade of time. Vietnamese government is now trying to stabilize the inflation rate but it is
not an easy job, as Vietnam has to catch two birds with one stone. This means Vietnam has to
achieve economic growth and stabilization of inflation rate.lviii
IV. Developments in science and technology.
Although Vietnam has opened its gate towards the world relatively late, they are
experiencing great developments in science and technology. Vietnamese are considered to be
one of the smartest people in the world as they win prizes in mathematic Olympiad now. Also
they are eager to learn about the new things as nearly every internet cafes are packed with
Vietnamese doing something with computer and the internet. There are many universities and
colleges teaching new technologies and sciences. The government is using its budget to teach
science and technology at early age and teaching that to those who live in rural areas.
A. Current technology available
Vietnam’s science and technology is not at the latest, not surprisingly. However, the
government is trying its best to improve it. The government has formed an association called
Vietnam Union of Science and Technology Associations. Which in year 2009, had a 79
associations at the city and 53 associations at the province. This was formed in year 1983 and
is very active in Vietnam.lix They cooperate with different universities and colleges in
Vietnam to gather the best brains. To do so they organize different Olympiad or different field
of competition to examine creative and scientific mindset of individuals.lx
Vietnam values technology for the government is trying its best to teach the use of
computers from the early age. Internet is easily accessible in Vietnam, if you don’t have
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internet service within your house, there are many internet cafés. Vietnamese are very eager
to learn whatever technology they encounter for they know that these technologies can lead
them to fortune. Although they are latecomers to the world of technology, Vietnam is
improving rapidly as the government, public/private cooperation, and individuals are trying
to implement new technology.
B. Percentage of GNP invested in research and development.
There was no information about GNP for majority of people believe GDP is more
reliable than GNP. Vietnam’s GDP is 95billion USD and 6billion USD is used for
development of the nation (closest to R&D in the government expenses). Which means 6.3%
of GDP is being invested into development sector.lxi
Total including private (11%) and FDI (12%) sector is 37.8billion USD has been
invested into R&D. It makes up 39.8% of the GDP.lxii
C. Technological skills of the labor force and general population.
Vietnam’s labor forces are well-known for their dedication and devotion to work, unlike
other communist nations. Also growing generations, which are going to be next labor force,
are well-educated as Vietnam became member of ASEAN and WTO. To meet the required
standard of those associations, Vietnam enforced education of Vietnamese. Growing
generations are amazingly devoted to technology as schools teach how to use different
programs of computers and how to utilize internet. Although there are restrictions of
commenting on their government and their system, they are free to acquire knowledge
through internet.
Vietnamese are eager to learn new technology and also enjoy expressing themselves using
blog’s. There are about 3million blogs in Vietnam. As they learn and implement new
technologies, Vietnam is experiencing a great turnover. There are young people who are
willing to pay their 3month paycheck for a new gadget. As this generation grows, Vietnam
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will have abundant work force that is tech-friendly.lxiii
V. Channels of distribution (macro analysis).
Vietnam’s WTO commitments have allowed many foreign distributors and retailers to enter
the Vietnamese market. Because of some Joint Venture problems and amendment of
government law on foreign companies owning business in Vietnam, there are more retailers
and distributors starting business in Vietnam owning 100%. Although there is a risk that the
policy might change, the market of 86 million people, and the boosting economy is very
attractive to foreign retailers.lxiv
A. Middlemen
1. Retailers.
Retailing in Vietnam is dominated by locals and traditional retailing by 96%. Although, many
foreign retailers are willing to enter the market as the regulation on foreign company to own a
business in Vietnam is loose. Before this happened, joint venture was the only way to do
business in Vietnam for foreign companies but as they can own 100%, Vietnam is becoming
one of the attractive places for retailers.
a. Number of retailers
There are numerous small retailers that have been dominating the market. However,
Metro Cash and Carry and Lotte Mart have been entering the market. Business Monitor
International claimed that despite the strength of local small retailers, as more multinational
retailers enter the market, there would be great changes in Vietnamese retailing market. lxv
b. Typical size of retail outlets.
Sizes of typical Vietnamese retailers are small. 96% of the retailers are small local
retailers. However, as multinational retailers are getting ready to enter the market, there are
high opportunities for the outlets to become bigger. Currently Vietnam is ranked as 6th in
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Global Retail Development Index, which means there are more chances that the market is
going to get bigger. Retailing business in Vietnam has potential as half the population of
Vietnam is under 30 and Vietnam’s rapid growth in GDP. Young people spend more than old
people and as GDP grows, there is more money to spend. As the government is easing the
regulation and there is growing market, more retail giants are going to enter Vietnam and the
size of retail outlets will get bigger.lxvilxvii
c. Customary markup for various classes of goods.
Vietnamese tend to emphasize on shopping food and groceries. As their wage is small
compare to that of other developing Asian countries, they emphasize on purchasing food and
drink than expensive goods.lxviii However, as Vietnamese have an extended family
organization, sometimes live together or live nearby, they often buy expensive goods as well.
Also as the eldest child and unmarried adult children live with parents, there may be several
working people within one household. Also among the relatives, they lend money to each
other at low interest or no interest, making them easier to purchase goods.
Pricing of goods in Vietnam, is really up to the middlemen. As traditional distribution
channels in Vietnam are fragmented, there are many stages to go through; if the retailers are
100% owned by foreign company or product has been produced domestically. Middlemen
often discount the price of goods for the easier turnovers and there also exist Christmas
Holiday discounts and Lunar New Year discounts.lxix
d. Methods of operation
Traditionally Vietnamese payment was dominated by cash. It was recent when they
moved on to credit card payment as there were more highly paid people. In case of Visa card,
there are more than one million visa cards in the market and 400,000 among 1million cards
are newly joined members. Vietnam’s credit card market is getting bigger but still majority
are paying with cash and some retailers still prefer the dollar over Vietnamese dong when
31
foreigner is trying to buy a gourmet.lxx
e. Scale of operation
Despite there are many foreign retailing giants considering entering the market,
96% of retailers are small local retailers. However, as rapid growth of retail sales value,
which was 39billion USD in 2008, and the number of middle class is growing, Vietnam is
becoming more attractive to multinational retailers and when those multinational retailers
come in, they will open mega stores. Right now, there are only few foreign retailers including
Lotte. They are doing well but to compete with competitors that are willing to come in, they
have to do better to use first mover advantages.lxxi
f. Role of chain stores, department stores, and specialty shops.
As economy of Vietnam boosts, it is not hard to find chain retailers or department
stores in Vietnam. Multinational retailers which already entered Vietnam are using their first
mover advantage, opening many stores as possible in different district and regional cities. For
example, Big C, chain store from England, had revenue of 259.5million USD in a year. Many
chain retailers are earning money in Vietnam so there will be more fierce competitions in
Vietnam. Also department stores and specialty shops are opening in great numbers as number
of middle class is growing.lxxii
2. Wholesale middlemen
There are number of different wholesalers in Vietnam. Some are private owned and
some are state owned wholesalers. However, it was rather hard to find information on
wholesalers for they don’t have appropriate websites. However, I found out that there are
different clothing, electronic goods, pottery, shoes, and wine wholesalers that are selling
through internet and also supply to retailers.lxxiiilxxiv
3. Import/export agents.
Importing and exporting in Vietnam is very hard. If a firm wants to import, they receive a
32
certificate before operating business, the certificate should mention importing or trading. If
not it is illegal for a firm to do such and to do so should go through appropriate import and
export agents. This website (http://vietnamexportsimports.com) has information on the
different agent companies for different categories of goods. However, for firms that need
raw materials from other countries, the government usually allows that firm to import
goods. If not these agents are usually owned by Vietnamese government or Vietnamese
individuals, so go through them.lxxvlxxvi
4. Warehousing
Warehousing in Vietnam is a big problem. Recently some foreign funded companies
have built nice and modern warehouse, most warehouses in Vietnam are considered old
system. They often do not have temperature controlling systems and securities of those
warehouses are always a big issue. They place inventory goods manually and often move
boxes physically not with machines.lxxvii
5. Penetration of urban and rural markets.
As mentioned at 1. Retailer, 96% of Vietnamese retailer is small local retailers. This is
no different in urban and rural markets. Rural areas have these retailers and some villages in
mountainous areas, motorcycles go in and sell products. Big retailers used to do business
only in Ho Chi Minh and Hanoi, where average house hold income triples the income of
whole national, but they are gradually moving into other cities as well.lxxviii
VI. Media
A. Availability of media
The only resources of media available are the television, radio, and newspaper.
Internet is also used as a form of media however it is censored to avoid political
pervasiveness.
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B. Costs
1. Television
*Unable to locate information regarding the cost of a television.
2. Radio
*Unable to locate information regarding the cost of a radio.
3. Print
*Unable to locate information regarding the cost of a newspaper.
4. Other Media (cinema, outdoor, etc.)
An average movie ticket costs 25,000-30,000 VND. According to an Internet
currency converter it costs about $1.33 to $1.60 USD. In Hanoi, there is a movie theater,
Megastar, considered to be the country’s best. It offer’s projectors, screens, and quality
surround sound from the United States. “When the construction of the complex started, they
planned to charge VND 80,000 a ticket. However, market studies showed that a more
reasonable price was VND 50,000/ticket on Fridays and Weekends. On weekdays, the price is
VND 45,000/ticket. Children pay VND 35,000 and the elderly pay VND 40,000.”lxxix This
theater costs $2.66 on the weekends, $2.40 on the weekdays, $1.86 for the children, and
$2.13 for the elderly. According to the article above, Megastar and its high prices are set for
the movie viewer who has exquisite taste. Along with the prices and expensive equipment,
Megastar tries its best to release its movies on the same date as North America.
C. Agency Assistance
Vietnam has its own set of television channels however they do carry 40 different
international channels. “Since 1991, hotels, restaurants, clubs, government offices and
diplomatic organizations in Vietnam have been permitted under license to install and operate
satellite dishes to bring in foreign programming.”lxxx This comes to show that Vietnam and its
citizen’s part take interest in the life and entertainment of other countries.
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D. Coverage of Various Media
Vietnam does not only cover media and information about its own country. By carrying
information and publications of other countries, they receive worldwide information.
Vietnam however does censor information on the internet to stop propaganda for it is a
socialist republic.
Product and Market Analysis
I. Executive Summary
Franchise industry in Vietnam is at its starting level. Most franchise industry in Vietnam
is fast-food chain. Jollibee, KFC, Lotteria is three biggest fast-food industry that sells
American-style fried chicken. They have the most shops and have most market share.lxxxi
Good news for BBQ chicken is that Vietnam’s franchise has potential to grow bigger as there
is growing number of middle-class. Also BBQ chicken has already opened few shops in
Vietnam’s capital city, Hanoi, and city of economy, Ho Chi Minh. BBQ chicken made MOU
with Vietnam’s government for right to open franchise shops. BBQ headquarter in Korea has
Master Franchise right over Vietnam’s BBQ chicken shops, which can give them loyalty
every month. As BBQ chicken just has right to collect loyalty in Vietnam, in this part, we are
going to focus on strategies to expand more shops in Vietnam.
II. The product.
A. Evaluate the product as an innovation as it is perceived by the intended market.
1. Relative advantage, Compatibility, Complexity, Trialability & Observability.
BBQ chicken prides itself in as the healthier fried chicken compared to its counterpart,
fast food conglomerate, KFC. The Vietnamese consume large amounts of chicken on a
regular basis.
35
BBQ is more expensive than KFC. BBQ’s chicken is fried in olive oil while KFC uses
the generic oil used in other fast food restaurants. As in other countries, the services
provided toward the customers are viewed as a great aspect. BBQ chicken being a dine in
restaurant should provide their customers with much care and interest. Korea also being a
country that prides them in customer care should provide necessary training for their new
employees overseas.
The compatibility rate in Vietnam should be relatively high. There are other restaurants
that serve chicken however its main competitor is KFC. Being a country that consumes
much chicken, citizens would like to embark on new journeys to try new restaurants that
provide the food they desire. Chicken is so widely consumed that, at the three fast food
restaurants, Lotteria, Jollibee, and KFC, added chicken and rice plates to their respective
menus.
The complexity of BBQ was the alternation of the menu to fit the standards of
Vietnamese. In Korea where it originated, chicken is sold as a whole where families can
share however; in Vietnam it is sold by pieces as an alternate. BBQ chicken is priced a tad
more expensive than it KFC. “Young people say they enjoy eating at the outlets for their
friendly atmosphere, delicious food and reasonable prices.”lxxxii
BBQ chicken is already in Vietnam. The trials it can face is that being a bit more
overpriced, how many people will come to dine in such a restaurant that serves fried chicken
which can be purchases elsewhere. At the moment it is located in the major cities of Ho Chi
Minh City and Hanoi where the costs of living and its standards are higher. From
observation, it can be more successful if celebrities were to endorse the product as it is done
in Korea for Vietnamese enjoy their media and entertainment.
B. Major problems and resistances to product acceptance based on the preceding
evaluation.
36
Market research company Nielsen estimates Vietnam’s fast food industry will grow by
40 percent this year to generate VND500 billion (US$28.1 million).lxxxiii With the fast food
industry on the rise and more restaurants opening, it can cause a problem of containing its
customers. With these fast food restaurants holding the niche market, expanding of BBQ
chicken may take some time.
III. The market.
A. Describe the market(s) in which the product is to be sold.
1. Geographical region(s).
BBQ is currently in Hanoi and is planning on an expansion throughout Vietnam.
2. Forms of transportation and communication available in that (those) region(s).
Vietnam has many modes of transportation to offer throughout the country. In the city
of Hanoi, the available transportations are taxi cabs, taxi motorcycles, cars, and buses.
3. Consumer buying habits.
Consumer’s buy food according to their hunger. BBQ chicken is just another
alternative to the typical fast food offered by KFC, Jollibee, Lotteria. The environmental
change relates to the family like restaurant atmosphere that people may enjoy.
4. Distribution of the product.
a. Typical retail outlets.
BBQ chicken is retailed throughout the city of Hanoi. It is located on along the
streets near other businesses as other restaurants are.
b. Product sales by other middlemen.
There is no direct information regarding middlemen of ingredients and retailers for
BBQ chicken. Regarding rice farmers and their middlemen issues are different. “Rice
grown by the farmers currently passes through the hands of traders, processors, 37
wholesalers/food companies, and retailers before reaching consumers.”lxxxiv The process
is heavily taxed and a long process is taken place due to the delivery of driving through
the rural areas of Vietnam to get to the farmers locations. If the middlemen are to take
much benefit from rice farmers throughout Vietnam, the chicken industry may be facing
similar relations however not as extreme due to no processing is involved.
5. Advertising and promotion.
a. Advertising media usually used to reach your target market(s).
“With music blaring out from loudspeakers and hip looking staff in colorful
uniforms outside distributing fliers, it was obvious what market they were aiming
for.”lxxxv Along with the colorful uniform of the hip looking staff, other forms of
advertisements are available. BBQ chicken is advertised through print, word of mouth,
television commercials, and radio broadcasting.
b. Sales promotions customarily used (sampling, coupons, etc.).
According to www.bbqchickenusa.com the section regarding coupons is not yet
available leading to information that discount coupons or other sources of discount are
not yet available.
6. Pricing strategy.
a. Types of discounts available.
According to www.bbqchickenusa.com the section regarding coupons is not yet
available leading to information that discount coupons or other sources of discount are
not yet available.
B. Compare and contrast your product and the competition's product(s).
1. Competitor's product(s).
a. Brand name.
KFC
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b. Core Value Proposition
“To sell food in a fast, friendly environment that appeals to pride conscious, health
minded consumers” (www.kfc.com)
c. Features.
A long history with success of its products and sales worldwide.
2. Competitor's prices.
Chicken price is similar, differs by spices.
3. Competitor's promotion and advertising methods.
KFC is a worldwide known fast-food chain. They advertise their products through
various methods. Their promotion and advertising methods include television commercials,
color fliers depicting what food they offer, newspaper, movies, and most importantly the
world famous Colonel Sanders revenue many customers.
4. Competitor's distribution channels.
C. Market size.
1. Estimated industry sales for the planning year.
No estimated industry sales for the planning year however, the main competitor is
expected to open more franchise stores across Vietnam.
2. Estimated sales for your company for the planning year.
No estimated sales for BBQ chicken for the planning year. However, “BBQ Chicken
now has 10 restaurants in Hanoi and there will be over 30 in Vietnam by the year’s end and
more than 100 by 2010.”lxxxvi With such an increase of stores by the end of the year, one can
only conclude the success that it is having throughout the country.
D. Government participation in the marketplace.
1. Agencies that can help you.
The Ministry of Industry and Trade allows for franchises to run and operate in Vietnam.
39
2. Regulations you must follow.
“The State shall implement a uniform system to control the quality of goods, based on
[the laws of Vietnam]; in cases where international treaties to which the Socialist Republic of
Vietnam is a party contain provisions which differ from the provisions of the Ordinance, the
provisions of such international treaties shall be applied.”lxxxvii
IV. The market entry plan.
BBQ chicken already made MOU for Master Franchising with Vietnamese government.
Which means they are already entered Vietnam market in certain form. Master Franchising
A. Marketing objectives.
1. Target market(s) (specific description of the market).
BBQ Chicken should focus on middle class which has purchasing power. As BBQ chicken
uses the best ingredients for their food, and advertises it, products are expensive. Currently, as
more and more foreign business is entering Vietnam, people willing to pay more money on
one meal. KFC’s main target is middle-class who adores U.S way of life.lxxxviii For BBQ is
Korean chicken company, BBQ chicken has to promote that in Vietnam. As there are growing
number of Vietnamese who adores Korean way of life due to ‘Korea wave’, result of
popularity of Korean soap operas, BBQ chicken has relative advantage to approach
Vietnamese customers. Currently there are approximately 11million people living in two
major cities of Vietnam and the number is rising sharply, which gives BBQ chicken
opportunity to expand in those cities.
2. Expected sales 20—.
BBQ chicken is turning themselves into café style restaurant then just chicken delivery
shops. BBQ chicken is selling variety of different chicken related food to from fried chicken
to chicken burger and chicken breast with fried rice. Sales of franchisees that are operating in 40
Vietnam differ from 30million Korean Won to 60million Korean won a month.lxxxix Sales of
whole fast-food industry in Vietnam was $28million (USD) and its growing at fast pace of
35~40% annually.xc As sales are growing rapidly, competitors have plans to open more shops.
As BBQ chicken made MOU for Master franchising, they are waiting for more franchisee to
make contract with them, which can slow down expansion in Vietnam market.
3. Profit expectations 20—.
As BBQ chicken is master franchise in Vietnam, it collects loyalty and supplies food in
Vietnam. Profit of BBQ chicken relies on number of franchisees in Vietnam. However, more
people are interested in becoming franchisee of BBQ chicken in different cities of Vietnam so
the future looks bright.xci
4. Market penetration and coverage.
Currently fast-food industry in Vietnam, particularly chicken, is dominated by KFC with
most outlets. It is rather expensive food compare to that of Vietnamese restaurants for locals.
Vietnamese college students spend 15,000VND for their lunch at school cafeteria. However,
piece of chicken in KFC is 22,000VND, which is high price. However, Vietnamese enjoy
eating American-style chicken for their long for American way of living. A piece of chicken
in BBQ chicken is at the same range with KFC. Fried chicken is pretty common in Vietnam
for KFC has been in Vietnam for 13 years, giving advantages like brand recognition.xcii
Although BBQ chicken emphasizes in healthy ingredients, using best olive oil to fry chicken.
BBQ chicken is a new phenomenal to those concerning health and has potential to create
value using Korean stars who are celebrities in Vietnam.
B. Product adaptation or modification
1. Core Value Proposition
BBQ chicken’s core value is to provide healthy food. Although it is considered as fast-
food, BBQ chicken is using healthier ingredients from that of competitors.xciii They are
41
differentiating themselves with other competitors by selling healthy fast-food. Also BBQ
chicken is well-known for their aggressive marketing. BBQ chicken has the most outlets in
Korea and that can be advantage in Vietnam.
2. Core component.
As BBQ chicken is already operating in Vietnam, it is time for BBQ chicken to diversify
its menu. BBQ chicken is doing fine with current menu but as Vietnamese consider chicken
as meal rather than snack, BBQ chicken should come up with more ‘meal menus’. Also to
attract those focusing on ‘health’, it will diversify BBQ chicken’s menu if they add salads.
To approach customers who already know that BBQ chicken is a chicken franchise, they
have to appeal that they are not just chicken place but family restaurant. Introducing menus
that already exist in Korea BBQ chicken headquarters would help them greatly to do so.
3. Packaging component.
As BBQ chicken not only serves in the store but also delivers their food, packaging is very
important. In the packaging Vietnam government does not require to put ingredient’s country
of origin but BBQ chicken should do it as they are confident that they are using the best
ingredient. They should write not only that but also telephone number and address of the
outlet and should write in Vietnamese, Korean, and English.
4. Support services component.
Supporting service can be the delivery service, mentioned earlier. Purpose of delivery is
for the comfort of the customer. As Domino or Pizzahut is doing in Korea, BBQ chicken
should deliver on-time. Dominos in Korea once had this policy that if they deliver later than
30 minutes, they will not take the money. Also Pizzahut has system called ‘hot box’ that they
deliver pizza while it’s still hot. BBQ chicken should implement these systems and come up
with similar one. It not only satisfy customer but it promotes the brand just by doing this
service.
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C. Promotion mix.
1. Advertising.
Advertising is important when brand recognition is low. BBQ chicken should support its
franchisees by doing television commercials and posting ads on Vietnamese famous internet
community. Right now, BBQ chicken’s Korean television commercials are using celebrities
that are famous in South East Asiaxciv. If they change the contract a bit, they can use it in
Vietnam as well. Also handing out flyers and magnetic ones can also help advertising BBQ
chicken.
2. Sales promotions.
BBQ chicken is promoting itself to be café type restaurant that sells chicken based food.
However, it is important that they emphasize in delivery as a method of approaching
Vietnamese customers. Also when they come up with the new product, sampling can be very
effective. When customer orders food that they usually eat, they can give a piece per person
to try it out. They can get the reactions in advance before actually releasing it.
3. Personal selling.
Personal selling can also be defined as relational selling. It is an old method in marketing.
As DHL Korea’s logistic drivers are first person that can make relationship with the
customer, they are trained to be at their best behavior. Likely, BBQ chicken’s delivery man is
the first one to meet customer. Making bonds with customer is always good thing when it
comes down to business. Relationship with customer result-in high return rate. Training
employees and also franchisee would be crucial for BBQ chicken’s success in Vietnam.
D. Channels of distribution (micro analysis).
1. Retailers.
Right now, most fast-food restaurants in Vietnam are in outlets of big retail giants. Of
course they have few independent shops of themselves in famous shopping streets and so, but
43
most of the times it’s located inside the mart or stations. However, as BBQ chicken like to
call itself a café type family restaurant, it is located near residential area. It can be also
convenient for deliveries. However, to go as restaurant, BBQ chicken should expand into
down town or areas where offices are. White collars are new middle class in Vietnam. They
are well educated and get paid more than blue collars. They are making more money than
others so it is likely that they are to spend more money on their meals. If they are attracted to
meals that BBQ chicken offers, they will order chicken in their house or go to store nearby.
There is no need for BBQ chicken to enter big marts, but they need to expand into
downtown areas.
2. Warehousing.
a. Type.
BBQ chicken has its own supply chain called Genesis food. They are headquartered in
Korea, and they supply ingredients to all Genesis related outlets, including BBQ chicken.
When they are supplying, they use Genesis Logistics, also company associated with Genesis
Group. It would be easier to understand that they supply ingredients that outlets need so
warehouse is not needed.
E. Price determination.
Currently BBQ chicken is expensive. Prices differ by 1 or 2,000 VND but it is around
22,000 VND.xcv BBQ chicken does not have to use low cost strategy for there are people who
are willing to pay for the quality food. KFC is around that price range as well.
V. Pro forma financial statements and budgets.
A. Marketing budget.
It differs by time and length but 15second TV commercial in Vietnam is $10,000 a
month. Also to post advertisement on local paper costs $20 a month. Assuming that same 44
commercial that is on air in Korea is used in Vietnam, it will require at least $30,000 for TV
commercial in 3 different channels and $200 to advertise in different papers. Also as BBQ
chicken considers South East Asia market as Asia-Pacific, they can advertise on MTV which
price is unknown as they negotiate privately.
B. Pro forma annual profit and loss statement (first year and fifth year).
As an example of BBQ chicken franchisee whose already in Vietnam, sales was 60million
Korean won a month from the first year. Also as BBQ chicken just collects loyalties, there are
fewer threats to lose money.
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IX. Sources of information.
46
i http://www.mapsofworld.com/country-profile/information-on-vietnam-its-geography-and-history.htmlii http://www.asiarooms.com/travel-guide/vietnam/vietnam-overview/vietnam-climate.htmliii http://www.irinnews.org/report.aspx?ReportID=88362iv http://summervietnam.com/aboutvietnam.htmv http://www.haivenu-vietnam.com/vietnam-geography-topography.htmvi http://www.guardian.co.uk/world/2008/nov/22/vietnam-populationvii http://countrystudies.us/vietnam/41.htmviii http://www.country-data.com/cgi-bin/query/r-14658.htmlix http://countrystudies.us/vietnam/41.htmx http://www.business-in-asia.com/vietnam/education_system_in_vietnam.htmlxi http://www.business-in-asia.com/vietnam/education_system_in_vietnam.htmlxii http://www.business-in-asia.com/vietnam/education_system_in_vietnam.htmlxiii http://en.wikipedia.org/wiki/Politics_of_Vietnamxiv http://english.vietnamnet.vn/reports/2008/02/767896/xv http://www.nationsencyclopedia.com/Asia-and-Oceania/Vietnam-LOCAL-GOVERNMENT.htmlxvi http://www.vietnamembassy-usa.org/learn_about_vietnam/politics/government_structure/xvii http://www.wincolaw.com.vn/en/guide_ip_vietnam.htmlxviii http://docs.google.com/viewer?a=v&q=cache:qJRvQfCy3ggJ:vjol.info/index.php/vss/article/viewPDFInterstitial/268/218+social+classes+in+vietnam&hl=ko&gl=kr&pid=bl&srcid=ADGEESgmMUV6w0ibbjsr037yqRJeGMlgpBfTshBsK72-Sj7gTwPNiBjCsDhin_FXpxZ44JsUB-FRD6cf6eftsDkVodJwaktOgtlUNhUXTYu0DZqBt3FfOdO7P1T89r79-EnskRogWcbI&sig=AHIEtbRVrP2kuwIZMT5GncqkBTJN10JLFQxix http://www.chinhphu.vn/portal/page?_pageid=439,1093354&_dad=portal&_schema=PORTALxx http://www.kwintessential.co.uk/resources/global-etiquette/vietnam.htmlxxi http://www.asianinfo.org/asianinfo/vietnam/pro-religion.htmxxii http://www.asiarooms.com/travel-guide/vietnam/culture-of-vietnam/-religion-in-vietnam.htmlxxiii http://earthtrends.wri.org/searchable_db/results.php?years=1990-1990,1991-1991,1992-1992,1993-1993,1994-1994,1995-1995,1996-1996,1997-1997,1998-1998,1999-1999,2000-2000,2001-2001,2002-2002&variable_ID=193&theme=8&cID=195&ccID=xxiv http://xttmnew.agroviet.gov.vn/en/stories/TinTiengAnh/BC_TA/Vegetable_consumption.pdfxxv http://faostat.fao.org/site/368/DesktopDefault.aspx?PageID=368#ancorxxvi http://www.foodbycountry.com/Spain-to-Zimbabwe-Cumulative-Index/Vietnam.htmlxxvii http://www.lookatvietnam.com/2010/01/vietnam-aims-to-reduce-malnutrition-rates-this-year.htmlxxviii http://pfcmc.com/ga/habitat/statements/docs/vietnamE.htmlxxix http://www.iut.nu/Facts%20and%20figures/Asia/2009/Vietnam_NeedForSocialHousing_2009.pdfxxx http://www.asiarooms.com/travel-guide/vietnam/things-to-do/sports-in-vietnam.htmlxxxi https://www.appam.org/conferences/international/singapore2009/sessions/downloads/1441.docxxxii http://www.vietnamembassy-usa.org/news/story.php?d=20001019013739xxxiii http://www.asiarooms.com/travel-guide/vietnam/vietnam-overview/vietnam-language.htmlxxxiv http://www.kwintessential.co.uk/resources/global-etiquette/vietnam.htmlxxxv http://www.vietnamembassy-seoul.org/en/nr070521165843/nr070724011651/ns080123100337xxxvi http://cafe.naver.com/tgahn2243.cafe?iframe_url=/ArticleRead.nhn%3Farticleid=5479xxxvii http://www.prb.org/Countries/Vietnam.aspxxxxviii http://www.google.com/publicdata?ds=wb-wdi&met=sp_pop_grow&idim=country:VNM&dl=en&hl=en&q=population+growth+rate+of+vietnamxxxix http://www.nationsencyclopedia.com/Asia-and-Oceania/Vietnam-MIGRATION.htmlxl http://actamont.tuke.sk/pdf/2000/n2/10kusnir.pdf
xli http://www.asiarooms.com/en/travel-guide/vietnam/useful-information/vietnam-communications.htmlxlii http://www.asiarooms.com/en/travel-guide/vietnam/useful-information/vietnam-communications.htmlxliii http://en.wikipedia.org/wiki/Telecommunications_in_Vietnamxliv http://en.wikipedia.org/wiki/Telecommunications_in_Vietnamxlv http://www.indexmundi.com/vietnam/telephone_system.htmlxlvi http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Vietnam-WORKING-CONDITIONS.htmlxlvii http://www.vietnam-ustrade.org/index.php?f=news&do=detail&id=35&lang=englishxlviii http://www.gso.gov.vn/default.aspx?tabid=392&idmid=3&ItemID=8700xlix http://vietnambusiness.asia/private-sector-growth-not-matched-by-quality/l http://www.business-in-asia.com/vietnam_economic_data.htmlli http://www.vietpartners.com/statistic-fdi.htmlii http://www.vfr.vn/focus/top-10-financial-and-economic-features-of-2009-4.htmlliii http://www.mof.gov.vn/Default.aspx?tabid=5991&ItemID=59186 appendix 13liv http://findarticles.com/p/articles/mi_m1584/is_n7_v5/ai_14990596/lv http://www.buyusa.gov/vietnam/en/vietnam_trade_regulations.html#_section1lvi http://www.indexmundi.com/vietnam/unemployment_rate.htmllvii http://www.indexmundi.com/vietnam/inflation_rate_(consumer_prices).htmllviii http://www.thanhniennews.com/2010/Pages/20100523164606.aspxlix http://en.wikipedia.org/wiki/Vietnam_Union_of_Science_and_Technology_Associationslx http://vusta.vn/vusta/English/news_par.asp?id=99&18061984=99lxi http://www.chinhphu.vn/cttdtcp/vi/cpchxhcnvn/solieungansach/2009/dutoan8.htmllxii http://www.mof.gov.vn/Default.aspx?tabid=5991&ItemID=59186 appendix 16lxiii http://www.cnet.com/4520-13653_1-6796556-1.htmllxivhttp://peligotraining.com/CourseDetails/20100319%20Vietnam%20Retail%20and%20Distribution%20_BKK_.pdflxv http://www.just-food.com/analysis/foreign-retailers-get-ownership-boost_id104923.aspxlxvi http://www.marketresearch.com/product/display.asp?productid=2401697lxvii http://money.cnn.com/2006/05/09/news/economy/retail_vietnam/index.htmlxviii http://www.just-food.com/analysis/foreign-retailers-get-ownership-boost_id104923.aspxlxix http://www.buyusa.gov/vietnam/en/market_promotion_penetration.htmllxx http://www.vir.com.vn/Client/VIR/index.asp?url=content.asp&doc=19726lxxi http://www.marketresearch.com/product/display.asp?productid=2401697lxxii http://www.regoverningmarkets.org/en/news/se_asia/big_cs_big_stores_to_hit_central_vietnam.htmllxxiii http://www.wholesalersnetwork.com/merchandise/vietnamese/index.htmlxxiv http://www.buyusa.gov/vietnam/en/market_promotion_penetration.htmllxxv http://www.buyusa.gov/vietnam/en/market_promotion_penetration.htmllxxvi http://vietnamexportsimports.com/index.php?start=7lxxvii http://www.buyusa.gov/vietnam/en/market_promotion_penetration.htmllxxviii http://aseancooperation.com/business-and-market-overview-of-vietnam/284/lxxix http://www.vfr.vn/feature/megastar-new-heights-in-price-and-quality-2.htmllxxx http://en.wikipedia.org/wiki/Media_of_Vietnam#Televisionlxxxihttp://www.vietnewsonline.vn/News/Business/6032/Foreign-giants-dominate-fast-food- market.htm
lxxxii http://www.vietnewsonline.vn/News/Business/6032/Foreign-giants-dominate-fast-food-market.htmlxxxiii http://www.vietnewsonline.vn/News/Business/6032/Foreign-giants-dominate-fast-food-
market.htmlxxxiv http://xttmnew.agroviet.gov.vn/TestE/load/tn-spec-nodate-detail.asp?tn=tn&id=248059lxxxv http://www.vir.com.vn/Client/TimeOut/index.asp?url=content.asp&doc=16681lxxxvi http://www.vir.com.vn/Client/TimeOut/index.asp?url=content.asp&doc=16681lxxxvii http://www.amchamvietnam.com/1065lxxxviii http://www.buyusa.gov/asianow/vfranchising.htmllxxxix MBC Program ‘잡지왕’ broadcasted in 16th May, 2007xc http://www.globalintelligence.com/insights-analysis/asia-news-update/asia-news-update-august-28-2009/vietnam-foreign-companies-dominate-vietnam-s-fast-/xci http://www.vinahanin.comxcii http://news.vneconomy.vn/2010041603283251P0C1/for-your-dining-pleasure.htmxciii http://www.genesisbbq-ap.com/olive_oil.htmlxciv http://www.lanclip.com/watch-FPgZEamRPR0/wonder-girls-bbq-chicken-gold-cf-full-30s-ver1.htmlxcv http://blog.naver.com/pooky34?Redirect=Log&logNo=40094849120
