Foreign coffee chains close, lack understanding of Vietnam’s culture

Some foreign cafe chains, with powerful financial capability and strong brands, have left Vietnam, but many Vietnamese chains have been prospering.

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Arriving in Vietnam seven years ago, NYDC, a European-American style coffee & desserts chain, planned to open 20 shops within five years with investment capital of $300,000 for each shop.

However, the Singaporean-owned shop decided to leave Vietnam.

TNS, a market survey firm, commented that the closure of NYDC has raised a debate about the competitiveness of international brands in the market. 

Analysts commented that NYDC had to leave Vietnam because of the high retail premises rents in large cities. 

Meanwhile, Vietnamese consumers are getting choosier and NYDC has to compete with Vietnamese owned chains such as Tay Nguyen, Phuc Long, The Coffee House, Urban Station, Trung Nguyen and Kafe.

NYDC is not alone. Some other well known brands such as Burger King and Gloria Jeans & Tea Leaf also have left Vietnam or scaled down their operation.

Hoang Tung, a branding expert, said the Vietnamese chain owners’ have a good understanding of Vietnamese consumers’ habits and culture.

“Every Vietnamese coffee chain has its own special characteristics which help them compete well with foreign big guys,” Tung said.

Agreeing with Tung, an analyst said though foreign chains are experienced and powerful, they have a weak point – the high selling price.

“This explains why Vietnamese go to foreign cafes several times a month, but go to Vietnamese cafes every day,” he explained.

Great opportunities for Vietnamese-owned chains?

The departure of some foreign competitors from the Vietnamese market is believed to bring great opportunities to Vietnamese investors. 

However, it is still too early to say whether the Vietnamese business model has advantages over the foreign one.

Ly Truong Chien, president of Tri Tri Group, a branding expert, commented that while Vietnamese investors have advantages because they understand Vietnamese culture and customers’ habits, foreign chains are better in chain management and services.

Hoang Thanh Thuy, who said he ‘cannot live without coffee’, commented on an internet forum that the difference between foreign-owned and Vietnamese-owned coffee chains is style.

“Vietnamese like going to cafes in groups of many people, stay there for hours and those who invite friends pay the bills. At European style cafes, customers drink coffee quickly, pay themselves and rush to go back to work,” Thuy said.

Vietnamnet

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