By Tran Thu – The Saigon Times Daily (Wednesday, June 13,2012,21:27 (GMT+7))
HCMC – Compared to other Asian nations, franchising activity in Vietnam has remained flat but the country is expected to become a potential destination for international franchisers due to tough market conditions in their countries, heard a seminar in HCMC on Tuesday.
Since the first foreign franchisers such as the Philippines’ Jollibee, KFC and Lotteria entered the country in the late 1990s, Vietnam has now had 96 foreign brands franchised, show figures at the seminar organized by the Ministry of Industry and Trade and the USAID Star Plus project.
However, this number is still small compared to Japan and China with over 2,600 brands, or India, the Philippines and Australia with more than 1,000 brands.
Franchising in Vietnam is an untapped potential, Nguyen Ba Binh at Australia’s New South Wales University told the seminar. Echoing Binh’s view, Sean T. Ngo, managing director of Vietnam Franchises Ltd., said franchising in the nation was holding great growth potential.
Sean attributed the meager number of franchise deals struck in Vietnam to the fact that franchisers are mainly large companies with a focus on new emerging markets with larger populations like China and India. This kind of activity is still new in Vietnam, so it is difficult for foreign franchisers to seek appropriate local partners.
Moreover, Vietnamese suppliers are yet to provide input material meeting international standards, forcing franchisees to import most of materials as a result. High import costs along with mounting retail space rents have cut into profits of franchisers and franchisees, thus discouraging foreign traders from entering the local market.
Vietnam has already launched related regulations on franchises such as the 2005 Commercial Law, Government Decree 35 of 2006, Circular 09 of the Ministry of Industry and Trade of 2006, and Decision 106 of the Ministry of Finance of 2006.
As the prevailing rules are quite sufficient, there is no need to issue more new regulations on franchising activity, law experts told the seminar.
(The Saigon Times: http://english.thesaigontimes.vn/Home/business/other/23972/)