McDonald’s Supersizes its Business in Vietnam

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HCMC – According to reports out this week, the newly opened McDonald’s in Ho Chi Minh City (HCMC) has already served over 400,000 hungry customers.

The new location served its first burger on February 8th of this year. On its very first day open for business the restaurant served over 22,500 customers within 24 hours.

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McDonald’s is not the first western brand to enter Vietnam, Burger King, Starbucks, KFC and various other brands are already here.  However, the success of McDonald’s new restaurant dwarfs the openings of all the other western brands.  It would seem that the golden arches allure knows no borders.

McDonald’s is following its franchise model as it expands into Vietnam.  The owner of this first franchise in HCMC is the Prime Minister’s son-in-law, Henry Nguyen.  Interestingly, Mr. Nguyen even worked in a McDonald’s when he was young and living in the United States.

Mr. Nguyen expressed his delight at the explosive growth of his business which has surpassed even the sky-high expectations he previously held.

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Unlike in many western countries where McDonald’s has lost some of its luster, the new restaurant in HCMC is viewed by many as being an exciting and superior place to eat. McDonald’s is also an aspirational symbol for many Vietnamese – the average wage in Vietnam is around US$150 a month, whereas the cost of a Big Mac in HCMC is US$2.82.

The amazing success of McDonald’s in Vietnam also points to the growing strength of the country’s consumer class and the ever-increasing amount of young people entering the workforce.

Besides its growing consumer class, one of the key attractions of Vietnam for western brands has been the Vietnamese government’s efforts to loosen investment restrictions.

Buoyed in part by businesses like McDonald’s, HCMC has seen strong growth during 2014.  Over the previous two months, HCMC has seen its sales and services revenue amount to slightly over US$4.9 billion (VND 103 trillion). This is an 11.8 percent increase over the same period last year.

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Alongside this trend, the city has seen a year-on-year (Y/Y) increase of 14.7 percent in its level of exports, earning around US$1.8 billion during the month of February.

Consumer confidence continues to climb steadily throughout the country.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam in addition to alliances in Indonesia, Malaysia, Philippines and Thailand as well as liaison offices in Italy and the United States.

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