Wednesday, June 4, 2008
Vietnam: Top Destination for Retail Investment & Franchising
Vietnam has moved into first place as the most attractive emerging market destination for retail investment according to global management consulting firm A.T. Kearney and will be a global hotspot for franchsing in 2009.
In the Global Retail Development Index (GDRI), a study of retail investment attractiveness carried out among 30 emerging markets, Vietnam moved up to replace India as the most attractive retail destination. "The critical factors that have powered Vietnam to the top of the index this year are rapidly growing per capita income of the Vietnamese consumer and drastically opening up of regulations for new entry. Now is the “perfect time” to get involved in Vietnam’s retail market, said Mike Moriarty, a partner with A.T. Kearney and co-leader of the GRDI.
While Vietnam 's 20-billion USD retail market pales in comparison to India or China, the absence of competition and 8 percent GDP growth make it an attractive expansion opportunity for global retailers, the study said. Moreover, Vietnamese consumers are among the youngest in Asia, with 79 million below the age of 65, and increased their consumer spending by more than 75 percent between 2000 and 2007, the firm added.
While Vietnam 's 20-billion USD retail market pales in comparison to India or China, the absence of competition and 8 percent GDP growth make it an attractive expansion opportunity for global retailers, the study said. Moreover, Vietnamese consumers are among the youngest in Asia, with 79 million below the age of 65, and increased their consumer spending by more than 75 percent between 2000 and 2007, the firm added.
Given the excellent prospects for retailing in Vietnam, franchising holds very high promise. This is especially the case due to reforms in franchising laws that allow foreign entrants in early 2009. Before the reforms of commercial law, a franchise was regarded as a type of technology transfer or licensing agreement and was governed by Decree No 45/CP/1998. The decree tended to have a freezing effect on the establishment of franchises, imposing a maximum royalty of 5% of net sales such that parties to franchise agreements were not free to agree a higher rate of return. Lack of confidence in IP rights protection in Vietnam also contributed to the concerns of foreign franchisors.
With the new commercial legal reforms Vietnam has developed a legal foundation for all aspects of franchising. The legal framework in conjunction with the strong economic performance make Vietnam a priority market for franchisers.
Published since 2001, the GRDI assesses the retail expansion attractiveness of emerging countries based on a set of 25 variables including economic and political risk, retail market attractiveness and retail saturation levels. The other top-10 countries are Russia, China, Egypt, Morocco, Saudi Arabia, Chile, Brazil, Turkey, Mexico and Algeria.
Labels: asia franchising, franchising, vietnam franchising, vietnam retail investment
Friday, May 23, 2008
The Asian Franchising Boom
Asia is undergoing a terrific boom in franchising.
The rise of the middle class in Asia and the growth of China and India has delivered more opportunities for franchising than ever in history. Consumer demand remains high for franchise offerings across Asia especially in high growth markets. The market is very receptive to franchises especially in conjunction with the boom in retail projects in Asia as well.
Here are just three key reasons to consider buying a franchise in Asia:
Lower Your Risk with a Proven Business System
It's a lot easier than starting a business from scratch. There are many complex factors involved in any small business and franchise systems provide the know-how and support for the business owner. In a 2001 survey conducted in Singapore, by the Singapore International Franchise Association, nine out of ten businesses which have franchised their operations have become more profitable. Systems alone can provide a solid basis for increased profitability which is a strong reason to consider franchising in Asia.
Asia's Consumer's Prefer Franchises
The evidence is tending to demonstrate that the retail boom in Asia has been very much a boom for franchises. The very high representation of local franchises in the Philippines, Malaysia, Korea and China to cater for consumer preferences demonstrates that there has been strong demand for franchises across the region.
The Economics
The solid economic growth in Asia represents a great opportunity for franchisers. The increase in the purchasing power of the Middle Class represents the underlying driver of franchise growth. As each economy develops, consumer demand will remain strong and franchisers will need to go where the market is going.
As always, it is a matter of choosing the right franchise. Review the listings at AsiaBusinessInvestor.com and see what is on offer.
In October this year the annual www.franchiselicenseasia.com will be on in Singapore from the 16th to the 18th of October. This event provides and opportunity to meet the various franchisers over the major event itself. It's worth going if you can make the effort.
We shall be providing some podcasts shortly with various franchisers in Asia and franchise consultants so stay tuned to listen to so interviews we will be doing on franchising in Asia.
The rise of the middle class in Asia and the growth of China and India has delivered more opportunities for franchising than ever in history. Consumer demand remains high for franchise offerings across Asia especially in high growth markets. The market is very receptive to franchises especially in conjunction with the boom in retail projects in Asia as well.
Here are just three key reasons to consider buying a franchise in Asia:
Lower Your Risk with a Proven Business System
It's a lot easier than starting a business from scratch. There are many complex factors involved in any small business and franchise systems provide the know-how and support for the business owner. In a 2001 survey conducted in Singapore, by the Singapore International Franchise Association, nine out of ten businesses which have franchised their operations have become more profitable. Systems alone can provide a solid basis for increased profitability which is a strong reason to consider franchising in Asia.
Asia's Consumer's Prefer Franchises
The evidence is tending to demonstrate that the retail boom in Asia has been very much a boom for franchises. The very high representation of local franchises in the Philippines, Malaysia, Korea and China to cater for consumer preferences demonstrates that there has been strong demand for franchises across the region.
The Economics
The solid economic growth in Asia represents a great opportunity for franchisers. The increase in the purchasing power of the Middle Class represents the underlying driver of franchise growth. As each economy develops, consumer demand will remain strong and franchisers will need to go where the market is going.
As always, it is a matter of choosing the right franchise. Review the listings at AsiaBusinessInvestor.com and see what is on offer.
In October this year the annual www.franchiselicenseasia.com will be on in Singapore from the 16th to the 18th of October. This event provides and opportunity to meet the various franchisers over the major event itself. It's worth going if you can make the effort.
We shall be providing some podcasts shortly with various franchisers in Asia and franchise consultants so stay tuned to listen to so interviews we will be doing on franchising in Asia.
Labels: asia, asia franchise, asia franchising, franchise, franchising
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