Tuesday, September 16, 2014

The Rise of Big Mac in Vietnam

For those who are craving for McDonald’s Big Mac and French Fries in Vietnam, those cravings can now be satisfied with the franchise’s inaugural opening in Ho Chi Minh City, also affectionately known as Saigon by the locals. 

The man behind the brand’s introduction into the Vietnamese market is none other than Henry Nguyen. To watchers of Vietnamese politics, he is instantly recognizable as the son-in-law of Vietnam’s powerful Prime Minister Nguyen Tan Dung.

The new entrant joins the likes of other Western and Asian fast food conglomerates, namely, KFC, Burger King, Pizza Hut, Lotteria and Jollibean jostling for a share of the fast-growing Vietnamese consumer market. This is a reflection of the country’s rapidly changing landscape - there was no access to American products 4 decades ago when the US-backed government fell to the communist troop. Due to the liberalisation of its economy in the 1990s, Vietnam saw an influx of western brands in its food fast industry that was once limited to low cost traditional fast food. 

The international chain has already served over 400,000 customers and 61,980 Big Macs in its first month of operations. A stellar performance by any measure, in a sector which is projected to grow at an average 15% this year. With such promising statistics in the midst of fierce competition, it is no wonder that McDonald has plans to open 100 branches across the nation. Some also see this wave as a sign of Vietnam’s rising affluence which is demonstrated by an average economic growth rate of 7% over the last 10 years – one of the fastest in Asia.

The American fast food company reported in July 2014 that profits fell more than expected in the wake of weak U.S and Europe sales while Asia-Pacific, Middle East and Africa increased by 1.1%. In our opinion, expanding its foothold in rapidly developing consumer markets with a growing middle class, is perhaps the best way forward for well-established and mature brands such as McDonald to increase its margins. Vietnam, so far, seems poised to be a big success story.

Monday, February 3, 2014

Indonesians and the rise of Indonesia

Your correspondent went to Yogyakarta a couple of weeks ago for a short getaway weekend. The purpose of the trip was to visit the city and its famous Batik workshops as well as the two Unesco-listed temples of Borobudur and Prambanan. What actually happened is that besides adding two more sites to my list of Places To See in 2014, I got a true insight into the Indonesian economy and potential for development.

Let me explain. Yogyakarta is a city of over 630,000 inhabitants (as of 2012) in Indonesia’s largest and most populated island of Java. It was the capital of the Mataram Sultanate between 1575 and 1640, and was briefly the political capital of Indonesia during 1945 to 1949 before the title returned to Jakarta. Today, the city remains the island’s centre of classical Javanese fine art and culture such as batik, ballet, drama, music, poetry and puppet shows. Geographically, Yogyakarta rests in a plain surrounded by high volcanoes and is centred around the Kraton, or Sultan’s palace.

A stroll on the main street of Jalan Malioboro (which for a number of years was overlooked by a giant commercial poster by Marlboro, who decided to play on the similarity of the names to advertise its cigarettes) brings out a number of resemblances to other cities in Indonesia and Java. One is that the country is developing rapidly and that rural populations are moving to cities in mass while large numbers are coming out of poverty and entering the middle class segment. While newly arrived populations cluster in hastily built slums made of corrugated metal sheets and wood, in Yogyakarta thousands of others are little by little building sustainable homes with concrete bricks and glass windows, creating neatly organised neighbourhoods and establishing deep-tied communities. Sweeper, ojek (motorcycle taxi) or cycle tuk tuk driver, shop owner, street food cook – all are hard at work and contributing to the development of Southeast Asia’s largest economy. Another impression is that in Java, Batik remains a highly worn design and that most Javanese still wear it daily; men can be seen with short-sleeved brown or maroon patterns while a lot of women still wear the traditional kemben or torso wrap. In Yogyakarta, the strong presence of Batik workshops and the city’s historical attachment to Batik means that the Batik designs have evolved to appeal to a younger, more trend-oriented customer segment, with Batik-covered baseball caps, backpacks and purses covering stalls along main streets.

While visiting Borobudur and Prambanan, two other elements stand out. As a foreigner from Europe strolling around two of Indonesia’s most visited sights on a Sunday morning, your correspondent was arrested no less than a few dozen times by local school children and students looking to speak and improve their English, exchange impressions on Indonesia and pose for a picture. Two things are to be noticed here. First, it is impressive to witness the level of education millions of young people are accessing across Indonesia today. Most youngsters I spoke to had learnt English for a number of years already and knew how to have a simple conversation with a foreigner, asking name, country of origin, things liked about Indonesia. Most also fully understood the benefits of speaking English in building a career in the future. All across Indonesia, students are graduating from high school with a level of English which even some developed countries could envy. Second, all the school children I posed for a photo with took the photo... with a smartphone. What was once considered a unaffordable electronic item is slowly becoming mainstream, used to whatsapp, Facebook (with 64m active users, Indonesia is Facebook’s largest market in Asia-Pacific), email as well as make money payments and transfers.

Witnessing the economic emergence of a country happens in many ways, but sometimes, as in Indonesia, a close look at the locals, their work activities, hobbies and attire is quite sufficient.