The Vietnamese fashion market has been the subject of increased attention among international groups, which are looking to enter Vietnam through franchising arrangements.
At a one-day event held last week at the japan External Trade Organisation (JETRO) Office in Ho Chi Minh City, a group of more than 10 Japanese fashion giants introduced their wares to potential Vietnamese partners. These firms include Isato Design Works; In Design Lab; M-Trading, Inc; Kobe Leather Cloth Co., Ltd.; T-Three Co., Ltd; and Sachiyo Hayashi Beauty Laboratory Co.; Ltd. They all aim to open franchise stores in Vietnam in the future.
This event was the first of its kind held by JETRO Office in Ho Chi Minh City, targeting Vietnamese companies which have already organised franchising deals or are interested in such deals in the future. In total, 30 Vietnamese firms attended.
Maison Fashion Group and Imex Pan Pacific (IPP Group) are the most prominent Vietnamese firms to form franchise deals with international brands, but more look to be on the way.
In recent years, Japanese firms have invested in many service-related projects in Ho Chi Minh City. This market is expected to develop even more in the future. “In addition, Vietnam is home to specific regulations on foreign investment and trading habits, thus penetrating this market via co-operative agreements with local partners is an optimal choice”, said Teramoto Ukai, a JETRO official.
Japanese electronic products and consumer goods have long been famous in Vietnam for their quality. And now, Japanese firms want to tap into the local fashion market, which is growing at an annual rate of 10%-15%.
Miniso, a leading Japanese lifestyle brand, is one of the latest firms to connect with Vietnamese market. In April 2016, Miniso signed a franchise deal with le Bao Minh Group.
“Vietnam has growing consumer demands, thanks to rising incomes and [interest in] global trends. In addition, Vietnam is considered to be one of the 10 Asian retail markets with the fastest growth. The important thing is how to select brands and partners to cash in on the potential”, said Le Thi Ngoc Hai, chairwoman of Le Bao Minh Group.
Miniso, which has been franchised successfully in the Republic of Korea, Malaysia, China, the Philippines, and Thailand, opened its first three stores in Hanoi in August 2016. It plans to have 13 stores in-country by the end of 2016, between Hanoi, Ho Chi Minh City, Danang, Nghe An, Can Tho, and Haiphong, Hai added.
This franchising path follows a greater franchising trend in Asia. Along with the food and beverage sector, healthcare, education, and retail, fashion in Vietnam has attracted many famous global brands.
The UL’s Monsoon Accessorize entered the Vietnamese market in 2009 after signing a franchise deal with Maison, and has since opened three stores nationwide. Spain’s Mango, which also has Maison as its franchise partner, opened its first local Mango store in 2004 and now has 10 stores in Ho Chi Minh City and Hanoi.
In 2011, the UK’s Karen Millen entered Vietnam in partnership with Maison, and now has stores in Hanoi and Ho Chi Minh City. That same year, France’s Christian Louboutin entered the local market, with one store in Ho Chi Minh City.
Singapore’s Charles & Keith and the UK’s Topshop also appeared in Vietnam via franchise deals. Charles & Keith now has seven stores in Vietnam after six years in the local market, while Topshop has one store in Ho Chi Minh City. In another case, IPP Group, owned by Jonathan Hanh Nguyen, has also been a favoured franchise partner for international fashion groups, including Italy’s Bulgari S.p.A., the US’s GPS Strategic Alliances with Gap and Banana Republic, and the UK’s Warehouse. They each have opened three stores in Vietnam.
Zara, a famous Spanish clothing and accessories retailer, officially opened its first store in Vietnam in early September 2016. The opening was wildly successful- on its opening day, it chocked up around VND5.5 billion (US$251,000) in revenue.
According to a source from Zara, it plans to open a chain of seven stores in Vietnam in the future, including two in Hanoi in 2017.
Photo: CBR Investment AG