Although franchising has just entered Vietnam, it has been applied at 70 business systems of various fields, with networks of stores operating effectively.According to several economic experts, Vietnam can quite apply this form and develop it to serve economic development goal and optimise trade operation efficiency in the future. Vietnam Business Forum had an interview with Mr. Vo Van Quyen – Vice Director of Domestic Market Policy Department, the Ministry of Trade.
There is a comment that in the coming time, franchising will enjoy a boom in Vietnam. What is your opinion on this matter?
Firstly, we must recognise franchising as an effective form of business for enterprises. That many companies such as Trung Nguyen and King Do currently apply this form successfully is proof that it works. With close linkages, both franchisees and franchisors see benefits, and more importantly, their combined efforts in competition with big companies operating in the same field. Therefore, this is a suitable form of business for us in a period when Vietnam needs to gather resources from small- and medium-sized enterprises to enhance the competitiveness of the economy in international economic integration. Of course, enterprises are very sharp in applying effective business forms.
So, I think that there are an increasing number of enterprises participating in this form of business and its fast development in the time to come is understandable.
However, this means that foreign distribution corporations will quickly occupy the Vietnamese market, which will make the domestic distribution system that is still weak suffer more pressure. Because of the very reason, the Ministry of Trade has launched the 2006-2010 domestic distribution development strategy although it has been said that it is late?
Integration and opening the market are indispensable. Working out a domestic trade development strategy to pave the way for establishing a good distribution system in order to catch up with the integration process are two consensus steps without contradiction. Referring to which brands, items and distributors should enter Vietnam and how they can perform depends on the commitment roadmap of Vietnam with countries in negotiations for WTO’s membership.
Therefore, the 2006-2010 domestic distribution development strategy is a short-cut strategy, ensuring the development of the domestic distribution market with participation from both domestic and foreign enterprises in a healthy competitive environment. Besides, whether foreign companies can master the Vietnamese market using this form or not also depends on the local enterprises.
Enterprises in Vietnam should be active in improving their distribution systems to take the initiative in integration. It is wrong to maintain that they are weak. Take a look at Trung Nguyen, Kinh Do and the Convenient Store 24/7 chain, we can see their swiftness in catching-up with business opportunities. They are young, educated entrepreneurs who are carrying out a modern business manner. Needless to say, everybody can see their efficiency.
Despite many advantages, this form of business is regarded as one that easily causes disputes between franchisee and franchisor. As far as we know, the New Commercial Law due to come into force from January 1st, 2006 also mentions franchising, but not specifically?
Because this is a new form of business, it requires a concrete legal framework. To firmly introduce franchising as mentioned in the eighth section of the 2006 Commercial Law, the Government has made a draft Decree incorporating detailed instructions. The Decree clearly regulates the State’s rights, duty and management of franchising. Expecting that with these tools, franchising will enjoy suitable and healthy development in Vietnam.
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