Vietnam businessman creates stir with coffee
By Tini Tran
Associated Press
HANOI, Vietnam — The decor is unadulterated kitsch — glittering Christmas lights, Crayola-colored chairs, a pop music soundtrack — and undeniably trendy.
Associated Press
For the stream of customers crowding into Trung Nguyen cafés across Vietnam, it's a potent combination of ca-phe sua, a strong espresso served over a syrup of condensed milk, and coffee chic.
A shopkeeper weighs coffee for a customer at one of the Trung Nguyen coffee shops in Ho Chi Minh City. More than 400 outlets have opened in the past four years.
Capitalizing on an emerging, affluent middle-class and the simple attractions of aromatic coffee, 31-year-old entrepreneur Dang Le Nguyen Vu has successfully launched Vietnam's first nationwide franchise.
Call it Starbucks, Vietnam-style.
During the past four years, the Trung Nguyen chain has grown to more than 400 outlets in all of Vietnam's provinces — from the busy streets of Ho Chi Minh City to the rural outpost of Sapa on the northern border.
"I want to have the Vietnamese brand name of Trung Nguyen well known in the world. Our coffee is good. There's no reason we can't do it," Vu said.
Bold words, but Vu has already bucked the odds by successfully operating in a communist country that still favors state-owned enterprises over private business.
Trung Nguyen's wildfire growth in Vietnam, the world's second-largest coffee exporter, is testament to Vu's vision — not to mention the notable absence of a certain coffee giant.
Although Seattle-based Starbucks has made sizable headway in the region — in Japan, Thailand and China, among others — it still has no presence in Vietnam. High tariffs on imported roasted coffee ensured the dominance of the local coffee industry and an opportunity for an enterprising medical student.
In 1996, Vu "was in love with economics and business more than medicine so I started a small operation."
Associated Press
With three friends, he opened a small cafe in their Central Highland hometown of Buon Ma Thuot — famed for its potent coffee. The story could have ended there but what made Trung Nguyen different was Vu's decision to introduce franchising in 1998.
Vietnamese entrepreneur Dang Le Nguyen Vu began the Trung Nguyen coffee shop franchise in 1998. People gain franchising rights for a one-time charge and a pledge to buy coffee from only Vu.
For a one-time charge and a pledge to buy discounted coffee only from him, a franchisee gained the right to put up the distinctive brown and cream sign with the coffee cup.
In return, Vu got name-brand advertising and the visible saturation necessary to start a buzz.
The name sells, said Pham Thi Truc Giang, who runs one of the largest Trung Nguyen franchises in Hanoi. Her two-story, 400-seat cafe is packed with 600 to 800 customers daily. Weekends bring in even more, with motorbikes parked three to four deep on the sidewalk.
"I think Trung Nguyen came along at the right time. If people didn't have money to spend, then we wouldn't do so well," she said.
Trung Nguyen's distinctive, upmarket style is a sharp contrast to the streetside tea stalls and murky cafes that abound in Vietnam, attracting a range of clientele from office workers to college students. Its success parallels a growing middle class with more money to spend and more leisure time to linger.
But for Vu, domestic dominance is only the beginning.
He is already casting his eye about the region. Last year, he signed franchise agreements in Singapore, Tokyo and Shanghai.
In December, he visited America for the first time as part of a delegation scoping out business opportunities after a U.S.-Vietnam trade pact passed last year.
"I visited some Starbucks outlets in the United States. I think Starbucks and Trung Nguyen share some similarities. But we are planning to make Trung Nguyen coffee shops with typical Vietnamese features, which reflect our culture, design and service style," he said.
His company is negotiating with partners in 15 countries, including the United States, Germany, Taiwan, Russia, Hong Kong, Australia and Canada, to offer the franchise, he said.
For the time being, Vu plans to stop franchising within Vietnam and concentrate on setting up 15 luxury cafes in Hanoi and Ho Chi Minh City. When the inevitable time comes, he plans to be ready.
"We see Starbucks as a potential competitor in Vietnam and we are not afraid of competing with Starbucks," he said.
