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McDonald's takes a bite out of Vietnam

The Big Mac's arrival signals another move by the communist country to open up to Western-style capitalism.

Last updated: 22 Feb 2014 13:33
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The story of McDonald's opening is part of Vietnam's larger, ongoing integration into the rest of the world [EPA]

Ho Chi Minh City, Vietnam - It's been a week since Vietnam's first McDonald's opened, with customers waiting in line for hours to get a taste of the American fast-food giant's offerings. But for some Vietnamese people, the presence of McDonald's means something more than simply Western burgers and fries: it is confirmation that their country has arrived.

Lai Thi Tuoi, an entrepreneur, said she'd eaten McDonald's in China and Malaysia and didn't understand why every country seemed to have its own Golden Arches except Vietnam.

"Vietnam has developed already, right?" said Tuoi, who brought her 11-year-old son to the grand opening on February 8. "So of course, you have to let the citizens know about all the things the world has, Vietnam should have it, too. We Vietnamese are proud in that way. So I've been waiting for [McDonald's] to come here."

The global restaurant behemoth operates in more than 100 countries. Those that have yet to experience the Big Mac include pariah states such as North Korea and, until recently, Myanmar. Vietnam didn't want to be a part of that club.

Those people who got jobs with factories making shoes 15 years ago, they're 15 years older, they're making more money, they have higher skills, higher wages, and so on.

- Herb Cochran, American Chamber of Commerce in Vietnam

The country has other Western fast-food establishments, including KFC and Burger King, but the story of McDonald's opening is part of Vietnam's larger, ongoing integration into the rest of the world. It's been decades since the nation united under communism after the Vietnam War, but this is still very much a country in transition.

Vietnam has petitioned the United States for years to recognise it as a market economy. It also has worked to cement its place in the international community, signing on to pacts such as the World Trade Organisation, and occasionally taking the lead in the Association of Southeast Asian Nations (ASEAN).

Ready to spend

Vietnam observers like to say communists might have won the war, but today capitalists are declaring victory. Since Vietnam made the switch to a mostly market economy in the 1980s, it has become not only a top exporter of rice and coffee, but also a manufacturing powerhouse.

The trade boom created jobs for Vietnamese, who have spent years stashing away their earnings. According to World Bank figures, Vietnam's per capita income rose to $1,550 in 2012 from $1,000 in 2008.

Now, as consumption growth catches up with trade growth, Vietnamese are ready to spend.

"Those people who got jobs with factories making shoes 15 years ago, they're 15 years older, they're making more money, they have higher skills, higher wages, and so on," said Herb Cochran, director of the American Chamber of Commerce in Vietnam.

Some say these higher incomes mean the time is now for foreign businesses to target Vietnamese consumers.

With a population of 90 million, Vietnam has the fastest-growing middle and affluent class in Southeast Asia, according to the Boston Consulting Group. The consultancy estimated there would be 33 million people in this class in 2020, compared with 12 million in 2012.

This is the "sweet spot" in the Vietnamese market, as US Ambassador to Vietnam David Shear said at the McDonald's ribbon-cutting.

Increasing wealth

As increasingly wealthy Vietnamese middle classes decide where to lighten their wallets, they are looking to US companies such as McDonald's. On opening day here in Ho Chi Minh City, some 20,000 customers poured in to order Happy Meals, snap photos with Ronald McDonald, and use the country's first motorbike drive-thru.

Representatives, including Henry Nguyen, the franchisee and Prime Minister Nguyen Tan Dung's son-in-law, guided drivers who'd never ordered from a drive-thru.

It's not surprising that consumers would take to the chain. On the heels of Britney Spears, Coca-Cola, and the iPhone, McDonald's is seen as the latest sign of the embrace of American capitalism.

In explaining the enthusiasm, a professor who teaches American culture here in the city points to the post-war diaspora; the 2010 US census reported more than 1.5 million Vietnamese live in the United States, more than in any other country.

"I think students are quite curious to learn about American culture, they're open-minded," said David Hardy, of the University of Social Sciences and Humanities. "Many people already have distant knowledge of America through family members, or friends, or classmates. America is not just a faraway place, it's a tangible destination."

It's a matter of the Vietnamese, step by cautious step, becoming more comfortable with participating fully in the global economy.

- David Brown, former US diplomat in war-era Saigon

Burying the hatchet

Some Americans still expect to experience visceral resentment when they come here as part of the legacy of the Vietnam War from 1965 to 1975 - known here as the "American War". Official statistics say 58,220 US soldiers were killed, and while an exact figure is not known, it's been estimated as many as three million Vietnamese died.

But if any wartime enemies have dramatically buried the hatchet, they are Vietnam and the United States. The latter played a key role as Vietnam opened up, from lifting a trade embargo in the 1990s, to signing a bilateral trade agreement in 2001 that sent Vietnamese exports soaring.

Many pundits say Vietnam chose warmer ties with the United States as the most expedient way to lift itself out of poverty.

As one of the few remaining nominally communist nations, Vietnam faces an identity crisis in a world where success equals economic development, usually through market capitalism. In response, the country has opted to work increasingly with foreign businesses, according to David Brown, a former US diplomat in war-era Saigon, now known as Ho Chi Minh City after the revolutionary leader who helped defeat both French and American forces.

"It was evidently impossible to do that, while leaving the US out of this," Brown told Al Jazeera.

So more and more US companies have entered Vietnam, including McDonald's, now that a sizable part of the population can afford their goods and services. Compared to the time when Brown served at the US embassy here, Vietnam is increasingly integrated.

"It's a matter of the Vietnamese, step by cautious step, becoming more comfortable with participating fully in the global economy," he said.

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Source:
Al Jazeera
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