China’s low-cost brands flood Vietnam as younger consumers seek affordable options
Beverage and ice cream chain Mixue has grown its footprint to 1,000 stores in Vietnam in just five years
Jamille Tran
[HO CHI MINH CITY] In terms of stores, the largest beverage player in Vietnam isn’t a local company, but Mixue – a Chinese ice-cream and tea franchise that recently marked the opening of its 1,000th outlet in the country.
Five years after making its debut in Vietnam, the company has tapped on its popularity on social media platforms like TikTok to reach out to its target demographic of younger consumers, many of whom are drawn to Mixue’s relatively affordable offerings.
Mixue, which prices its soft-serve ice cream as low as 10,000 dong (55 Singapore cents), is also spreading its footprint in other parts of South-east Asia thanks to the company’s fast-growing franchise model. In Indonesia, for instance, there are also around 1,000 Mixue outlets in operation.
Worldwide, Mixue has some 22,000 franchised stores, making it the world’s fifth-largest fast food chain by number outlets, behind only McDonald’s, Subway, Starbucks and KFC. In mainland China, Mixue has 28,000 stores,
The numbers tell the story of Mixue’s success so far.
The company’s revenue in 2021 was nearly 10.4 billion yuan (S$1.97 billion), more than double the 4.7 billion yuan it raked in the previous year (although it’s worth noting 2020 was the year the Covid-19 pandemic struck). Net profit was 1.9 billon yuan in 2021, triple the amount the previous year.
A NEWSLETTER FOR YOU
Friday, 8.30 am
Asean Business
Business insights centering on South-east Asia's fast-growing economies.
In Ho Chi Minh City, 19-year-old Dang Phuong Chinh said she has purchased Mixue’s ice-cream and drinks for the past year. She said she was hooked after listening to Mixue’s theme song that recently went viral on TikTok in Vietnam, with the words “bing qi ling” (ice cream in Mandarin) proving especially catchy.
China’s brands a soft power
Mixue is not the only low-cost Chinese ice cream and beverage brand that’s making waves in Vietnam. Cooler City is another who has employed a similar strategy of affordable prices and an easy franchising model. Its stores are seen on many streets of major Vietnamese cities, having made its debut in Hanoi only in March this year.
Beyond food and beverage, scores of Chinese brands have, or are in the process of, entering the lucrative Vietnamese market. These brands include cosmetics, smartphone accessories and even home appliances that have one thing in common – affordable items that appeal to Gen-Z shoppers (those born in the mid-1990s to early-2010s).
E-commerce platforms have made it much easier for Vietnamese consumers to access these products. Shopee, TikTok Shop and Lazada – the three largest sites in Vietnam with backers including some Chinese investors – enable users to buy directly from Chinese sellers with relatively low shipping fees.
TikTok has about 50 million users in Vietnam, with those in Chinh’s age group of 16-24 deemed most likely to use the platform for online shopping. Industry players describe the buying behaviors on TikTok as “shoppertainment”, which is the blending of e-commerce and entertainment to help engage customers and promote sales.
Damien Yeo, a consumer and retail analyst at BMI, a research unit of Fitch Solutions, said the prominence of e-commerce platforms in Vietnam “have an effect in shaping perceptions of Chinese products”. Those sites, in turn, serve as a sales and marketing channel for these products.
“Across regions, price-competitive businesses like South-east Asia because (even though) wages are still quite low, the consumers are often young, eager to spend and are quick to embrace new trends,” he said.
Analysts have flagged other things for Chinese brands to consider too when expanding in the region, such as the relatively low brand loyalty among younger consumers and the strong competition in developing markets like Vietnam. The ongoing territorial disputes between China and some South-east Asian countries could also have an impact on the purchasing decisions of consumers in those countries, they said.
Chinh summed it up best by saying that political tensions don’t affect the quality of the products being sold.
“I will still buy goods of Chinese origin or from other countries as long as they are within my budget and are of good quality” she said.
Copyright SPH Media. All rights reserved.
