McDonald’s in Vietnam: Why hasn’t it been successful?
McDonald's is one of the world most recognizable brands. So how come McDonald's and fast-food chains have struggled to be successful in Vietnam?
Updated August 21, 2018
In March 2018 Grabtaxi bought Uber’s Southeast Asian business. The merger of the two companies created lots of worry and concern about prices increases for Grabtaxis. Others were concerned that the ride-hailing scene might become plagued by service problems, longer wait times, and mishaps after Grabtaxi’s acquisition. The last serious issue, how Grabtaxi would transition users from Uber’s app to its app, and how Grabtaxi would manage its side businesses app services.
The fear that Grabtaxi would monopolize the ride-hailing scene while legitimate was never an issue. The void left behind by Uber’s exit from Vietnam was filled by newcomers eager to serve Vietnamese consumers. The newcomers include Indonesia’s Go-Jek, Singapore’s MVL, Aber, VATO, and T.NET.
Indonesia’s Go-Jek was a startup seven years ago, and now it is listed as #17 on Fortunes 50 companies changing the world. Indonesia’s Go-Jek operates in fifty cities across Indonesia and offers a myriad of services. Go-Jek offers ride-hailing services, delivery of goods, food, beauty services, and massages. It also offers delivers medication and vehicle repairmen. Go-Jek’s app offers 18 app-based on-demand services that include transportation, food, grocery and shopping, delivery services, entertainment ticket selling services, medicine, massages and beauty delivery services, professional cleaning services, automotive solutions, digital payment, e-Wallet, bill payment, and phone credits top-up. Go-Jek will call its Vietnamese operation Go-Viet.
Aber is special because its app eliminates fee commissions, and only charges drivers a monthly maintenance fee. Also, Aber has promised to not increase its prices during rush hour like Grabtaxi. Bike drivers who earn more than 499,000 VND/month pay 70,000 VND as their maintenance fee. Car drivers who earn more than 4,999,000VND pay a maintenance fee of 750,000 VND/month. As bike and car drivers continue to increase their income, their maintenance fees will continue to increase.
VATO is a ride-hailing app introduced into Hanoi and Saigon in April 2018. The benefit of using this app is that it allows consumers/riders to negotiate trip prices with the driver. There is a small standard fee that all consumers/riders must pay. VATO’s is set to charge 8,500 VND/km. Drivers might prefer this company to Grabtaxi, because VATO only takes a 20% commission, whereas Grabtaxi’s commission is 25% per trip.
T.NET, an intelligent vehicle app created by FPT University trainers and students is entering the Saigon’s market too. The smart car app was launched in Hanoi and Hung Yen provinces. T.NET combines smart car technology and ride-hailing apps. In March 2017 T.NET had eight low to high maintenance service cars including motorbikes, cars, and taxis. Although it is an upscale international ride-hailing app, it charges prices comparable to those of its competitors and is still cheaper than the traditional taxi services. T.NET works with taxi drivers from Mai Linh, Long Bien, My Dinh, and Vinasun. Consumers may embrace this app because they save a minimum of 20% off traditional taxi fares per trip.
A group of South Koreans founded the Singaporean MVL (Mass Vehicle Ledger) startup in 2012. MVL plans to begin its operations in Vietnam in July. It is a blockchain-based mobility system that has launched a ride-hailing app in Vietnam. The drivers benefit from not having to pay the company commission fee for ride referrals. There is a negligible transaction fee for the platform’s maintenance. Riders don’t pay additional fees to use the platform. Riders are only charged a small fee if they pay their ride-hailing fare via online transaction. Drivers also receive bonus points if they get positive ratings from their riders/customers. The drivers’ bonus points can be converted to MVL tokens. MVL tokens are a cryptocurrency that can be traded within the MVL ecosystem.
MVL is able to operate the app with 0% commission and fair pricing because the backbone of its technology is blockchain technology. The blockchain-based system can be publicly accessed, although private data will be stored on a private external distributed storage ledger. MVL’s profits will come from partnering its mobility system with other services like the token transactions and by selling data to corporate and market research companies.
MVL will be registered as a tech company, and will not pay taxes on its ride-hailing service, because it does not collect any standard or commission fees from its ride-hailing service. Critics argue that MVL’s tech is not secure, and that the probability of successfully incorporating cryptocurrency and blockchain into its mobility ecosystem. There is noteworthy concern that an unregulated market flows combined with technology and packed with commercial and private data could be a major problem.
Vietnam’s ride-hailing market has increased by 400% since 2015. It is expected that Vietnam’s ride-hailing market will be worth US$20 billion in 2025. Grabtaxi has a lot of competition in Vietnam. Given the increasing value and expected growth of the ride-hailing market, Grabtaxi will continue to have competition in the ride-hailing market. Grabraxi’s advantage is that it is established, familiar, and has working technology. However, its competitors are using a two-prong attack to steal its drivers and riders. The first prong, appeal to the drivers’ desires to pay little or no commission fees to the company running the ride-hailing app. The second prong of the attack, attract riders by reducing the fees the riders have to pay for each ride. Grabtaxi has the largest share of the ride-hailing market in Vietnam. Only time will tell how well it is able to defend its market share and grow as a company in the future.
If you are new to Vietnam and looking for a taxi, take a Grabtaxi. Grabtaxi has motorbikes, private cars, and taxis available to take you wherever you want to go. The minimum fare for a Grabtaxi is 25,000 VND. After the initial fee, you pay 9,000 VND/km and 300 VND/minute of the trip. The application is easy to use. First, download the application, then open it and select the kind of vehicle you want, your pickup point and your drop-off point. Next, wait for the next available vehicle to pick you up. The best part, no worries about the fare or being cheated, because you know the cost of the trip before you’re picked up.