Income down, but banking sector remains hot

Commercial banks continue recruiting more officers, and though the average income decreased in 2012, bank officers still had sky high monthly salaries, which were the dream of the workers in other business fields. High pay for workers… Vietinbank has been leading the banking sector in the salaries it pays to its staff. In 2011, the bank’s pay was VND260 million on average. In, 2012, which was described as an unsatisfactory business year of the bank, every officer still received VND243 million. As such, the monthly average income of every officer of Vietinbank was VND20.22 million, of which VND19.7 million from the monthly salaries and the remaining was from other sources. In Vietnam, those, who can earn more than VND10 million a month are considered high income earners. Analysts have noted that the decrease in the monthly average income of Vietinbank’s officers should be blamed on the increase of the personnel size, from 18,600 in 2011 to 19,800 in 2012, rather than the less satisfactory business result. The Military Bank and Eximbank have also been named in the list of the banks with sky high incomes. Both of them paid VND209 million to every officer in 2012, or VND17.5 million a month. Every officer of the Military Bank received VND11 million from his fixed salary, and VND6 million as bonus and other incomes. Meanwhile, Eximbank paid VND14.8 million in salary and bonus, while the remaining VND2.5 million from other sources of income. The noteworthy thing was that the banks still could pay high to their officers, even though the two banks’ personnel increased by 700 and 370 officers, respectively. Vietcombank also had the number of officers increasing by 1,000 to 13,251 in 2012. Vietcombank officer’s income in the year was VND200 million, lower than the 2011’s level of VND220 million, which meant that every worker got VND16.6 million. Rumors were spread out that ACB cut down its staff sharply in early 2012 after the bank got some troubles. However, a report released at the end of 2012 still showed that the bank still had 10,300 workers, an increase of 1,700 workers over 2011. ACB’s income decreased slightly from VND163 million in 2011 to VND160 million in 2012. The figure was just the fixed salary for every worker of the bank, which did not include the extra income from other sources. While most of the banks cut down the pay fund, two banks still offered higher pay to their staff. Sacombank’s income slightly increased from VND169 million to VND172 million, while the number of workers rose from 9,600 to 10,310. Techcombank officers’ income jumped from VND 149 million to VND179 million. … and boards of directors Lien Viet Post Bank paid VND45 billion in 2012 to the board of directors and the supervisory board, leading the banking sector in the pay for the board of management. As such, each member of the board received VND4 billion. Eximbank also paid high to the board of directors and the supervisory board, about VND32 billion dong. Especially, the bank decided to extract 1.5 percent of the post tax profits to pay the key personnel. Other banks also reportedly paid billions of dong to every member of the boards of management. Vietinbank’s members of the boards received VND14.2 billion. However, the sum is just equal to 0.23 percent of the post tax profit of the big bank. NCDT

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Big guys’ alliance causes worry about monopoly in energy sector

The strategic cooperation of the three big guys in the energy sector is believed to harm the national economy because it would make the market monopoly become more serious. Three most powerful groups in the energy sector, namely the Electricity of Vietnam (EVN), PetroVietnam (PVN) and the Vietnam Coal and Mineral Industries Group (Vinacomin) have signed a strategic cooperation agreement, aiming to form up an alliance to better manage the electricity production and distribution. The appearance of an alliance of the giants has raised big worries among the public. The three big guys are all the exclusive manufacturers and distributors in their fields. What will happen if they join forces and control the domestic power market? Pham Chi Lan, a well-known Vietnamese economist, has pointed out that the cooperation of the three power groups would create a bigger monopoly. More dangerously, the monopoly would exist in the energy sector, which has big impacts on all other business fields of the national economy. She has also warned that with the monopoly to be created by the three big groups, it would be even more difficult for the State to manage the enterprises. The three big guys explained that their cooperation would help better manage the power production and distribution. However, they cannot convince people that the cooperation would be for the sake of the national economy. Will the cooperation help reduce the electricity shortage? Will the electricity cuts occur? Will Vietnam have to import electricity? Will domestic power plants be able to sell electricity to EVN, or will EVN continue buying electricity from China? No one can say for sure that the current existing problems would be settled once the three big guys cooperate with each other. While it’s still unclear about the benefits the alliance can bring to the national economy, a worry has been raised that the alliance would deprive the opportunities of other businesses to join the market. What will happen if EVN, the only electricity wholesale buyer, prioritizes to buy electricity from PetroVietnam’s or Vinacomin’s power plants? If so, no other enterprise would have the opportunity to sell electricity to EVN. This would not only lead to the collapse of the power plants, but also make the national plan on developing a competitive power market fail completely. Also according to Lan, the Competition Administration Department (CAD) has the right the ask the three power groups to show their business strategy and the way the three groups would cooperate. To date, EVN still has been controlling the power distribution market. However, the problem is that CAD is not an independent agency, but it is an arm of the Ministry of Industry and Trade, which is the governing body of EVN, Vinacomin and PetroVietnam. Le Dang Doanh, a well-known economist, has also warned that if the three power groups join forces to strengthen their monopoly, this would be a big threat to the national economy. It may happen that the alliance of the three groups would control the electricity price, while the electricity price would keep escalating and become unbearable for businesses. Doanh has stressed that Vietnam now is very bad at controlling the monopoly. Therefore, the situation may become even worse if the three groups join forces to control the power market.

As fortunate as SCIC

Deposit interests and dividends were the two main sources of income for the State Capital Investment Corporation (SCIC), the powerful corporation which specializes in making investments in businesses with the state’s money. The 2012 finance report of SCIC showed that deposit interests and dividends brought 96 percent of the total income of the corporation. SCIC has reported the pretax profit of VND4,582 billion, post tax profit of VND3,974 billion, up by 36 percent over 2011. The noteworthy thing is that the total expenses of the corporation in 2012 was VND121 billion only, or three percent of the post tax profit and 0.2 percent of total assets. The figures may catch the attention from any finance expert, because this shows that SCIC’s asset management skills have been in no way worse than that of passive management funds. Deposits and “milk cow” In 2012, SCIC got VND1,568 billion from the interests of the deposits at commercial banks and VND1.001 billion from Vinamilk, a leading dairy producer in Vietnam. As such, commercial banks and “milk cows” brought two thirds of the total turnover of SCIC. SCIC said that the financial turnover only fulfilled 98 percent of the plan, but it still represented the six percent increase because of the higher amount of deposits. Of the VND2,151 billion worth of dividends it got from the invested enterprises, the dividends from Vinamilk alone made up nearly 50 percent. Since the income from dividends are not subject to the corporate income tax, the dividends from the “milk cow” brought 25 percent of the post tax profit. SCIC also received dividends from other profitable enterprises in 2012, namely FPT Telecom (VND175 billion), Vinare (VND61 billion), Hau Giang Pharmacy (VND57 billion), Bao Minh insurance (VND46 billion) and FPT Holding (VND47 billion). Being a giant investor, SCIC did not earn much money from the stock trade. In 2012, it could collect VND170 billion only from selling the state’s capital contributions in enterprises. Of this amount, 2/3 came from the sale of the Tan Tien plastic packaging company’s stakes. The turnover from the stock sale of SCIC in the whole year 2012 could fulfill 25 percent of the yearly plan in term of value and 14 percent in quantity. As fortunate as SCIC Commented about the profit SCIC made in 2012, economists said luck played quite a part in its success. SCIC successfully withdrew capital from Jetstar Pacific, where it held 70 percent of stakes (VND921 billion out of the chartered capital of VND1,317 billion), an unprofitable airline, in early 2012. Since Jetstar Pacific continued taking loss (it once reportedly took a loss of VND40 billion a day), by the end of 2011, SCIC, as an investor, had had to make provision of VND815 billion against the risks. It was so lucky for SCIC that it safely withdrew capital from the unprofitable airline, as the government decided to transfer Jetstar Pacific from SCIC to Vietnam Airlines, the state owned air carrier. The decision then lifted a burden on SCIC, because the provisioned money has been reimbursed. SCIC sits on a heap of money The SCIC’s finance report showed that the corporation got VND1,568 billion from deposit interests in 2012. If noting that the average interest rate was 8 percent per annum, one could make a guess that SCIC is now holding VND19 trillion in cash, or 25-30 percent of the VND62 trillion worth of total assets. Apple, which had reportedly had $137 billion in cash by the end of 2012, has been urged to pay back a part of the sum of money to shareholders. And a question has been raised that if SCIC should pay a part of the cash it holds and sell some investment portfolios to pay back to the State – the owner, who now seriously lacks money? TBKTVN

How many billionaires are there in Vietnam?

Thirty years after the doi moi (renovation) was kicked off and 10 years after the stock market made its debut, Vietnam has had a billionaire recognized in the world. Who would be the second billionaire? Mr Dao Hong Tuyen Pham Nhat Vuong has become the first Vietnamese billionaire to enter Forbes’ list of world’s richest individuals, with total assets of US$1.5 billion as estimated by March 2013. Doan Nguyen Duc, the brilliant candidate The most likely candidate among the Vietnamese businessmen for the title of the second billionaire in Vietnam is Doan Nguyen Duc, Chair of Hoang Anh Gia Lai Group. Duc, the businessman who has poured his money into many business fields, from rubber plantation to hydropower, real estate to football club, was twice named in the list of the Vietnamese richest stock millionaires in 2008 and 2009. In those two years, Duc was believed to be richer than Pham Nhat Vuong. However, since the Hoang Anh Gia Lai’s stakes saw the prices drop sharply in 2010, 2011 and 2012, Duc felt into the second position in the list of stock millionaires. Therefore, though being the only person who expresses his aspiration for becoming a billionaire in the world, Duc has yet reached his goal. Duc was still firm on the second position of the 2012 list of stock millionaires, but he was left far behind by Pham Nhat Vuong. By the end of 2012, Vuong held VND17 trillion worth of shares, while Duc, though seeing the asset value increasing considerably by 30 percent in 2012, had had VND5,600 billion worth of shares. However, though the stock prices have fallen down sharply, Duc still has been highly appreciated in the business circle. Hoang Anh Gia Lai, which took loss with domestic real estate projects, has been earning money from other sources of income. The conglomerate has shifted its focus on rubber plantation, with the projects on growing 51,000 hectares of rubber in Laos, Vietnam and Cambodia. It is estimated that when the 51,000 hectares of rubber is put into exploitation, rubber plants alone would bring $300 million a year to Hoang Anh Gia Lai/ Meanwhile, the $300 million real estate project developed by Hoang Anh Gia Lai in Yangon, Myanmar would bring multi-billion dollars to the conglomerate, if the Myanmar market heats up in the next five years. The rubber, sugar cane projects in Laos could also be the big assets of the businessman. Once all the projects make profit, the prices of Hoang Anh Gia Lai stakes would increase rapidly, which also means that Duc’s asses would also increase accordingly. The hidden billionaires They are called “hidden candidates” because there has been no exact information about the actual assets of the billionaires. In Vietnam, people believe that the richest people in the stock market might not be the richest people in Vietnam. There are many billionaires whose assets have not been known to people simply because their businesses have not yet listed shares on the bourse, or the information about their assets has not been exposed to the public. The Vietnamese billionaires would enter the Forbes’ list of the billionaires of the word any time once their businesses list shares. Dao Hong Tuyen, who is called “the island’s kind” in Vietnam, is believed to be the owner of a lot of companies throughout the country and the owner of a series of real estate projects. There has been no exact information about the value of the assets Tuyen possesses, but Tuyen said his assets are worth two billion dollars. The owner of Geneximco Vu Van Tien has also been well known in the business circle with the real estate projects in many localities from the north to the south. Huan Tu

Fast food market: bigger burgers to clamp smaller ones

How will the fast food market will be after McDonald’s makes its presence in Vietnam? The presence of the big guy McDonald would surely lead to the big changes in the fast food market, after it forces the rivals to re-divide the market. Some people now feel curious about what will happen on the day the fast food giant McDonald’s makes debut in Vietnam. Prior to that, they witnessed young people in HCM City queuing up to wait for their turns to enjoy Starbucks coffee on the opening day February 1, 2013. While some analysts think that the presence of McDonald’s in Vietnam would overpower its rivals, others think that it would not be an easy work for the fast food chain, even though it is a big one, to penetrate the Vietnamese market. In fact, McDonald’s also has to overcome the barriers it meets in China when competing with the fellow-countryman Yum!Brand which owns KFC brand, or Jollibee in the Philippines. A lot of foreign big fast food brands have been present in the Vietnamese market. However, three of them are believed to lead the market, namely KFC, Lotteria and Jollibee. All of them have been here in Vietnam since 1990, while two of them have been coming through the franchising way. The three biggest giants in Vietnam might have been listening to the news to find out who would be the official partners of McDonald’s and where the first shop of McDonald’s would be set up. They understand well that McDonald’s would be a redoubtable rival, which would not only attract urban consumers, but tourists as well. At present, Lotteria is believed to have the largest chain with 146 shops, while KFC has 156 and Jollibee 30. However, KFC is believed to have higher growth rates and turnover. A report of Euromonitor showed that KFC led the fastfood industry in Vietnam in 2011. Doan Dinh Hoang, a branding consultancy expert, said the joining of McDonald’s to the Vietnamese market would make the fast food brands’ struggle stiffer. The three big guys in the market themselves have been competing fiercely with each other. With 146 shops, Lotteria obtained the turnover of VND39 billion just within 10 days, from the first day of the Lunar New Year to the 11th day of the year. Meanwhile, it has reported the 30 percent increase in the turnover in 2012 over 2011. The business performance of the chain is better in HCM City than in Hanoi. Meanwhile, Hanoi is not an easy market for Lotteria because of the culture factors, and partially because KFC is holding the upper hand in the capital city. Truong Ham Liem, Head of the Marketing Division of Lotteria Vietnam, said the chain plans to open 50 more shops in 2013, while 30 percent of which would be not in HCM City, but in other localities such as the western part of the southern region and Da Lat City. Not only striving to increase the coverage, Lotteria Vietnam has put a high hope on the development of hamburger, hoping that this would be a potential menu thanks to the reasonable price and good taste. Not only Lotteria, KFC and Jollibee have also been pushing up the development of their chains in Vietnam. Graham Allen, President of Yum Restaurant International once said about the plan to develop 180 shops in Vietnam by 2014. Meanwhile, Jollibee Vietnam told the press it wants to have 500 shops in Vietnam. To implement the plan to expand the networks, the big guys have been moving heaven and earth to look for retail premises. However, they need to find out the answer to the question: “where would the first McDonald’s shop be located?” first, before going ahead with their plans. DNSG

Aviation market not as gloomy as thought

The death of Indochina Airlines and the current difficulties of Air Mekong have raised a big worry that Vietnam would not have a competitive aviation market, if only the state owned Vietnam Airlines can exist in the market. Private airlines, one after another leaves the market… “Will any more investors dare to pour money into the aviation industry after Air Mekong halts its operation? If the answer is “no”, Vietnam Airlines would still hold the monopoly in the market, which also means that consumers would be put at a disadvantage,” an aviation expert said. After Air Mekong halted providing commercial flights since March 1, only five airlines have been left, including Vietnam Airlines, Jetstar Pacific, Vasco, Angkor Air and VietJet Air. Of these, Angkor Air is a joint venture between Vietnam Airlines and the Cambodian government. As such, Vietnam Airlines holds the stakes in all four airlines (Vietnam Airlines, Jetstar Pacific, Vasco and Angkor Air), while VietJet Air is the only private air carrier operational in the market. Five private airlines have been set up over the last five years. However, most of them, including Indochina Airlines, the “early bird” which was established in May 2008, have disappeared from the aviation map because of the big losses and debts. The disappearance of the airlines is not the thing the Civil Aviation Authorities of Vietnam (CAAV) wants to see. When licensing private airlines, the watchdog agency hopes that the existence of the new comers in the market would help bring more choices to passengers and eliminate the monopoly held by the state owned Vietnam Airlines. …but one still exists As such, VietJet Air has become the only private air carrier in the domestic market. While other private airlines are in the danger of having to stop operation, VietJet Air seems to be an exception. The private airline, just within a short time, has developed a new modern fleet which allows to set up the air routes to nine provinces and cities nationwide. In early 2013, VietJet Air announced the opening of its first international route, becoming the first Vietnamese private airline that provides international services. According to Desmond Lin, Business Development Director of VietJet Air, the air carrier served more than one million passengers in 2012 with the high seat occupancy rate at 87 percent. Especially, VietJet Air has been listed in the top 5 of the most successful newly launched air routes in the world. The initial success of VietJet Air has raised a hope that there are still opportunities for private airlines in Vietnam. VietJet Air is following the policy which aims to provide low and flexible airfare. This is the market segment which international experts believe to have great potentials to develop. A report of IATA also showed that despite the decline in China and India, the airlines in Asia Pacific would still obtain the profit of two billion dollars this year. Especially, budget airlines are believed to have high growth rates. The Vietnamese aviation market is believed to have great potentials with the population of 90 million and the majority of them are still young. Meanwhile, it is expected that only 12 million passengers would be served in 2013, which is just equal to 25 percent of the transport output in Malaysia, the country with less than 25 million people. Compiled by C. V

Venture funds still cannot play in full swing in Vietnam

A lot of venture investment funds have been set up in Vietnam. However, due to many reasons, the venture funds still cannot make adventurous investments as per their nature. Venture funds, who are they? DFJV, belonging to the joint venture between VinaCapital and the US Draper Fisher Jurvetson proves to be the best-known venture fund in Vietnam because it was one of the first funds established in the country. Besides, the Japanese CyberAgent fund, IDG Ventures Vietnam (IDGVV) are also the well-known names. IDGVV has been known for the investment portfolio mostly targeting four important business fields of the Vietnam’s national economy, including e-commerce infrastructure, information and communication, technology and entertainment media. IDGVV also considers jumping into other business fields, such as clean energy, retailing, healthcare and education. It is raising the second fund, about $150 million, to make investment in the above said fields, which is expected to begin the disbursement by mid 2013. IDGVV has succeeded with its investment deals, with one or two successful affair in every business field. Its investments in VC Corp, the owner of Bamboo, CafeF, and in PeaceSoft, which runs NganLuong.vn and ChoDienTu.vn both have brought relatively high internal rates of return, above 30 percent. The two companies are operating in the fields of information – communication and technology trade. It has also succeeded in entertainment media and e-commerce infrastructure when injecting money in the two firms which are dominating the domestic market – VinaGame and DiaDiem JSC, the founder of NhomMua.com. Nguyen Hong Truong, Deputy President of IDGVV, said the fund makes investments in the information and communication based fields, because these prove to be potential fields. There are two reasons Truong has cited to prove that these are the potential fields. First, more and more businesses in Vietnam tend to shift to use online and mobile services in order to optimize their production costs and business effectiveness. Second, Vietnam now witnesses the strong development of the digital content services following the development of Internet and mobile devices, especially in entertainment, music, education, games, mobile content and social communications. While IDGVV is ready to inject money in the projects it believes have great potentials, DFJV always keeps cautious about its investment decisions. Than Trong Phuc, Managing Director of DFJV, said DFJV seeks the businesses which are on the rise, not the start ups or fledgling businesses with vague business ideas. Facing big challenges Phuc has admitted that of the operational venture funds in Vietnam, IDGVV is the only fund which is really “adventurous,” while his DFJV is not. This has been explained by the fact that the Vietnamese market still does not have enough good conditions for venture funds to operate successfully. In the eyes of investors, South East Asia, not including Singapore and Indonesia, venture funds meet higher risks in their investments, because while there are good and original ideas, the infrastructure and supporting factors remain limited. Therefore, Phuc said, DFJV dares not pour money largely into small investment deals. He also said that though DFJV also considers pouring money into e-commerce, it would only be ready to make disbursement in some more years. It is because high risks still exist in e-commerce development in Vietnam. E-commerce businesses still cannot build up their prestige among consumers, while people’s consumption habit shows that Vietnam has yet ready for a real e-commerce model like eBay or Amazon.

Vietnamese businesses get benefits from Japan’s loosened monetary policy

VietNamNet Bridge – The Japanese central bank has decided to loosen the monetary policy in an effort to raise the inflation rate to 2 percent, which would bring benefits to many Vietnamese businesses, according to Maybank Kim Eng Vietnam Securities Company (MBKE). The price of PPC shares of the Pha Lai thermopower plant has been hovering around VND16,100-21,200 over the last month. PPC is believed to benefit most from the Japanese yen depreciation. The PPC price has soared by 73 percent so far this year on the expectation about the high profits the company would obtain when the yen depreciates. The company borrowed yen27.85 billion at the interest rate of 2.45 percent to build Pha Lai No 2 plant, and incurred the big losses in recent years due to the depreciation of the Vietnam dong against the yen and the dollar. However, things have got different. PPC has reported the profit of VND745 billion, or 36 million dollar in 2012 because of the 9.7 percent depreciation of the yen against the dong. The profit then helped make PPC’s profit increase from VND9.7 billion in 2011 to VND770 billion in 2012. And if the yen depreciates further by another 8 percent in 2013, the profit from the exchange rate fluctuation to be obtained by PPC would be VND530 billion. If so, PPC’s post tax profit would be 89 percent higher than the profit it would obtain in case of the stable yen valuation. The monetary policy loosening has also benefited the enterprises which import materials from Japan to make products for domestic consumption. Hoa Sen Group is one of them. Hoa Sen imports 60-70 percent of hot rolled coil (HRC) it needs from Japan to make galvanized iron sheet, used for industrial production workshops and civil construction works. MBKE has estimated that the post-tax profit of Hoa Sen would increase by 38 percent in 2013, reaching VND509 billion, or $24 million thanks to the lower financial costs and the increasing profit from the factory expansion. Meanwhile, the Doan Xa Port, or DXP, a port developer, would not direct benefits from the Japanese new monetary policy, but it hopes it would benefit indirectly from the increase in the exports of Japanese invested enterprises. A report showed that Japan makes up 50 percent of the foreign direct investment (FDI) capital in Vietnam. Since most of the products churned out by the Japanese invested enterprises in Vietnam have been exported back to Japan, DXP hopes it would get fatter profit from the services to be provided to the Japanese export enterprises. DXP’s business performance heavily depends on the import-export activities. When China unexpectedly decided to stop importing frozen meat across the border gate in March – May 2012, Vietnamese export companies had to store meat products at the port for longer time, thus helping DXP obtain the 39 percent increase in turnover and 60 percent in profit in comparison with the same period of the last year. Meanwhile, the Japanese yen depreciation would be not the good news for the companies which export products to Japan. MPC, the Vietnamese leading shrimp exporter, though getting payment in dollars, would still bear influences from the exchange rate fluctuation. If Japanese importers ask to reduce the import prices to offset the yen depreciation, by 20 percent, for example, MPC’s turnover and profit in 2013 would decrease by 4 percent and 9.5 percent, respectively. In case the sale prices remain unchanged, the export volume may decrease by 20 percent, which would make both the turnover and profit down by 4 percent. NDHMoney

After Starbucks, McDonald’s will come

High ranking executives of the US McDonald’s came to Vietnam in 2012, a signal showing that the giant was eyeing the Vietnamese market. And it has become more obvious that the fast food chain will enter the Vietnamese market. If Starbucks is thought to create a new face to the Vietnamese coffee market, then the presence of McDonald’s is believed to force the rivals like KFC, Jollibee or Lotteria to reconsider their business plans. It’s simply because McDonald’s, with the shops in 119 countries, is really a powerful empire to confront with. In August 2012, local newspapers caught the attention from the public when reporting that senior executives of McDonald’s were here in Vietnam to seek suitable partners for a franchising contract. No strong commitments were made after the working visit, but the US fast food chain left some noticeable information that it would officially be present in Vietnam in two years, and that it would open 100 McDonald’s shops in Vietnam, of which the first one would be in HCM City. In late February, the news that McDonald’s was negotiating with three Vietnamese partners heated up the fast food market. According to Dr Ly Quy Trung, the big brands like McDonald’s, Burger King, or 7-Eleven rarely conducts single-unit franchise, while they prefer area development franchise. There has been no information about how the negotiations have ended up and who of the three McDonald’s would choose. It is also likely that McDonald’s would franchise to at least two Vietnamese partners, one in the north and one in the south, because it would be difficult to find a Vietnamese business which can bear the high fee of becoming the franchisee of McDonald’s for a long time. At present, Lotteria is still leading the domestic fast food market with 146 shops, while KFC has 134 and Jollibee 30. However, KFC has higher growth rates and turnover. A report of Euromonitor showed that KFC led the fast food industry in Vietnam in 2011. Who could be the partners of McDonald’s then? It’s obvious that the businesses or individuals who have the plan to become McDonald’s partners need to be very rich. It’s simply because McDonald’s is a big brand name with high value which would set up very high requirements. Regarding the franchising fees, analysts say the initial fee would be no less than $45,000. Besides, the franchisees would have to pay a lot of other kinds of fee. In general, analysts say, there are two kinds of expenses to bear, the pre-operation expenses, and the expenses to be spent during the operation. It is estimated that the total investment capital for every McDonald’s shop, which includes the franchising fee, premises rents, equipments and interior decoration, could be between $214,000 and $2.1 million. According to McDonald’s, more than 88 percent of its franchisees have more than one shop. And it’s highly possible that the Vietnamese franchisees would also do that, because large chains of shops not only can increase the presence of the brand in the market, but also bring higher turnover to them. After paying the initial investments to set up a shop, franchisees would have to bear over 20 types of expenses, including the service fee, which is four percent of the turnover, to be paid to the franchisers, and the advertisement fee, which is at least four percent of turnover. No official statement has been made about the Vietnamese partners. However, Doanh Nhan Saigon has quoted its sources as saying that the three partners are CT&D, Son Kim Group and a big name in the field of venture investments. TBKTSG