Bikes and beer
HANOI, Vietnam — A number of the posts already on Vietnam at least mention China, if not focus on it. China is the 800-pound gorilla next door, and much of what Vietnam hopes to accomplish in the international marketplace is in spite of or in direct competition with China.
I’ve talked before about Vietnam’s focus on quality, but it’s a lesson born from experience in Vietnam’s domestic market, and it comes in the form of beer and motorbikes. One trade official we met with outlined the following lessons.
Five to ten years ago, the dominant beer in Vietnam was Chinese-made swill that should have more or less been in a generic can marked “beer” like you see in television shows that haven’t gotten product-placement deals. It was poorly made, tasted bad, but was dirt cheap, and it had driven native producers (several of which had European heritages) to have just tiny slices of the market. But, the Vietnamese producers improved quality, lowered prices, developed stronger marketing, and, with the help of increasingly wealthier domestic consumers with improving palettes, nearly rid the market of the Chinese beer. Now, brands like Hanoi Beer, 333 (pronounced with the sheep-like sound “Ba ba ba”), and SG Special have taken back the market.
A similar thing happened with the motorbike market. (By “motorbike,” I refer to the broad category of motorcycles, scooters, vespas, etc.) Now, you can’t cross the street without risking life and limb against a constant crush of motorbikes. But maybe ten years ago, it was cheap, Chinese-made motorbikes that took urban Vietnamese traffic from a gaggle of sedate bicycles to a madcap dash of high-speed, death-defying motorbike weaving. The Chinese versions were cheap and available, and the Vietnamese ate them up. (Cars, it turns out, are taxed heavily… often at a 150% tariff on top of the purchase price.) So the major Japanese brands (Honda, Kawasaki, etc.) stepped up their production efficiencies, made their prices more competitive, and brought their quality products to the market, and now Vietnamese-assembled Japanese brands dominate the streets.
It’s this lesson of quality over price that Vietnam hopes will set it apart from its hulking neighbor to the north.