The paradox of businesses going North and South

While many Saigon tycoons have found success in doing business in the North, on the contrary, Hanoi giants have struggled in the South.

Pho 24, Nguyen Kim or Saigon Co.op... the big brands in the South are now no longer strange to consumers in the North, the revenue and profits of these businesses have increased every year.

Established in 2003, Pho 24 quickly established its reputation in Ho Chi Minh City with a chain of several dozen stores. In contrast to the image of traditional pho restaurants that are still simply decorated and serve like a diner, Pho 24 chooses a polite, professional service style like an air-conditioned restaurant.

In an interview, Mr. Ly Qui Trung, founder of Pho 24 chain, was very excited when talking about the adventurous story of bringing this brand to Hanoi, where traditional pho dominates almost every corner.

Mr. Trung said that when Pho 24 had grown in Saigon, he started planning to move to the North. In the beginning, many people discouraged him because Hanoi was the traditional land of Pho. However, in Mr. Trung's eyes, that was not too important. "In a few times when I went to lunch with partners, they really wanted to invite me to eat traditional Pho, but they were afraid that the restaurant was not polite. Just imagine in the middle of a hot noon, wearing a vest and tie and sitting there sweating, what would that be like?", Mr. Trung said. Therefore, he realized that his model and service were completely different in both facilities and services.

Pho 24 is a story of successful branding in the North.

He analyzed that Hanoians selling pho are not very enthusiastic, do not pay attention to the appearance of the restaurant, and use a lot of MSG in the broth. Regarding location, he noticed that Hanoi restaurants do not pay much attention to the main roads or central areas, so he took advantage of this loophole by finding the best locations here to do business and it was quite convenient right from the first pho restaurant opened in late 2004.

According to Mr. Trung, at first, customers were not satisfied with the price of pho because it was quite high. However, just a few months later, the number of customers coming to the restaurant increased. Because, according to customers' reviews, the restaurant is close to the office, the service is good, it is only a little more expensive but it is convenient and safe. Thanks to that, after 5 months, Pho 24 opened a second store in Hanoi.

As for the electronics giant Nguyen Kim, on the first day of opening its branch in Hoan Kiem, Hanoi, the entire road leading to the store was packed with people. "The appearance of the Saigon electronics brand is very new to us. In addition to the diverse products and big promotions, their service style is also completely different," Ms. Lan, a customer in Hoan Kiem district, recalled. Up to now, despite economic difficulties and competition from some big brands in the North such as Tran Anh, Pico..., this giant still maintains a good growth rate, fluctuating between 10-30%. Currently, Nguyen Kim has 3 supermarkets located in the capital.

In the consumer goods retail segment, Saigon Co.op is almost the "king" in the Southern market. By 2010, this giant began to expand into the Hanoi market. Mr. Nguyen Tien Dung, Director of Co.opmart in the Northern region, said that in the beginning, when moving to the North, there were many difficulties in approaching consumers and market pressure, but Co.opmart proactively adjusted the structure of goods, shopping space, and personnel, so the number of customers increased day by day. The average purchasing power at supermarkets in Hanoi is only a very small percentage lower than that of the Ho Chi Minh City market.

Contrary to the successful trend of moving north, in the Ho Chi Minh City market, Hanoi businesses entering Saigon to do business are less favorable.

Hanoi Trade Corporation (Hapro) has been in the South for more than 20 years, but this name is little known to consumers. Harpo products do not appear in many distribution systems and supermarkets. Increasingly losing ground in the Ho Chi Minh City market, Harpro almost wants to withdraw from this place and only maintain the export sector. A manager who used to work for Harpro said that the reason this unit failed in the South was because it used family-style personnel. Meanwhile, outside management personnel were not given authority, so business activities were increasingly declining.

Despite its ambition, Pico eventually had to leave the Ho Chi Minh City market.

Similarly, if in the period 1995-2000, the Ha Long canned food brand "made waves" in the Southern market, even a giant like Vissan could not compete, now this Northern brand is gradually retreating. In the market, consumers only recognize two familiar canned products: tuna in oil and liver pate. A long-time sales employee at Co.opmart supermarket said that only older customers choose to buy it out of habit, while young customers do not like it. According to her, although it has been around for a long time, the design and packaging of this product have not changed, leading to boredom.

Not only old brands, even young businesses in Hanoi still have a hard time entering the Southern market. A typical example is the Korean men's fashion franchise chain (Kosman) in Hanoi, although favored by customers in the North, with a chain of 4 showrooms in Hanoi and 6 other stores in the Northern provinces, but when entering Ho Chi Minh City, they immediately encountered difficulties. The manager of this store said that at first, the company's leaders also invested a lot in renting premises in the central area. But gradually, the stores moved further and further away and now there is only one location on the one-way Nguyen Dinh Chieu Street (District 3), which is quite inconvenient.

A survey by VnExpress.net at this store showed that the number of customers visiting was very low. The staff here said that because new products were rarely shipped from Hanoi, they even hung up old items that had been left for quite a while. Previously, there were a few sales staff, but now business is difficult, so there is only one person left who also watches customers' vehicles. On the other hand, the prices of these products are quite high, ranging from 500,000 to 1 million VND, equivalent to other brands located in the central area.

Besides Hapro, Kosman, Ha Long...., other Hanoi brands such as Hai Ha confectionery, although present in Saigon very early, are still operating at a low level. Even in 2012, Fivimart supermarket had to close in Ho Chi Minh City and move back to Hanoi. As for electronics giant Pico, after moving to the South for a while, in early March this year, this supermarket had to hang a sign to stop operating and sell to Lotte...

According to economic experts, the main reason is that the products of these companies are not new, sometimes they are less attractive than the products of Southern enterprises. On the other hand, the service and advertising methods are poor, so they are gradually being overshadowed. Instead of changing their service style to adapt, many Northern giants are more conservative, so the models in the South are still sluggish after many years.

Talking to VnExpress.net, a marketing expert said that it is not easy to assess whether penetrating the Ho Chi Minh City market is more successful than Hanoi or vice versa. Because there are also businesses from Hanoi that have succeeded in entering the South and failed in the North.

Normally, in each market, each business has its own characteristics and different strategies. Some businesses choose the new market as their main target, but others consider it just an extension and do not pay much attention to it, leading to failure. If a business knows how to "transform" its strengths in the new market, it will be more successful.

Specifically, Golden Gate Company is the largest Asian restaurant chain in Vietnam and currently owns 11 exclusive restaurant brands with 67 restaurants such as Ashima, Kichi-Kichi, SumoBBQ, Vuvuzela... Although originating from Hanoi, Golden Gate is more successful in Ho Chi Minh City. "One of the reasons why these chains are successful in Saigon is because Golden Gate has a good management team in the South, especially the personnel from KFC. And Golden Gate is also flexible in giving the Southern team the freedom to develop according to the market direction," this expert explained.

However, in another aspect, this person affirmed that consumers in the two regions always have many differences. Most Southerners accept new products more easily, but also quickly change their habits, making the products easily eliminated. Meanwhile, Northerners are difficult, but once they are attached to and experience the product and are satisfied, they will be more loyal. Therefore, when promoting and producing products for new markets, it is necessary to carefully research consumer psychology, competitive advantages, as well as market gaps to succeed faster. Service style is also an important reason that determines the success or failure of businesses, especially in the service sector. Southern businesses have known how to promote their advantages in service style to achieve success in the Northern market, where local businesses often lose points in service attitude.

According to reading the newspaper