Vietnam: Soya bean cafe rides on growing consumer boom

The Xiao Ban cafe in SC VivoCity mall in Ho Chi Minh City. It opened in 2015 and was Xiao Ban's first overseas outlet. It has three outlets in the city, with plans to open another three there, and two in Hanoi by this year.
The Xiao Ban cafe in SC VivoCity mall in Ho Chi Minh City. It opened in 2015 and was Xiao Ban's first overseas outlet. It has three outlets in the city, with plans to open another three there, and two in Hanoi by this year.PHOTO: XIAO BAN

A leafy tree grows outside the bright orange Ho Chi Minh City storefront with a name familiar to Singaporeans - Xiao Ban soya snack cafe. The tree partially obscures it and the shop next door.

Just a few weeks after opening the outlet last year - the company's third in Vietnam - Mr Picasso Terrence Hong, group chief business officer for Asia-Pacific, was surprised when a worker turned up to trim the tree. "He said we have to pay for the tree pruning. If we want to trim more, we have to pay more," says the Singaporean entrepreneur.

The worker said he would be back the next month, but returned within a week to trim the tree again and request more payment. Curiously, the shop next door, which is owned by a local, does not have to pay, says Mr Hong.

Navigating the complex business and regulatory landscape in Vietnam is one of the challenges the company has faced since entering the market in 2015, says Mr Max Yeow, its Asia-Pacific group chief operating officer. "You really have to familiarise yourself with the business environment before you go, and learn from what the locals do," he tells The Sunday Times.

Xiao Ban is run by four friends - Mr Hong, 37, Mr Yeow, 37, chief retail officer Esther Yan, 35, and chief production officer and founder Ken Li, 39. Mr Li's father started the famous Lao Ban Soya Beancurd. Besides the regular soya beancurd, it also sells waffles, gelato and soya lattes - the last is a special product catering to Vietnam's coffee culture.

  • Tips

  • ...FROM MAX YEOW

    • Be flexible and adapt to the culture. For example, you may need to adjust your branding by avoiding Chinese words.

    • Establish networks with local businessmen in the same trade, who can help you understand local business practices, as well as with successful foreign companies who may have contacts who can help when you encounter problems.

    • Focus on the Singapore brand - it is trusted by consumers.

    ... FROM IE SINGAPORE

    • Consider going into hi-tech, urban development and environment sustainability areas, which the Vietnamese government has been encouraging as it hopes investors can bring in new technologies and knowledge.

    • Hold a long-term view. It is hard to compete with local businesses on pricing, so try to localise the business where possible and think about imparting skills and knowledge to the local workers.

    • Take note of the different cultures in north and south Vietnam when looking for business partners. Businessmen in the south tend to be more open-minded and direct, while those in the north tend to be more diplomatic and place more emphasis on building relationships before doing business.

It has three outlets in Ho Chi Minh City, one of which is run by a franchisee, with plans to open another three there, and two in Hanoi by this year. It also has outlets in Taiwan and Cambodia.

The four friends do not speak Vietnamese, but get by with a personal assistant who can translate, store managers who speak English, and copious use of Google Translate, says Mr Hong with a laugh.

Vietnam was the first overseas market they went into, attracted by its modernity, large population of over 90 million, and the fact that other big Singapore companies like Mapletree Investments and Keppel Land had invested there. Singapore is Vietnam's third-largest foreign investor, with investments of US$37.9 billion (S$52.9 billion).

Study trips by IE Singapore and the Singapore Manufacturing Federation introduced Xiao Ban to the business environment and mall owners there. But the company got what it calls its lucky break when it was invited to provide food at an SG50 celebration in Ho Chi Minh City two years ago.

"The response from local guests was very positive, and many asked when we will have an outlet," says Mr Yeow. Vietnam had just opened up the food sector then to allow fully foreign-owned outlets, so they decided to make a move.

Xiao Ban's first outlet - in November 2015 at Mapletree's SC VivoCity in Ho Chi Minh City - came hot on the heels of global names McDonald's and Starbucks. Soon after opening, it was visited by celebrity emcee Nguyen Cao Ky Duyen, who surprised Xiao Ban by broadcasting a Facebook Live video of her visit to 1.7 million followers. She had tried the beancurd in Singapore on a visit.

But at the start, the reviews from customers were not all glowing. Mr Yeow says people thought it was a China company and doubted the food quality.The company even changed its signboards twice, from "Xiao Ban" in Chinese characters, which led customers to think the brand was from China, to "Xiao Ban Soya Singapore".

Focusing on the Singapore brand helps gain consumers' confidence, as it is well recognised for being ethical and trustworthy, says Mr Yeow.

Mr Hong adds: "We're excited about our prospects because more people are moving into the middle class, and we've seen the city grow."

A version of this article appeared in the print edition of The Sunday Times on April 02, 2017, with the headline 'Vietnam: Soya bean cafe rides on growing consumer boom'. Print Edition | Subscribe