Vascara fashion brand was found in 2007 when "Made in Vietnam" footwear and handbags were still not welcomed by customers. Despite brand-building efforts, many experienced and skilled enterprises such as Hong Thanh, Dong Hai, Hanh Dung, Vina Shoes ... still faced with difficulties since customers preferred foreign brands and the market was flooded with cheap Chinese footwear.
However, just two years after establishment, Vascara’s revenue obtained from shoes and bags jumped from VND6.8 billion ($296,000) to more than VN40 billion ($1.74 million) per year. As of April 2018, Vascara was present in over 40 provinces and cities with 100 stores across the country.
Vascara’s secret to business success is the application of smart business tactic, which first of all uses a foreign brand. At the time when this brand emerged, it was doubtful that whether Vascara was a domestic or foreign brand. Searching on Google, Vascara was recognized as a "Brazilian footwear and handbags brand, founded in 2007."
However, Vascara kept silent about this information. Only when achieving a strong position in the market, especially the domestic footwear brands have begun to win customers’ hearts, Vascara began to claim that it is a Vietnamese brand.
The strategy of foreign branding is proven to be successful in many other brands such as Datkeys under Dat Quang Company. From accounting for a small market share, this company in 2014 quickly made up 15 per cent and became one of the leading brands in the sectors of sanitary ware and building materials in Viet Nam thanks to products made, produced in Malaysia and Thailand.
Anka Milk is also a brand which has applied this strategy successfully when its products are canned in Spain and the raw materials are produced in Ireland. Mumuso, which has only entered the Vietnamese market for more than a year, now has 27 stores and more than 200,000 return customers.
Nham Phi Khanh, Director of Mumuso Vietnam Import Export Co., Ltd, revealed: "Because South Korean is a very competitive market, in the early stages of brand building, Mumuso's strategy is to register business license and trademark protection in Korea but targets Vietnam first. After Mumuso gains a foothold in the market, Mumuso will expand operation in South Korea."
According to Mumuso, outsourcing production to China is a way to reduce production costs to allow competitive pricing by making use of abundant labor supply and material resources in China, the country which is considered "the factory of the world".
Similarly, Sao Nam Manufacturing and Service Joint Stock Company (Sao Nam) also launched numerous brands of Dr Kool, Dr Clean, Queenie ... made in Korea, Malaysia and Singapore. Thanks to the advantage of foreign brands, these products are also quickly welcomed by many of consumers. Notably, Dr Clean is leading in the market for hand washing gel.
Especially in the supermarket system, these products are also usually displayed in more eye-catching locations than the domestic products because they are named in the list of imported products.
As a result, the wave of having products outsourced or business license registered abroad, then bringing products to Vietnam under foreign brands has emerged and become the fastest way for a number of Vietnamese enterprises to penetrate into the domestic market.
Doan Dinh Hoang, a branding expert said: "The application of strategy in which production is outsourced and products are labelled with foreign brands to build the brand in the domestic market will help enterprises to access the domestic market more easily thanks to Vietnamese people’s preference for foreign products. In particular, this strategy helps reduce risk and save time and money when building a brand at a time when the domestic products have not captured the hearts of customers.”
However, the biggest risk of this strategy is that when customers find out the origin of the brands and products, they will get disappointed, feel cheated and leave the brands. For example, when customers realized that Mumuso has no retail stores in South Korea and that Mumuso's products are labelled with “made in China”, many of them were disappointed, claiming that Mumuso had cheated.
Legally, Mumuso does not either violate the declaration of product origin or ignore the labelling to cheat consumers, but the internet tools and social media are strong today, a rumor only can easily create crowd effects that affect reputation and image of the brand. Even when everything is clearly explained, enterprises and brands have also suffered heavy losses.
Nguyen Thanh Tuu, Director of Nguyen and Associates - Intellectual Property Law Firm also stated that for any Vietnamese brands that have trademark protection registered, or business license granted abroad, their products outsourced do not violate the law and cannot be "viewed" as misleading the customers if the product label clearly states the country of origin.
However, the risk of brand reputation is unavoidable when the current customers do not fully understand the law as well as enterprises’ business strategies.
Another risk, according to a director in the field of cosmetics, is the origin of the products. Recently, the trend that customers prefer products originated from Korea, Thailand, Japan because of having mindfulness about their quality. Therefore, when customers have more options, products originated from China make customers suspicious. The fact is that the company's products have reduced by 30 per cent in terms of sales compared to the cosmetics produced in the US, South Korea, etc.