How Starbucks affects social status in a developing country (Vietnam)

An Kieu

The entrance of Starbucks, an American coffee company, to Vietnam,the world’s second-largest coffee exporter, hit the headlines of many newspapers worldwide not for its global fame but more for the market Starbucks decided to invest in: a place with a long history of coffee production and consumption. However, this entrance does not superficially show the difficult business strategies to penetrate this Southeast Asian nation’s market. Its appearance in Vietnam, as time passes, suggests itself as a status symbol of wealth and prestige, which is not a problem in developed countries such as America or Japan.

A brand from America, a dreaming destination of modernity and high-living standards, is the first reason that accidentally turns Starbucks into an image of affluence. Right after Starbucks’s grand opening in Ho Chi Minh City, a video was made to discover the true reason behind the Vietnamese preference for Starbucks over local coffee brands. Many consumers, from high school students to adults who had been familiar with Starbucks before, admitted that they came here purely out of curiosity, desiring to try an American-branded coffee. Brands have been ingrained in Vietnamese consumers’ mind recently. As people start to judge each other through the brands of vehicles, clothes, cell phones and so on, it is apparent that a globally famous coffee brand like Starbucks cannot escape their (brand) collections. The problem is that if you have to work hard every day just wishing to make ends meet, should you have time to care about brands? Starbucks in the United States is a coffee chain that everybody, from students, teachers, workers to CEOs of companies, can drop by for a cup of coffee during the day, but in Vietnam, the situation is completely different. Starbucks Vietnam is not a coffee store for normal people, but for the wealthy to gather.

Besides the matter of brands, the price of a Starbucks cup of coffee obviously helps differentiate social status in Vietnam. Look at the menu at a Starbuck store in Hanoi, it is not difficult to notice that the prices range from 55,000 VND ($2.60) to 100,000 VND ($4.74). These may be reasonable prices for a cup of coffee in developed countries like USA or Japan, but in Vietnam, this is “about half the average daily wage.” (New York Daily News). Are you as a customer still willing to make this purchase, especially when thousands of streetside cafes in Hanoi, offering shoe-shines, free Wi-Fi and traditional drip-filtered iced coffee for just 10,000-15,000 dong (47-71 U.S. cents)? With the long-lasting coffee culture, Vietnamese people usually drink 2-3 cups of coffee during a day. Prices of Starbucks, therefore, cannot satisfy white-collar workers’ needs, not to mention the blue-collar’s, whose salaries are much lower. Do Thanh Tung, an electric salesman, while welcoming Starbucks to Vietnam, also reminds that he cannot become a regular patron because he drinks about 6 cups of coffee a day, thus Starbucks would be too expensive. From “a haven, a break from the worries outside, a place where you can meet with friends.”, Starbucks now in Vietnamese customers’ definition is a place for high-salary and wealthy people, a place where only noble residents dare to step in, a flashy store that is out-of-reach for the average Vietnamese.

Clearly, Starbucks’s entrance to Vietnam is now no more a matter of competing in an old coffee-adored market but the difference in consumers’ social status it accidentally creates. As a foreign newcomer, Starbucks is warmly welcomed up to now. Consumers flood in to enjoy “meaningful service” with “passion and care”, to check-in Facebook, Twitter,… to follow the trend or to simply satisfy curiosity of a wide, clean and professionally designed coffee store, completely contrary to streetside stores nearby. Yet, whether this positive trend will continue once Starbucks’s appearance is no longer an icon of novelty and hotness is a heated issue among not only Starbucks’s planners but also people caring about its growth in this developing country. In order to continue the development and fulfil its ambition to open the market in Asia, Starbucks needs to come up with a plan to solve the problem and to restore an image of within-reach for lower-income people.