TABLE OF CONTENT

1. INTRODUCTION

1.1. Market overview 1

1.2. Historical background 1

1.3. Problems statement 2

1.4. Research objectives 2

2. MONOPOLISTIC COMPETITION LITERATURE REVIEW AND

APPLICATION

2.1. Definition of Monopolistic Competition 2

2.2. Economic Efficiency under Monopolistic Competition 3

3. THE COMPETITION OF THE HOT POT CHAIN MARKET IN

VIETNAM

3.1. Existing rivals and entry barriers 5

3.2 Product differentiation 6

3.2.1 Service strategy 7

3.2.2 Location strategy 8

3.2.3 Product lining 9

3.3 Haidilao’s success in VietNam 10

3.4. Haidilao’s latest movements 12

4. CONCLUSION AND RECOMMENDATIONS

REFERENCES LIST 14
 HOW HAS HAIDILAO'S DIFFERENTIATION MADE IT SUCCESSFUL IN
THE MONOPOLY MARKET?
1. INTRODUCTION
The economy was negatively impacted by the difficult Covid-19 season, particularly the

food and beverage service sector. When everything slowed down, just necessities were

accessible. circulate. All restaurants and coffee shops had to temporarily cease

operations due to intense pressure, and some vendors abandoned monopolistic practices.

Due to investors' desire to limit the harm caused over the two years, competition in our

nation increased as soon as things started to get better. Every company is aware of the

risks they run if they do not understand their consumers' wants. Due to the direct impact,

it has on a company's ability to survive and grow, customer happiness has emerged as

the most important problem.

1.1 Market overview

The business environment is getting worse as a result of the trend of an expanding

economy and increased globalization. Due to globalization, the food and beverage

service business are also subject to a great deal of competition, particularly with the

Government's policy of economic opening measures. According to recent studies

conducted by the Vietnamese Government, the number of chained restaurants in

Vietnam totaled just over 1.5 thousand that year. It also means that the number of hotpot

chains appearing in the Vietnamese market is increasing significantly. Therefore,

customer satisfaction has emerged as the most crucial problem because it directly

impacts a business's ability to remain and expand.

1.2 Historical background

Haidilao's extraordinary success story begins with a modest hotpot establishment in

1994. Zhang Yong, the company's founder, founded the first business in 1994, with only

four tables in a tiny booth. Over the past 20 years, Haidilao International Holding Ltd.

has grown into a world-class catering company. According to Haidilao‘s offical website,

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the brand had built 935 chain restaurants throughout China, Singapore, the United States,

South Korea, Japan, Canada, the United Kingdom, Malaysia, Vietnam, Indonesia, and

Australia by the end of June 30, 2020. Simultaneously, revenue is anticipated to increase

by more than 30% to 10 billion yuan. In the course of time, the hot pot king of China has

effectively established a a good reputation by overcoming both commercial and

consumer hurdles.

1.3 Problem statement

As the most recent entry into the Vietnamese hot pot market, Haidilao must contend

with the distinction from established, well-known large brands like Hutong, and

Manwah, whose origin is the same as Haidilao. In addition, a fresh rival has emerged in

the form of Dookki, which joined Haidilao a year ago but has since expanded to include

outlets across the entire nation, making it one of the most well-known brands. When

entering the Vietnamese market, Haidilao was not very spectacular due to the service

model, which is not all that distinctive and explicitly permits consumers to be creative

with the flavor of hot pot. Despite having stores in great locations, Haidilao's issue with

making clients wait has not been resolved for a while, which steadily lowers customer

happiness and lowers revenues.

1.4 Research objectives

This report will mainly focus on analyzing the behaviors and services of enterprises that

help businesses differentiate themselves through monopolistic competition. In addition,

we also compare Haidilao with the other famous hot pot chains with the specific figures.

Hence, the data and illustrations are carefully demonstrated in this paper.

2. MONOPOLISTIC COMPETITION LITERATURE REVIEW

AND APPLICATION

2.1 Definition of Monopolistic Competition

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Monopolistic competition occurs between a monopoly and perfect competition,

including features of both and firms with comparable, but not identical, product offers.

The monopolistic rivalry may be found in businesses such as restaurants, hair salons,

home goods, and apparel. Many competing enterprises sell, advertise, and price items

such as dish soap and hamburgers.

Monopolistic competition has "low barriers to entry," which means that multiple

companies can enter the market and compete for a market share, and "product

differentiation," which means that competing companies differentiate similar products

with distinct marketing strategies, brand names, and quality levels. Finally, "Demand

Elasticity" is very elastic and very responsive to price changes, and corporations

function as price makers and set prices for goods and services.

The food and catering industry (F&B) market is unique in that it is characterized by a

highly competitive sector, a rapid elimination rate, and a company reputation that has a

significant impact on the health and safety of enterprises, and customer conduct.

Businesses in this market must continually evolve to adapt and capture chances from

new consumer patterns in order to survive and thrive. There are several vendors in the

hot pot sector, including well-known Asian chains such as Haidilao, Kichi Kichi,

Dookki, and Hutong, as well as prominent local hotpot restaurants. describe the meals

they will serve. Although the cooking procedure is the same, each product and service

has a distinct feature that only they have, such as dishes, tastes, and ways of presentation.

Hotpot chains have market power as well, establishing higher or lower pricing based on

product differences. Because there is no need for a factory or complex technological

equipment, it is simple to enter this industry.

2.2 Economic Efficiency under Monopolistic Competition

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It is widely acknowledged that a monopolistically competitive market can never attain

productive or allocative efficiency since a thing is always priced higher than its marginal

cost. Similarly to the monopoly market, in the short-run, it produces a quantity at which

marginal revenue equals marginal cost, then utilizes its demand curve to determine the

price at which that amount may be sold.

Companies in monopolistic competition produce at a level where marginal cost and

marginal income are equal in the long term. However, due to new entrants into the

market, the demand curve will have moved to the left and firms receive zero profit.

Even if monopolistic competition is not completely perfect, innovation and variety are

arisen from its characteristics. Obviously, there are many hot pot restaurants with varied

models such as buffets, a la carte, etc., and pricing ranges that are acceptable for both

working people and students. Many individuals would prefer to live in an economy with

a diverse range of clothing, cuisines, and vehicle models, rather than in a world where

everyone wears blue jeans and white shirts, eats only banh mi, or uses the same types of

mobile phone. Hence, it is better than to live in an economy where businesses are

fighting to determine how to appeal and retain customers through strategies such as

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friendlier service, free shipping delivery, quality assurances, or convenient locations.

For example, while people are attracted by the noodle dance of Haidilao, the desert line

of Manwah makes them come back once again.

3. The competition of the hot pot chain market in Vietnam

3.1 Existing rivals and entry barriers

On the Vietnamese market right now, a battle is raging between two factions: local folk

hotpot restaurants, such as stingray hotpot in Vung Tau and chicken hotpot with lemon

leaves in Da Lat, and floating hotpot brands. Mahwah, Dookki, Hutong, and Kichi Kichi

are examples of worldwide languages.

Haidilao had its own fame and brand awareness when they were still in China, and in

2019 Haidilao first debuted in Vietnam in a most costly area. Vincom Ha Noi,

Vietnam. As a fresh wind, swiftly drew the attention of many people and soon became

the king of the hot pot sector with its exceptional service and creative flavors,

particularly in 2019 with the opening price is 1,108vnd per day; by 2022, this figure will

have risen to 1,276vnd (0.36 %).

Manwah, which debuted in 2017 and afterward, is still one of Haidilao's fiercest

competitors. Manwah was at the time one of the usual Taiwanese-flavored chain stores

that dominated the hot pot market. The famous Taiwan’s hot pot chain has operated

more than 41 outlets around the country over four years. Despite being impacted by

COVID-19, Manwah nonetheless saw extraordinary growth in 2020 when it served

more than 1.5 million guests, generated up to $25 million in income, and exceeded the

growth milestone of more than 80% compared to 2019. Additionally, Dookki is a

brand-new rival with a completely unique business plan that sets it apart from other

typical hot pot restaurants. You are able to make your own hot pot in addition to merely

taking pleasure in eating and drinking. Particularly in Vietnam, Dookki has opened 30

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outlets around the country thus far despite just falling in love with its first location in

November 2018. This is sufficient evidence of the brand's prominence and allure. It also

demonstrates the love that young Vietnamese people have for this Korean delicacy.

Currently, Haidilao has swiftly risen to the top of the hot pot sector in Vietnam despite

being a newbie to the country. And a crucial component of the company is product

differentiation. Monopolistic competition has the capacity to provide clients with many

more alternatives than a monopoly market, ranging from flavors and ingredients to even

the brand identity. Thanks to the delightful interactions provided by their well-trained

employees and the ongoing innovation of their marketing techniques, they more than

ever know how to make their customers' time spent here useful. Turning to

inefficiencies, the businesses create unique goods since the hotpot market cannot

provide "uniform pricing" that best serve the customers, like ideal competition.

Consequently, each company must pay substantial selling expenditures. On the plus side,

businesses are under pressure from the competition to reduce prices and improve goods.

3.2 Product differentiation

3.2.1 Service strategy

There are many models of hot pot restaurants on the market today, with that price range,

Haidilao stands out and prides itself on providing customer services beyond the

expectations of a typical hotpot restaurant.

Chain invests heavily in customer waiting areas. Unlike most hotpot restaurants when

customers wait without seats, the waiting area in Haidilao is very well decorated and can

take up 1/3 of the restaurant's total space, it provides WIFI, service manicure/shoe

shine/hand massage, board games, and a variety of snacks and drinks, all for free. This

one-of-a-kind waiting experience has resonated significantly with the restaurant among

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young diners, and received a lot of positive feedback, saying that the services give

consumers the opportunity to relax and connect without feeling like wasting time.

Nail services in Haidilao while customers are waiting for a table

In addition to providing these services for free, Haidilao also encourages its employees

to support its customers' unique service value propositions. In this high-end hot pot

segment, there are Manwah and Hutong as two big hotpot restaurants, but in terms of

"pampering" customers with unique proposals, these two restaurants are not equal. This

can be seen clearly on the reviews of hotpot restaurants or tiktok clips that only show

Haidilao's images in the customer service segment. Haidilao understands that customer

satisfaction will make the chain retain customers longer, so employees are entitled to do

whatever makes customers happy.

In short, the strategy of providing customers with unique services that make customers

feel like not only eating hot pot but also relaxing has made Haidilao stand out from other

brands in the same industry.

3.2.2 Location Strategy

Hot pot companies typically locate their outlets in commercial areas. In Vietnam,

Haidilao currently has 14 facilities, concentrated in 2 big cities, Ho Chi Minh and Hanoi.

Haidilao has chosen the premises extremely carefully. It can be seen that most of

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Haidilao's restaurants are located in commercial centers or luxury buildings in the

central area. This once more clarifies Haidilao's position in the market. Haidilao is

conveniently accessible at Landmark 81, Crescent Mall, and other commercial locations.

After strolling for many hours to buy things, potential buyers may become hungry and

quickly choose a place to eat and enjoy themselves within the mall rather than going out.

As a consequence, Haidilao's whole network is housed in retail malls, ensuring that

consumers don't have to worry about finding parking or difficult-to-find addresses.

Furthermore, the company placed its restaurants in office buildings such as Bitexco,

which helped Haidilao increase sales by providing a meeting space for office workers or

partner customers visiting the workplace to gather and eat.

Haidilao branches are all located in the mall

In terms of form, Haidilao has all kinds of tables for families, groups of friends,

couples, and individuals. More special than other hotpot brand chains, Haidilao also

provides a private dining room for customers in need. The rich variety of seats makes

Haidilao score in the hearts of consumers, and is a priority place when customers need to

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find a meeting place. In addition, Haidilao also serves until the middle of the night for

customers who want to eat at night, which is something that other hotpot brands have

not been able to do.

3.2.3 Product Lining

Haidilao creates the uniqueness of the brand by including exclusive dishes only Haidilao

has. For dipping products, the brand is especially popular with Haidilao beef, which is

marinated, thinly sliced according to the taste of Cantonese people. A special feature

when enjoying Haidilao's dishes is that in addition to satisfying the sense of smell and

taste, the sight is also completely expanded with special noodle dances, which can also

be considered as a highlight, making diners cannot rest my eyes. In their menu,

customers can consider many different hot pot flavors and can choose the size to suit

their needs. When the customer chooses the item on the electronic device, it will show

the total price the customer has to pay, this helps customers measure the price they have

to pay in advance and choose the right dish for their conditions. The dipping sauce

counter is located in a separate area so that diners have the space to choose the flavor of

the sauce according to their preferences. Besides custom dipping sauce recipes,

customers can also create their own sauce flavors to their liking. Haidilao staff will also

support and advise you to do this.

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 Noodle dance performance at Haidilao delights diners

In addition, Haidilao offers a wide variety of products compared to other hot pot brands.

Customers can enjoy appetizers such as fried dumplings or other fried dishes such as

fried rice, fried noodles, and steamed rice. The diversity and uniqueness of Haidilao's

menu makes customers satisfied from the elderly to young children.

3.3 Haidilao’s success in Viet Nam

and all of them are in ideal locations in two big cities, Hanoi and Ho Chi Minh City.

According to Brand Finance (2020), the China's most famous hot pot restaurant is the

fastest growing brand in this year's ranking, increasing 136% to US$4.7 billion and

leapfrogging from 9th to 15th place. Haidilao, which serves more than 100 million

guests each year, takes pleasure in providing best-in-class customer service, which is a

primary motivator in the brand's goal of enhancing the eating experience. Moreover, this

new foreign entrant is one of the main factors that slows down the growth of the Red Sun

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and Golden chains (Son, 2019). Hence, the hashtag #Haidilao holds 762.8 million views

on the Tiktok platform despite not investing too much in advertising. Making the most

of social media, Haidilao shares videos of noodle demonstrations as well as surprise

birthday greetings for customers at restaurants. Furthermore, the company encourages

both online and offline user participation by inviting customers to create their own soups

or sauces and post films to TikTok. Many food lovers have visited Haidilao eateries to

film videos and demonstrate their inventiveness in producing hot pot dishes using their

own recipes. Recently, clips that its staffs make hearts with customers are also trending.

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 3.4 Haidilao’s latest movements

Famous for its delicious dishes, Haidilao has grown into a global restaurant chain with

more than 600 stores, including in demanding markets like the US. When officially

launched on the stock exchange in 2018, Haidilao's shares were so interested that the

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subscription level exceeded 20 times the number of offers. Since its IPO in September

2018, the stock price has more than doubled, bringing the company's capitalization to

over $26 billion. Haidilao has received quite a lot of attention from investors.

Reportedly, this restaurant chain has received $ 375 million in investment capital from

Hillhouse Capital, Greenwoods Asset Management, Morgan Stanley, Snow Lake, and

Ward Ferry. And after the IPO in September, Haidilao raised nearly $ 1 billion in the

capital, contributing to the capitalization of the business to approximately $ 12 billion.

4. Conclusion and recommendations for Haidilao.

Despite competition from a variety of major and small hot pot companies, from locally

distinctive modest and rustic eateries to well-known global names. Prior to it, Haidilao

had effectively resurrected itself to rank among the top brands following the Covid

pandemic. Since Haidilao has a keen understanding of the significance of consumer

sentiments regarding their brand and has worked to maximize customer happiness, they

have outperformed all other brands in terms of brand success. It will cost less to make

waiting areas entertaining by crafting nails or paper cranes, then with a marketing plan

made possible by the visitors who come here to have a good time, it has increased public

knowledge of Haidilao even more. Additionally, it can be claimed that they are “trend

makers” since every time visitors come here, they have unique experiences. By

capitalizing on this fact, they have piqued the interest of subsequent visitors in the

experiences that are yet to come. However, there still have some points that Haidilao

needs to improve:

a. The quality of the food is the most crucial factor; if one shop makes a mistake,

the entire brand will suffer. Vietnamese customers are likely to prioritize

better-quality food products, a nicer restaurant atmosphere, and wholesome and

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 healthful eating selections more as their consumption patterns improve. This

trend is anticipated to be advantageous for mid-to-high-end hot pot restaurants.

b. It is possible for consumers to feel uneasy while enjoying their cuisine in

different locations, even when the employees are serving the same brand of food.

As a result, it is imperative that no matter where they are, whether or not the

store is busy, the staff always has a kind attitude. When hiring, make sure that

the candidates receive sufficient training before being given official permission

to work.

c. Expanding demand for meal delivery services. People have less time to cook at

home as society becomes more hurried, therefore they may decide to order meal

delivery at home or at work. Additionally, the market for meal delivery services

has expanded because to the rising popularity of food delivery apps. As a result,

it is anticipated that the market for meal delivery services would expand quickly

in the next years.

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