SPECIAL REPORT-Vietnam's capitalist roaders follow China's trail

Study Mandarin," he said, referring to the main Chinese dialect. In the northern capital of Hanoi, Dao The Vinh also has a taste for China. The 38-year-old chief executive of Golden Gate Trade & Service, a fast-growing restaurant chain operator, is modelling his business on China's Little Sheep Group Ltd which has more than 350 chain stores around the world. "That is our case study," he said, "But of course our culture is different and we have to find our way of doing things." Five years ago, Vinh and two friends set up a restaurant specialising in "mushroom hotpot" -- a savoury mix of mushrooms, meat and vegetables boiled in a salty broth and eaten from a gas-fired vessel. Within two years, he had six shops. By last year, he had 34. "Our vision is in the next three years to increase profits 40-50 percent a year, and at the end of 2013 to have about 90 or 100 restaurants," he said. His rival, seven-year-old Pho 24, a network of soup noodle shops that has become the biggest restaurant chain in Vietnam with 60 stores, has expanded abroad with 19 restaurants. Founder and chief executive Ly Qui Trung said he expects the number of franchised stores to double or triple in the next five years. But mom-and-pop shops still hold sway over the Vietnamese consumer . In congested Ho Chi Minh City, a city of about eight million people, shoppers elbow their way through crowded Saigon Plaza, whose two floors of small rented stalls sell everything from clothing and jewellery to knock-off handbags and children's toys. "There's a lot of variety here and the prices range from low to high. Best of all, you can bargain," said Te Vinh Loc, a 34-year-old designer as he snaked his way through a maze of second-floor stalls on a Thursday afternoon. "Sometimes I look at the high-end places, but they don't have what I'm looking for so I come here." A few shops away, saleswoman Quynh Thi Bich Lai sells a blue-and-white soccer shirt with the Adidas logo for $6. "It's just good business," said Quynh, who moves about 200-300 units of clothing a month in a stall no bigger than 2 sq metres. Retailers at Saigon Plaza pay rent of about $600 a month and generate about $2,000 in revenue, pocketing about $500 a month in profit. Down the street, at the sparkling new Vincom Center, store attendants sat quietly in mostly empty stores, some thumbing messages on their phones. At a Versace store, women's handbags were on sale for around $2,600 each - more than double the annual salary of an average Vietnamese worker. Business is "not good but ok," said salesman Nguyen Anh Tuan. The shop attracts about 50 shoppers a day, he said, though only about five make purchases. But the potential for future growth means the luxury brands can't afford not to be in Vietnam. In usually staid Hanoi, paparazzi at a rope line snapped celebrities arriving in stretch limos for the September opening of a Gucci store opposite the landmark century-old opera house and Hanoi stock exchange building. Most days, however, shoppers are scarce.