ON FEBRUARY 8th Vietnam's first McDonald's opened with great fanfare in Ho Chi Minh City, the country’s business capital. The event was rich in both saturated fat and historical irony: the outlet, a potent symbol of American capitalism, sits in a city that was, until 1975, a key outpost in America's struggle against communism. The company's local franchisee, a Harvard-educated, Vietnamese-American tech tycoon, is the son-in-law of Nguyen Tan Dung, the prime minister, who presides over a nominally communist nation. McDonald's is the latest American fast-food food brand to enter the Vietnamese market—a trend that began in 1997, with the arrival of fried-chicken giant KFC, and that has accelerated in the last three years. Starbucks, Subway and Burger King are all growing their empires here. Analysts say the trend illustrates how Vietnam’s rising annual incomes, estimated at around $1,800, are increasingly attractive to international food-and-beverage retailers. Sales at modern supermarkets, as opposed to traditional ones, roughly tripled in Vietnam between 2008 and 2012, according to the forecaster Euromonitor.

That portrait seems consistent with an emerging consensus, among Ho Chi Minh City’s businessmen and developers, that the country's property market is slowly coming back to life, five years after its 2008 crash—and smartly offering more products to the middle class, rather than to the super rich. Developers and businessmen hope that, by shopping more and investing in new apartments, Vietnam's urban middle-classes will aid the government's campaign to bring the economy back to the seven-percent-growth figure it achieved in the mid 2000s. Last year's growth rate of 5.4% was a slight uptick from 2012’s rock-bottom 5.03%, but still far below the rates of the boom years.

Another apparently positive sign is the appearance, last year, of several new malls in the country’s two major cities. In Hanoi, the capital, investment-grade retail stock grew last year by an unprecedented 133%, according to Jones Lang LaSalle, a real-estate consultancy. Perhaps the flashiest example is Trang Tien Plaza (pictured), a downtown mall near the Hanoi Opera House; Louis Vuitton occupies its choicest spot. The biggest is Vincom Mega Mall, a mammoth underground affair with Asian food courts and a skating rink. (Your correspondent is a hockey player who regularly loses his way in its cavernous depths.)

But other statistics suggest that Vietnam's retail sector is not as healthy as it seems. The retail sector’s 2013 growth rate, of just under 15%, was the slowest in four years, according to the real-estate consultancy CBRE. Consumer confidence has been sliding since 2008, according to TNS Global, a market forecaster. And the country’s two major cities—especially Hanoi—are oversupplied with retail space. Jones Lang LaSalle reports that more than half of the landlords managing Hanoi's investment-grade retail properties lowered their rents last year in an effort to keep their tenants. Analysts say the general retail outlook for the short term is continued oversupply, particularly outside of the central business districts. Many think that Vingroup, the local developer behind that underground mega-mall, has taken a mega-risk by building in such a soft retail market.

Trends in modern grocery retailing are equally hard to analyse with any certainty. Big-box supermarkets have been trickling into Vietnam since the country joined the World Trade Organisation in 2007. But a 2013 study by British and Vietnamese academics found that the top five super-sized retailers in Vietnam still only accounted for 4% of its grocery market. Vietnam's street markets, which sell everything from live frogs to toilet paper, remain a formidable foe for big-box hopefuls. This is especially true at a time when more urban Vietnamese increasingly view their jobs as less secure. Kantar Worldpanel, a consultancy, says that although what it calls “Hyper-Super” modern grocery retailing is likely to grow in Vietnam over time, some thrifty urban consumers are switching back to traditional markets. Hanoi officials recently tried to move a wet market into a commercial building, but a local official told a state-run newspaper that the project "hasn’t done anything but concern people.” The paper wrote that similar projects had also "failed miserably".

A survey of the broader economy reveals other instances of indicators that look sound but actually mask systemic problems. The country’s official unemployment figure of around 2% is widely considered a gross underestimate, for example. The government's well-publicised efforts to buy up bad debts in the hobbled banking sector are proceeding too slowly, say some economists. And although Mr Dung, the prime minister, has won praise for his promises to speed up equitisation of state-owned enterprises, the World Bank’s country head for Vietnam said recently that the pace of structural reform last year was "slower than expected”.

Still, Vietnam's young population, as well as its consumer-spending potential, offers solace to some retailers. Smartphone ownership and automobile sales rose last year by 42% and 20%, respectively. Troy Griffiths of Savills, a real-estate consultancy, says Ho Chi Minh City's residential market is also showing signs of life in the low-end sector—albeit "very, very fragile" ones. He is among a chorus of business folk who say sales of residential apartments are the key to the property market’s eventual recovery.

If big-box retailing is not catching on in Vietnamese cities as quickly as some had hoped, Mr Griffiths adds, perhaps that is because hyper-super shopping sprees are somewhat impractical given the country's dominant mode of transport: "You can only take so much on a motorbike.” Fast-food, by contrast, is perfectly suited to two-wheeled life: dozens of motorbikes lined up at the McDonald's drive-thru for the outlet’s grand opening. But it is unclear whether munching on more Big Macs will have a noticeable impact on consumer spending or the economy.

(Picture credit: AFP)