Illustrative image (Source: VNA) Hanoi (VNS/VNA) - Competition between domestic and foreignretailers is likely to remain fierce this year, requiring Vietnamese businessesto cooperate in order to maintain their market shares, said an official fromthe Ministry of Industry and Trade (MoIT).
The warning was given by deputy head of the MoIT’s Multilateral Trade PolicyDepartment Ngo Chung Khanh in the wake of news that while many Vietnameseproducts are exported overseas, those same products are also imported fromother countries for domestic consumption.
Khanh pointed out that price of Japanese mango and Taiwanese dragon fruit couldreach up to a million dong per kilo and still sold out in the Vietnamesemarket.
“There are also many examples such as imported beef, chicken and pork which notonly meet international standards but are also much cheaper than domesticproducts,” Khanh said.
In terms of garment and textiles, a major sector for Vietnam, Khanh said therewas big pressure on the sector due to the presence of the world’s famous brandssuch as Zara and H&M in the domestic market.
Japan’s Uniqlo recently bought a 35 percent stake in a Vietnamese fashion firm.It planned to open its first branch in Vietnam this year, said Khanh.
In seven years when all tariff barriers for garments among the CPTPP countriesare completely removed, foreign fashion firms will have the chance to dominatethe market, which is valued at 4.5 billion USD per year with annual growth of20 percent, according to domestic garment enterprises.
According to the ministry, the number of foreign retailers currently accountedfor only 17 percent of the modern retail market share, but insiders said thereal figure was much higher. Names like Central Group, Lotte and Aeon arere-dividing Vietnam’s retail market.
In comparison with foreign businesses, the insiders said Vietnamese retailerslacked capital, business strategies and even professional services. To competewith foreign firms would require strong links between domestic companies.
A report on 2019 released by Vietcombank Securities showed that minisupermarkets and convenience stores would be the fastest development model thisyear. Although it currently occupies a small proportion of total retailrevenue, it had been growing rapidly, luring foreign investors withinternational brands such as Family Mart, Circle K, Shop&Go, Bs Mart andGS25.
Vu Vinh Phu, a retail expert, said only one in ten businesses was capable ofgetting goods on the shelves of foreign supermarkets due to high costs, pricesqueezes and discounts.
He said the quality and design as well as the stability of Vietnamese productswere also very limited. The volume of clean agricultural products on display insupermarkets and trade centres was quite small compared with the country’sproduction capacity.
“This leaves Vietnamese goods in a weak position compared with foreign ones andleads to them being pushed out of the system.”
Tran Thi Phuong Lan, deputy director of Hanoi’s Industry and Trade Department,said one of the reasons was farmers and producers did not have complete controlof product quality.
“Many agricultural products are unhygienic with no packaging or certificationson food safety,” Lan said.
Deputy Director of the Hà Nội Investment Promotion, Trade and Tourism CentreNguyen Thi Mai Anh said it was difficult for Vietnamese enterprises to accessinformation on criteria for production and technology in order to makequalified products that suited market demand, competitiveness and reasonableprices.
Due to technical barriers, Anh said there were many regulations requiringbusinesses to invest on a large scale. “If enterprises do not receiveinvestment or long-term commitments, they won’t be able to meet theseregulations from distributors.”
“The influx of foreign retailers into Vietnam has inherently increased in thepast few years, and coupled with the new push from the CPTPP, it will furtherincrease in the coming years,” she added.-VNS/VNA
VNA
