Illustrative image (Source: VNA) Hanoi (VNA) – Foreign retailers have made strongerpresence in the Vietnamese market over the years, posing great pressure ontheir domestic competitors.
According to the Department of Domestic Market under theMinistry of Industry and Trade, the retail market of Vietnam has seen a strong waveof investment with such big names as Central Group from Thailand, Aeon fromJapan, Lotte from the Republic of Korea, and most recently, Auchan Retail fromFrance.
According to head of the department Le Viet Nga, Vietnameseretail market is attractive due to large and young population. Besides, householdconsumption is forecast to rise 10.5 percent per year to 714 USD per month in2020, and the coverage of modern retail system compared to other regionalcountry remains low, at only 25 percent.
The conclusion of negotiations and signing of new-generationfree trade agreements containing commitments to open the service, investmentand distribution markets has also drawn more foreign investors into theSoutheast Asian country’s retail market.
The increase in market shares of foreign retailers has poseda number of challenges for domestic ones.
Nga said that the biggest challenge for the domestic retailersis their weak competitiveness, noting that over 90 percent of domesticretailers are small and medium-sized.
Meanwhile, foreign firms are financially capable and haveinternationally-standardized governance and operating systems. Merge &acquisition deals allowed them to enter the Vietnamese market as quickest asthey wish, she said.
Other challenges come from local macro management where a legalframework formed for retail market development has yet to be complete andcomprehensive, and the efficiency of policies and legal regulations in thefield have yet to be strictly implemented in localities.
Experts commented that competition among retailers benefitconsumers, giving them more choices. However, they agreed that the Governmentshould work harder to create an equal and transparent competition betweendomestic and foreign firms, and between traditional and modern retail channels.-VNA
VNA
