Vietnam may soon become a fashionista paradise with scores of leading fashion retailers vying against one another to distribute their brands in the fast growing country, the Vietnam Investment Review (VIR) has reported.

Chairman of Luala Fashion Company Do Ngoc Minh just inaugurated their second store in Ho Chi Minh City. He forecasted that Vietnam will soon be a leading destination for fashionable shoppers from throughout the region. Foreign luxury retailers would rather work together to grow their collective market share quickly, than catfight over mere metres of sales space.

Luala’s second store is over 300 square metres and has occupied a location previously held by Gucci and neighbouring the Milano store.

Luala was founded in 2006 and is managed by DX Fashion Group, it opened its first store in Hanoi and specialises in distributing numerous international fashion brands.

In May last year, Luala merged with Milano with the aim of puting a firm foothold in the southern market.

Experts say Ho Chi Minh City is an ideal market for high-end fashion brands, but Luala is also faced with competition from similar companies such as Imex Pan Pacific Group (IPP), Tam Son Fashion, and Four Seasons.

VIR quoted Minh as saying that location is critical in developing a business. Luala is confident that the company’s buyers have over 20 years experience in the fashion industry and have a clear understanding of Vietnamese consumer trends.

Minh added that DX Fashion was on a smaller scale than its competitors but that Luala included a private development strategy unique to it and Milano. Instead of opening single brand stores within a trade centre, DX Fashion invests in department stores offering scores of brands.

Luxury fashion companies have noticed several interesting aspects of Vietnam likely to lure international tourists. Moreover, they also have strategies to win over medium and high-end domestic customers.

Le Hong Thuy Tien, General Director of IPP said that sales to international tourists were growing and that just last year IPP saw 20 percent growth in the face of shrinking consumption.

Minh said that Vietnam’s retail market still has plenty of room but that high-end fashion brands face challenges such as complex customs procedures and high import taxes.

According to Minh, if the state supplies sound policies, current fashion companies in the countries will fare even better and therefore potential entrants would be more eager to invest. Brands that have made significant investments in Hong Kong, Singapore and Thailand have their sites set on Vietnam and are just waiting for the right time to strike.

“Right now, the right policies and thereafter establishing presence are more important to these companies than fighting over market share,” Minh explained.

Minh added that at present, Vietnam is not yet considered an attractive high-class shopping destination in Asia. He explained that compared to other ASEAN countries, Vietnam’s tourist volume was high, but their spending was quite low. Most international tourists spend a lot on souvenirs handicrafts. Not only DX Fashion, but other groups such as IPP, Tam Son and Four Seasons are also eagerly awaiting a policy shift in their favour.

One policy they would like is a value-added tax (VAT) refund. Thailand is notable in this regard. But in Vietnam, the VAT refund procedure is complex. That said, until this changes, if fashion companies want sales to international tourists to increase they may have to loosen their own purse strings.

Discussing IPP’s business plan for this year, Tien said they hope the economy will get back on track as their goal is to double last year’s turnover. Minh said DX and Luala were preparing for challenges in 2014 but that they are confident in their long-term strategy.-VNA