Increased presence of Thai imports challenges domestic products

Hanoi (VNA) – The increased presence of Thai imports will motivate local producers and the economy, but it also poses a fierce challenge for domestic products, said Vietnam Retailers’ Association (VRA) President Dinh Thi My Loan.

Overseas retailers were allowed to establish 100-percent foreign-invested businesses in Vietnam from January 2015 based on the country’s WTO commitments. The formation of the ASEAN Economic Community that enables the free movement of goods, capital and human resources within the region, in addition to the recently signed Trans-Pacific Partnership (TPP) deal, will add more pressure for domestic manufacturers.

The Ministry of Industry and Trade expects Vietnam to have 1,200 to 1,300 supermarkets and 180 shopping centres by 2020 with estimated retail sales of 25 to 30 billion USD, offering appealing opportunities for overseas producers.

Thai investors have scaled up their presence in the country through a number of deals since 2013. The deals include Thai-based Berli Jucker (BJC) purchasing convenience-store chain Family Mart from Vietnam’s Phu Thai Group and introducing it as B’s Mart in 2013. The firm continued acquiring Metro Cash & Carry Vietnam for 876 million USD in August 2014.

In January last year, Central Group, a leading Thai electronics store operator, bought 49 percent stake from electronics retailer Nguyen Kim for 200 million USD. The group also expanded its Robinson department stores which distribute Thai goods in Hanoi and Ho Chi Minh City.

Both BJC and Central Group are expressing their intention to acquire Vietnam’s Big C retail chain.

Loan voiced her concern over Thai firms’ aggressive expansion into the domestic market, warning that Vietnamese goods find it hard to enter Thai retailers’ systems.

According to the VRA president, Thai products are favoured by many Vietnamese, as they are well-designed, high-quality and affordable.

Central Group plans to spend 1.3 billion USD to open stores and pursue merger and acquisition (M&A) deals in Southeast Asia, including in Vietnam, over the next three years. It is expected to pave the way for more Thai products to enter Vietnam’s market, Director of the Ministry of Industry and Trade’s Domestic Market Department Vo Van Quyen said.

To gain a stronger foothold in the domestic market, local firms should shift from traditional to modern retail models and draw up strategies that reflect lessons learned from global brands, Loan suggested.

Additionally, local enterprises should cooperate to create strong links and compete with imported products. The government needs to encourage customers to use Vietnamese goods by regulating the minimum proportion of local products sold at supermarkets, she added.-VNA