Vietnamese retailers have expressed concerns about the increasingly competitive retail market, as the country plans to open up to an influx of foreign retailers required by the World Trade Organisation (WTO) obligations, which will come into effect from January 11, 2015. Report by Dan Tri online newspaper.
Under the WTO obligations, Vietnam will have to permit the establishment of wholly foreign-owned businesses, including retailers, and some of the world's leading retailers have expressed great interest in the Vietnamese market.
Since Vietnam began to open its markets to foreign retailers beginning in early 2009, with the entry of companies such as Metro Cash&Carry and Lotte Mart, the landscape of modern retail in Vietnam has changed. Some foreign retailers are even expanding their distribution networks to rural regions.
Statistics from the Ministry of Industry and Trade (MoIT) show that by the end of 2012, foreign groups accounted for 40 percent of about 700 supermarkets in Vietnam. Meanwhile, 31 out of 125 commercial centres in the country were foreign-invested.
According to the MoIT, competing with foreign retail businesses will be a challenge for domestic companies. Leading international retail groups have poured large sums of money into their business expansion plans in Vietnam. More outlets and trade centres have been opened to compete with local retail businesses.
Metro Cash&Carry opened 10 new trade centres in 2011, while Parkson added seven new shopping centres in big cities across Vietnam. Big C invested 14 million USD in a new trade centre in northern province of Thanh Hoa late last year, increasing the number of outlets for the chain in Vietnam to 17. They plan to increase the figure to 29 this year. With initial investment capital of 80 million USD, E-Mart Group, out of the Republic of Korea, has signed a joint venture with U&I Group to put their first project into operation in 2013.
Meanwhile, Thai and Japanese firms have also seen potential in the Vietnamese market. The retail business group Berli Jucket decided to acquire 65 percent of shares in Thai An Company, which manages 41 “B’s Mart” convenience stores in Ho Chi Minh City. It opened three more stores in August, bringing the total number of stores to 61 late this year.
Speaking with The Nation newspaper in Thailand, Berli Jucket’s Vice President Phidsanu Pongwatana said that compared to Thailand, which has fierce competition, Vietnam is seen as a potential market for the retail industry. According to its development plan, the group will open an additional 100 stores next year, and 300 more in Hanoi and other big cities by 2015.
Japanese retailer Aeon has also recently opened a national headquarters in Ho Chi Minh City and plans to open many retail stores, including convenience shops, shopping centres and supermarkets in Vietnam. Last December, the company launched its first Mini Stop convenience store in the southern hub and is intent on running its first shopping centre in Hanoi next year.
Thailand's leading shopping mall developer, Central Pattana, is currently negotiating with a Vietnamese partner to develop their first shopping complex in Vietnam.
Many Vietnamese retailers see this as a threat and are doing their best to firmly establish their brands in the country. Saigon Co.op Mart recently opened many more shops in industrial parks and export processing zones to serve workers. They also have got approval for a commercial joint-venture with a Singaporean retailer, Fairprice, and will open two supermarkets named Co.opXtra and Co.opXtraPlus in the near future.
Saigon Co.op Mart’s President Nguyen Ngoc Hoa says fierce competition requires greater efforts on their part to meet the high customer demand and secure a firm foothold in the market.
According to Pham Quoc Manh, CEO of Phu Thai Group, which is among leading local retailers, the opening the retail market means that domestic retailers will be well-prepared to compete with their foreign rivals.
“In fact, no Vietnamese enterprise has capital of over 100 million USD,” Manh confirmed. “Besides, revenues from foreign-invested supermarkets are usually 20-30 times higher than those of their Vietnamese counterparts. Vietnamese retailers will face great difficulties if they do not cooperate with one another and find a good development strategy. We are also considering cooperating with a foreign partner to better position ourselves."
The deputy general director of Vinatex, Hoang Ve Dung, said that the two biggest obstacles that domestic enterprises need to overcome when competing with foreign rivals are capital and human resources. Dung also added that they needed to pay more attention to consumers’ buying habits, quality and prices.
“I think for this, Vietnamese retailers should learn from outlets such as Big C and Metro, who appear very professional in managing the origin, quality and price of their products,” Dung said.
Speaking at a recent online forum held in Hanoi, deputy head of the MoIT’s Domestic Market Department Tran Nguyen Nam warned that foreign firms have the benefit of experience, financial resources and qualified workers, so to compete with them, domestic retailers will need to adapt their management systems, training and customer service.
A recent report, "Vietnam Retail Market Forecast to 2014", by AT Kearney says that Vietnam's total retail market is forecast to see an annual growth rate of 23 percent by 2014, offering many opportunities for both domestic and foreign retailers. According to the report, in the next few years, a short wave of consolidation will emerge as foreign retailers try to establish their positions and penetrate the market.
Modern retail is expected to be the key distribution channel in Vietnam in the near future due to its 90 million consumers, AT Kearney's report remarks. Vietnamese consumers' shopping habits are changing, with more spending in modern retail outlets due to convenience and health-related issues. And this means fiercer competition expected for Vietnamese retailers.-VNA
Under the WTO obligations, Vietnam will have to permit the establishment of wholly foreign-owned businesses, including retailers, and some of the world's leading retailers have expressed great interest in the Vietnamese market.
Since Vietnam began to open its markets to foreign retailers beginning in early 2009, with the entry of companies such as Metro Cash&Carry and Lotte Mart, the landscape of modern retail in Vietnam has changed. Some foreign retailers are even expanding their distribution networks to rural regions.
Statistics from the Ministry of Industry and Trade (MoIT) show that by the end of 2012, foreign groups accounted for 40 percent of about 700 supermarkets in Vietnam. Meanwhile, 31 out of 125 commercial centres in the country were foreign-invested.
According to the MoIT, competing with foreign retail businesses will be a challenge for domestic companies. Leading international retail groups have poured large sums of money into their business expansion plans in Vietnam. More outlets and trade centres have been opened to compete with local retail businesses.
Metro Cash&Carry opened 10 new trade centres in 2011, while Parkson added seven new shopping centres in big cities across Vietnam. Big C invested 14 million USD in a new trade centre in northern province of Thanh Hoa late last year, increasing the number of outlets for the chain in Vietnam to 17. They plan to increase the figure to 29 this year. With initial investment capital of 80 million USD, E-Mart Group, out of the Republic of Korea, has signed a joint venture with U&I Group to put their first project into operation in 2013.
Meanwhile, Thai and Japanese firms have also seen potential in the Vietnamese market. The retail business group Berli Jucket decided to acquire 65 percent of shares in Thai An Company, which manages 41 “B’s Mart” convenience stores in Ho Chi Minh City. It opened three more stores in August, bringing the total number of stores to 61 late this year.
Speaking with The Nation newspaper in Thailand, Berli Jucket’s Vice President Phidsanu Pongwatana said that compared to Thailand, which has fierce competition, Vietnam is seen as a potential market for the retail industry. According to its development plan, the group will open an additional 100 stores next year, and 300 more in Hanoi and other big cities by 2015.
Japanese retailer Aeon has also recently opened a national headquarters in Ho Chi Minh City and plans to open many retail stores, including convenience shops, shopping centres and supermarkets in Vietnam. Last December, the company launched its first Mini Stop convenience store in the southern hub and is intent on running its first shopping centre in Hanoi next year.
Thailand's leading shopping mall developer, Central Pattana, is currently negotiating with a Vietnamese partner to develop their first shopping complex in Vietnam.
Many Vietnamese retailers see this as a threat and are doing their best to firmly establish their brands in the country. Saigon Co.op Mart recently opened many more shops in industrial parks and export processing zones to serve workers. They also have got approval for a commercial joint-venture with a Singaporean retailer, Fairprice, and will open two supermarkets named Co.opXtra and Co.opXtraPlus in the near future.
Saigon Co.op Mart’s President Nguyen Ngoc Hoa says fierce competition requires greater efforts on their part to meet the high customer demand and secure a firm foothold in the market.
According to Pham Quoc Manh, CEO of Phu Thai Group, which is among leading local retailers, the opening the retail market means that domestic retailers will be well-prepared to compete with their foreign rivals.
“In fact, no Vietnamese enterprise has capital of over 100 million USD,” Manh confirmed. “Besides, revenues from foreign-invested supermarkets are usually 20-30 times higher than those of their Vietnamese counterparts. Vietnamese retailers will face great difficulties if they do not cooperate with one another and find a good development strategy. We are also considering cooperating with a foreign partner to better position ourselves."
The deputy general director of Vinatex, Hoang Ve Dung, said that the two biggest obstacles that domestic enterprises need to overcome when competing with foreign rivals are capital and human resources. Dung also added that they needed to pay more attention to consumers’ buying habits, quality and prices.
“I think for this, Vietnamese retailers should learn from outlets such as Big C and Metro, who appear very professional in managing the origin, quality and price of their products,” Dung said.
Speaking at a recent online forum held in Hanoi, deputy head of the MoIT’s Domestic Market Department Tran Nguyen Nam warned that foreign firms have the benefit of experience, financial resources and qualified workers, so to compete with them, domestic retailers will need to adapt their management systems, training and customer service.
A recent report, "Vietnam Retail Market Forecast to 2014", by AT Kearney says that Vietnam's total retail market is forecast to see an annual growth rate of 23 percent by 2014, offering many opportunities for both domestic and foreign retailers. According to the report, in the next few years, a short wave of consolidation will emerge as foreign retailers try to establish their positions and penetrate the market.
Modern retail is expected to be the key distribution channel in Vietnam in the near future due to its 90 million consumers, AT Kearney's report remarks. Vietnamese consumers' shopping habits are changing, with more spending in modern retail outlets due to convenience and health-related issues. And this means fiercer competition expected for Vietnamese retailers.-VNA
