Tuesday, 22 Aug 2017
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ECONOMY

Networking among Vietnamese retailers to compete in domestic market

Updated at Tuesday, 01 Aug 2017, 20:16
The Hanoitimes - Facing the robust expansion of multinational retailers, Vietnamese supermarket chains are compelled to apply modern technologies and to form networks to be competitive in the domestic market.
Regarding Vietnam  as one of the global 30 most attractive retail markets , multinational retail firms have set up here including AEON (Japan), Lotte (South Korea) and Central Group (Thailand). According to Konishi Yukio, the managing director of Aeon Mall Vietnam,  the firm has set up three supermarkets in Ho Chi Minh City, Binh Duong and Hanoi in addition to other  59 supermarkets partnering with Vietnamese  chains such as Citimart and  Fivimart and 75 mini shops. Recently, the convenience store chains 7-Eleven has come to Vietnam. It is expected that in three more years, 7-Eleven will increase the number of stores in Vietnam to 100. In 10 years time, the number will increase up to 1,000 stores.  Central Group, Lotte and Robinson also aim to gain large quota of the Vietnamese retail market.
 
Customers at VinMart supermarket.
Customers at VinMart supermarket.
All multinational retailers said their hypermarkets in Vietnam will sell Vietnamese products. However, reality has proven the contrary. Mac Quoc Anh, the Secretary General of the Hanoi Association for Small- and Medium Enterprises, said  that the foreign retailers  usually tightens the inputs with strict regulations on management, quality, brand names and packaging. Besides, they delay the payments 30 to 45 days and ask for bigger discount rates than Vietnamese retailers. High fees including renting shelves and listing new products also  discourage domestic manufacturers.
 
To counter foreign competition and sell more made-in-Vietnam commodities, Vietnamese retailers are expanding their networks and enhancing association among them. The  CEO of Ha Dong Co.opmart  Nguyen Thi Kim Dung said  the Co.opmart is  piloting some  automatic payments and diversified service channels. Besides traditional retailing, Co.opmart is in the final stage of launching online retailing and is expected put it  into operation in 2019.
 
Recently, the Association of Vietnam Retailers (AVR) has submitted to the government a proposal to set up a retailing group consisting of Saigon Co.op, Phu Thai Group, Saigon Trading Group (Satra) and Hapro, the four biggest domestic retailers with combined  revenue from 4-5 billion USD per year. The Chairwoman of AVR Dinh Thi My Loan said: “This is not the first time this kind of cooperation has taken effect. Since 2007, four enterprises have cooperated  to establish the Vietnam Distribution Association Network Development (VDA).”

However, VDA was a failure, as it lacked the support from governmental policies and regulations. On the other hand, right after the establishment of VDA,  the government issued regulations forbidding  State owned enterprises (SOEs) from investing in  sectors not included in their business lines, resulting in the withdrawal  of Satra and Hapro from VDA. Without the support from these two names, the remaining two retailers were incapable of continuing with this project. Sharing the same viewpoint, the General Director of Hapro –Vu Thanh Son stressed: “We propose to set up a retailing group with the participation from all the economy’s components, so that whoever contribute the most capitals will be in charge of the group.”
 
Speaking about the idea of setting up a retailing group, the  consultant on retail and distribution Dao Xuan Khuong said:  “International experience shows that for national retail firms to be competitive, some countries form  large retailing groups responsible for guiding  the retail sectors and accessing  new markets . This proves the necessity to establish in Vietnam a national retailing group with international vision and strategy.” In short term, we can follow the models of VinMart+ or The Gioi Di Dong, or focus on investing in Saigon Co.op to lead and establish a strong retailing group. As a result, we can realize the potential of the Vietnam retail market and support enterprises in advertising and distributing local products”,   Dao Xuan Khuong said.
Minh Ngoc - Nguyen Tung
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