Vietnamese Goods Risk Losing Home Ground

At the meeting, most domestic retailers shared the view that goods made in Vietnam have weak competitiveness because of boring designs, low quality but higher prices than foreign rivals. There are so many supply intermediaries; therefore, products cost more when they reach consumers.

 

Ms Le Viet Nga, Deputy Director of Domestic Market Department under the Ministry of Industry and Trade, said: After three years launching the “Buy Vietnamese” campaign which convinces Vietnamese consumers to give priority to Vietnamese goods on shopping lists, the proportion of Vietnamese goods in modern retail channels has increased significantly. Up to 70 - 90 per cent of goods in these channels are Vietnamese-originated. However, the penetration of Vietnamese goods modern retail channels is similar from retailer to retailer and from sector to sector. Some sectors have low penetration, with a proportion of 50 - 60 per cents, even below 40 per cent.

 

She attributed this reality to limited categories of goods made in Vietnam, limited quantity, low quality, unattractive packaging designs in relation to imported rivals.

She added that domestic retailers and distributors have small capital scale and limited ability to dominate the market. They lack modern utilities for business activities and usually run small-scaled business spaces. Meanwhile, supporting services remain undeveloped, especially logistics services like warehousing systems, packaging facilities and freight synchronisation. Their service to customers remains unprofessional. After-sale customer policies are weak. Worse, some take advantage of promotions to commit trade frauds, sell unsellable, old or near-expiry goods.

 

From the position of a retail distributor, Nguyen Thi Hanh, General Director of Saigon Co-op, said Chinese goods are now flooding throughout the country at very low prices. This is also a cause to their yielding to foreign items. “The domestic capital market is left behind by domestic companies for a long time. The abolition of import duties for goods from regional countries since 2009 are a powerful leverage for goods from other countries like Thailand, China and Malaysia to influx into Vietnam. If State management agencies and businesses do not make specific support policies and long-term solutions, Vietnamese businesses will lose home ground,” she noted.

 

Also sharing difficulties facing retailers, Ms Vu Thi Hau, Deputy General Director of Fivimart supermarket chain, said, many manufacturers only distributed to Level 1 and Level 2 dealers rather than retailers. Thus, supermarkets must be import from intermediary dealers, causing higher prices quoted by merchants in traditional markets. In addition, advertising expenses seem to be a huge burden for Vietnamese retailers.

 

“In the meantime, domestic goods remain repetitive, designs are not eye-catching and prices are unattractive. During Lunar New Year, foreign goods are full of distribution systems because customers are often keen on nice-looking and luxury products to present others. As domestically produced goods fail to meet the demand, retailers must import foreign goods to serve customers. As for kid-wear, Fivimart still sells Chinese products since their designs are fast-changing and prices are very low," she stated.

 

Ms Le Viet Nga said, to remove these limitations, the Ministry of Industry and Trade will continue sending recommendations to the Government for support mechanisms and policies on training, legal advice, marketing, trade promotion, tax and fee preference for businesses. The ministry will also consider setting up funds to provide soft loans for distributors to open new retail spaces, continue developing local commercial infrastructures, especially modern retail systems, to bring revenues of modern retail channels on total retail sales from about 20 per cent at present to 40 per cent in 2020.

 

To help Vietnamese goods penetrate deeper into modern retail systems, Dr Dinh Thi My Loan, Vice President and Secretary General of the Vietnam Retailers Association, said that "It is necessary for manufacturing enterprises to build well-recognised brand names for their products to help people easily know and use. Communication is an effective vehicle for domestic products to attain popularity and domestic enterprises should pay attention to that to help consumers know product quality."

 

In addition, they need to improve the competitiveness of retail industry otherwise Vietnamese goods will not be able to gain access to consumers, she added. The State must introduce specific positive support policies for retailers and distributors.