Confidence of Local Retailers

2015 marked an important milestone in the field of distribution of Vietnam, which is the full open of the domestic retail market. It was said that domestic distribution businesses will be overshadowed by massive foreign enterprises.

 

Mr Tran Nguyen Nam, Deputy Director of the Department for Domestic Market of the Ministry of Industry and Trade said "As of late 2012, Vietnamese market had about 700 supermarkets. Meanwhile, foreign corporations accounted for only 4 percent. There were approximately 125 commercial centres, in which shopping centres of foreign corporations accounted for 25 percent. As such, quantity correlation between domestic market and foreign market is relatively high. Potential of Vietnamese market is still huge."

 

Agreeing with that point of view, Ms Dinh Thi My Loan, President of the Association of Vietnamese Retailers said: "Recent view of the press and public opinion on the market has been narrowed since foreign retailers have encroached, which needs reconsidering because of its inaccuracy. Actually, domestic retailers are still overwhelming and form the majority."

 

"We don’t agree with the idea that foreign retailers are gradually dominating domestic firms. In our opinion, the market share of domestic firms is very open and has more opportunities to develop. Therefore, people should not be too pessimistic about the idea that the market is to be lost to foreign retailers," said Ms Loan.

Ms Loan said that four large enterprises of Vietnam which are Hapro, Satra, Phu Thai and Saigon Co-op will cooperate. When local businesses actively associate with one another, their competitiveness will rise.

 

As a representative of the Association of Vietnamese Retailers, Ms Loan frankly pointed out the biggest concern of members of the association is weak economy and reduced purchasing power. Besides, the retail industry has been expanding and bearing international characteristics. Therefore, if we are not well-prepared, it will be very difficult to compete.

 

Mr Tran Nguyen Nam expects that from now to 2015, with the efforts of domestic companies, particularly ones in the retail sector who are trying to push Vietnamese retail system to become more competent. "I also hope state agencies, ministries and central agencies to coordinate to have policies regularly updated and revised for domestic retailers to grow. It is significant that authorities study to have more positive policies to support Vietnamese retailers to be able to compete with and accompany foreign corporations."

 

Giving comment on the idea that of foreign enterprises receive major support from the Government when doing business in Vietnam, Mr Tran Nguyen Nam disagreed: "Since its integration into WTO, Vietnam is regardless of incentives for foreign enterprises and domestic ones. Since 1^st January 2010, foreign companies have been allowed to distribute basic items excluding nine items. We can confirm that between domestic and foreign firms, there are not incentives for foreign ones. Foreign companies are even more bound compared with domestic companies."

 

In addition, Mr Nam also raised some existing issues when foreign enterprises operate in Vietnam, particularly transfer pricing. "The problem is that there are still legal loopholes for foreign corporations to circumvent the law. We hope relevant departments will continue examining and capturing information so that media can convey information to consumers better," said Mr Nam.

 

Mr Tran Nguyen Nam gave the example of the Metro Group. In 2012, the group contributed to the Government VND900 billion of tax. In previous years it reported losses frequently. However, Metro continued to develop its corporation system. Up to now, there have been 20 Metro centres.

 

Ms Dinh Thi My Loan analyses that although there are no specific preferential policies for foreign retail companies, some are still favoured in some localities. For example, domestic enterprises have to wait very long to get permission of the province without having addressed while that position fall into the hands of foreign companies. The Association has many times proposed opinions on this issue.