Vietnam Opens Retail Market to Foreign Investors
Following in the footsteps of major European retailers, Asian retail groups are eagerly anticipating the green light to enter Vietnam’s high-potential market, now opening its doors to foreign investors.
Parkson, a Malaysian retail group will debut in the Vietnamese market this month by leasing Saigontourist Trading Center in downtown Ho Chi Minh City to open its first outlet, with plans for nine others in its first five years of operation in Vietnam.
Meanwhile two other Asian companies, Dairy Farm from Hong Kong, and South Asia Investments from Singapore are seeking licenses to open store chains in the country.
“The major attraction towards foreign retail groups is that Vietnam is a potential market with a young population and increasing incomes,” said Tham Tuck Choy, CEO of Parkson Vietnam.
Also, foreign investors are encouraged by the success of chains such as France’s Big C Bourbon and Germany’s Metro Cash & Carry, as well as two foreign-managed trading centers in Ho Chi Minh City.
Zen Plaza, managed by a Japanese company and Diamond Plaza by a Korean company have both seen high growth in annual turnover. Opening in 2003, Zen Plaza has gained a 30 per cent increase in annual revenue and attracted up to 240 famous fashion brands locally and abroad.
Duck Ho Kim, general manager of Diamond Plaza, attributed its success to efforts in giving a facelift to the plaza and “sharing” business which benefits both the manager and traders.
Specifically, some 70 per cent of stalls at the Diamond Plaza have shared their revenue with the plaza manager, and in return benefited from the manager’s promotion events, customer taste research and infrastructure upgrades.
“This is an efficient way, different from most Vietnamese supermarkets and trading centers who simply forget about the trader once they sign a deal to lease a space in their building,” said one businessman.
Vietnamese brands still have very modest appearance on the shelves of prominent foreign store chains and trading centers in Ho Chi Minh City. A local garment maker said that foreign-managed trading centers had refused local brands as they were not up to international standards.
There is growing concern among the local business community over the issue as Parkson, who after leasing the Saigontourist trading center, decided to leave out a number of local brands in favor of foreign brands new to Vietnam.
Mr. Choy of Parkson Vietnam explained his company’s choice in brands by saying that his store targets at middle and upper-class customers.
According to the general manager of Diamond Plaza, his center has never set up rates of foreign and Vietnamese brands available there. “Our principle is to be always new. If foreign brands do not sell well, we will replace them,” said Mr. Kim
Statistics show that there are 170 supermarkets and trading centers across Vietnam.
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