Vietnamese distributors are falling in a fierce competition at the domestic market. Compete or go bankrupt? The matter is being made clear by all-out efforts jointly contributed by each distributor, forcing them to co-operate with each other, especially in the current context that more and more foreign distributors have shown their interests in expanding their outlet in Vietnamese market.
Vietnamese distributors are now expressing concerns over the situation that the local distribution system has been mostly managed by foreign groups.
Former Director of Hanoi Trade Service Vu Vinh Phu, who is also the president of Hanoi Association of Supermarkets, said that if no combination is established among domestic enterprises to create a continuous competition, domestic supermarkets will find it difficult to compete with foreign ones in terms of business and capital management.
He added that locally-run trade center and supermarkets will be the most affecters of such an imbalance competition, excluding direct distribution systems at wholesale and retail markets.
Given the situation, the Vietnamese distributors have also made a careful preparation for joining in the fierce competition.
Intemex has phased out a strategy to set up a three-level supermarket chain in big cities such as Hanoi, which is aimed at building more do-it-yourself supermarkets and trade centers throughout the country.
Domestic distributors are now seeking their own distinctive way, which is aimed at making use of their limited potentials, to have enough strength to compete with foreign ones by opening a wide range of mini-marts or specialized trade centers such as Carring Electronics Supermarket and Vinatex Fashion.
“If only satisfying essential demands of local customers for a certain quality and suitable prices, the Vietnamese distributors will have a marked advantage over foreign firms to expand their market shares and increase profits by building more and more mini-marts at any residential areas,” Phu highlighted.
The statement is completely true to the Vietnamese market as the local consumers are rather afraid of going to supermarkets far away from their houses or the cities’ centers for daily foods. BigC and Metro Cash & Carry are taken as clear examples.
Vietnam currently has a total of 160 supermarkets and 32 trade centers nationwide totally. A small percentage of the figure is those run by foreign-invested companies, which account for more than half of the total retail sales contributed by supermarkets and trade centers nationwide and up to 10 per cent of total retail market shares.
Metro Cash & and Carry, the world’s fifth largest retailer, was the first foreign company licensed to open a wholesale center in Vietnam. Followings are a French chain Bourbon, operating two supermarkets in Hanoi and Danang each, and Parkson Corp. from Malaysia.
With a statement of turning Vietnam into the world’s second key market after China, Parkson, who is running 36 trade centers and supermarkets in Malaysia and more than 40 others in China, has made a threat against the Vietnamese enterprises.
However, almost all Vietnamese distributors are expressing concerns over the penetration of Dairy Farm Corp, robust newcomer from Hong Kong with more than 2,600 supermarkets and trade centers throughout the Asian region, which is currently waiting for license from the Vietnamese government.
Foreign retailers have made strong impacts on domestic supermarket chain despite a little appearance in terms of volume. Apart from pouring investments into their businesses, the foreign distributors have also paid due attention to the Vietnamese staff training in accordance with international standards.
Metro plans to kick off construction on four big supermarkets in Vietnam, excluding current two in Hanoi and Can Tho City each and two in Ho Chi Minh City. Meanwhile, Bourbon will have an additional seven supermarkets and five of which is planned for Ho Chi Minh City and other two for Hanoi. Economists forecast that more and more foreign retailers will invade into the Vietnamese supermarket chain as all trade barriers will be removed by 2007.
The hustle penetration of foreign firms into the lucrative domestic market will bring further benefits to local consumers but fiercer competition for Vietnamese businesses, resulting in positive changes in Vietnam retail market.
Foreign-invested distributors have, however, begun shaking hands with domestic producers in order to form up a closed consumption channel, creating more favorable conditions to Vietnamese small-sized producers and enterprises to boost up their sales via a national supermarket chain instead of seeking for their own market.
Kim Phuong
Vietnamese
