Building of a Professional Distribution Channel for Goods

 

Recently, Metro Cash & Carry Vietnam organised a meeting with 500 Vietnamese goods suppliers and enterprises in Hanoi with an aim of increasing mutual understanding between the company with their suppliers, thus promoting co-operative ties.

This shows that Metro highly values the domestic market and with its high purchasing power, the quality of locally-made goods has improved to international standards. Metro even has promoted its investment for local farmers, providing them with financial and technological supports, so as to help them to produce, harvest and package their products to international standards in order to meet the company’s domestic demand at present and export in the future.

 

Metro has orientated the export of locally-made products through its global distribution network. The company is planning to co-operate with the Ministry of Trade and the ATZ Organisation to carry out a project on supporting the development of the goods distribution network in Vietnam, which was capitalised at EUR 400,000. This aims to develop a distribution network for fruit and vegetables in Vietnam and export to Europe.

 

Meanwhile, supermarket chains of foreign-owned companies, including Parkson, BigC, DiamondPlaza and ZenPlaza, have seen a rapid development. These chains supply mainly foreign-made products. Locally-made products have not found a foothold in the chains yet. There are many signs that internationally famous retail supermarket corporations, such as Wal-Mart, Carrefour and Tesco, have targeted Vietnam as their major market in the coming time.

While international distribution corporations continue to expand their business activities in Vietnam, local distributors are at a standstill. They even worry about competing with each other. Over the past few years, the distribution network in Vietnam has been mainly occupied by local enterprises, including Co-op Mart, Maxi Mart, Tax, Vinatex Mart and Satra and shops and agents of local enterprises nationwide.

 

Local distributors have made a significant contribution to the sale of locally-made goods. However, alongside increasingly high development demand, faster circulation of goods, increasingly high purchase power and international integration process, local consumers have adapted themselves with professional distribution networks. Therefore, it is hard for local distributors to compete with well-developed chains such as Metro, BigC and Parkson.

 

One risk which economic experts have warned of is a possible weakening of local distribution channels, resulting in difficulties of the consumption of locally-made products. In fact, distribution channels of local enterprises have not yet created strong trademarks. They have also not orientated their customers because goods sold in their supermarkets are of various quality. Shops and agents of local producers are retail shops, which are not modern enough. The network of shops of Biti’s, for example, in the past was highly appreciated but is not attractive enough to customers because of an unchanged decoration and arrangement style.

 

Some local enterprises, including Viet Tien, Phuong Dong and Ninomax, have made great efforts to create their own styles for their shops and fashion centres. This has initially paid off. At the same time, Ho Chi Minh City has built and developed wholesale markets to facilitate the gathering and distribution of goods to other localities but the implementation of the projects remains slow.

 

Local enterprises do not have much time at present, so they need support from each other and co-operation to form national distribution chains, capable of competing against foreign-owned ones, to become real distributions channels of locally-made goods.