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How will cooperation on opened retail market go?
Domestic retailers now face many challenges and have many choices as the retail market is officially open to foreigners.
Arriving and exploring
According to Saigon Tiep Thi newspaper, in terms of home appliance and information technology products, only one foreign investor, Best Carings, the joint product between the Ben Thanh Marketing and Trade Corporation and Japanese retail group, Best Denki, has shown up
Meanwhile, the newspaper quoted its news source as saying that a group of experts keen on the home appliance and IT product market is surveying the consumption behavior of Vietnamese consumers and exploring the domestic retail networks in a plan to penetrate the market by buying back the networks or contributing capital to form joint ventures.
The source said that the official negotiations will begin in mid-2009 at the latest. It is absolutely possible that foreign retailers will seek definitive purchases for mobile phone and IT product distribution systems, which have been having problems, but still have good premises in HCM City and Hanoi.
There are many ways of conquering Vietnam’s market
Koji Idera, Managing Director of Best Carings said that he does not believe that foreign retailers will dare purchase operational retail systems, while he thinks the joint venture model will be the best one for both parties.
Le Hong Xuan, Director of Best Carings, announced that in April 2009, Ben Thanh Corporation and Best Denki will form a joint venture with the capital contribution of 51% and 49% for Ben Thanh and Best Denki, respectively.
Hoang Ngoc Vy, Director of the mobile phone and information technology products retail system, confirmed that in the next year, the system will cooperate with domestic and foreign partners to develop services.
Nguyen Duc Tai, Director of The Gioi Di Dong (Mobile World), also said that joint ventures prove to be the optimal way at this moment. This is because, under the WTO commitments, Vietnam will allow foreign investors to join the retail market. However, they can only easily open one official retail point, while they have to seek permission from local authorities for the opening of the second and further additional retail points.
Xuan believes that among the various modes of doing business, franchising and joint ventures will be welcomed by domestic retailers as they can take full advantage of foreign partners’ capital, technology and sources of products.
However, Ho Minh Chinh, Director of Tai Nang Viet Company (Viet Talents), specializing in giving consultancy on retail training, said that it will not be so easy to be chosen by foreign retailers for the cooperation.
Unlike other experts, Chinh thinks that it is highly possible that foreign retailers will choose the mode of franchising, in which they can collect fees, or buy back the weak systems, but with good infrastructure, which allows them to not depend on domestic partners.
Saigon tiep thi
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