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Local retailers advised to strengthen ties
A senior trade official urged local retailers to increase cooperation to seize opportunities and overcome challenges that may stem from the opening of Vietnam ’s retail market on January 1, 2009, under its commitments to the World Trade Organisation.
On December 25, meeting with the press regarding the January 1 deadline for the opening of the local distribution market in Hanoi , Deputy Minister of Industry and Trade Nguyen Cam Tu outlined the need for local retailers to work out proper business strategies, raise capacity and apply modern management methods in a race to compete against powerful foreign rivals.
Under its commitments to the WTO, since January 2007 Vietnam has allowed foreign businesses to invest and partner with local companies in retail services with a capital ratio of 49:51 percent.
Starting January 1, 2008, the country has allowed foreign distributors to contribute unlimited capital to their partnered companies but required them to continue to operate in a joint venture form.
As of January 1, 2009, foreign retailers may establish 100 percent foreign-owned companies.
Under this blueprint, foreign retailers will take part in distributing tractors, vehicles, machinery, cars and motorbikes from January 1, 2009.
They will also join in distributing such commodities as liquors, cement and clinker, fertilizer, steel and iron, paper, vehicle tyres and audiovisual equipment from January 1, 2010.
However, foreign retailers will not be allowed to engage in the distribution of rice, sugar, cigarettes, cigars, crude or refined oil, pharmaceutical products, dynamite, books, newspapers, magazines, gemstones, CDs or data storage devices in Vietnam.
According to the Ministry of Industry and Trade, those restrictions apply to new foreign retailers only, not to those who entered Vietnam before the country joined the WTO.
The Vietnam Retailers’ Association reported that the country’s retail sales rose 25 percent in the 2006-08 period, more than doubling the figure in the previous period. In 2008 alone, retail sales are estimated to value 970 trillion VND.
Vietnam ’s current distribution network includes 140 marts and supermarkets and 20 trade centers, together with 1 million sq. m of convenience stores.
According to AT Kearney, Vietnam led the world in the global retail index in 2008 from its fourth place in the field in 2007.
VNA
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