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ICT resellers also feel the pinch
Dang Thanh Huong, marketing director of Phong Vu Computer Shopping Center, complains that the number of customers is declining. "Our business growth has begun slowing," she says.
Many information technology shop owners on Bui Thi Xuan and Ton That Tung streets in HCMC's District 1 also say they have got few customer visits in recent times. Most of them are doing the window-shopping as rising ICT product prices have led to them reining in spending.
The U.S. dollar is appreciating against the Vietnamese dong, so local consumers have to spend more on ICT products which are often denominated in dollar.
The official dollar/dong exchange rate was on Wednesday adjusted up 2% to VND16,461 per U.S. dollar, but the 1% trading band stayed, allowing the ceiling exchange rate to reach VND16,626. However, the U.S. dollar has increased for over a week with the black market price reaching VND18,000 per dollar.
Industry sources say prices of ICT products in Vietnam may be 10-15% higher than other markets. However, after 3-6 months, the prices can decline when the life cycle of the products nears the end. For mobile phones, their prices at the end of the life cycle may be 50% lower than at the beginning.
However, prices of mobile phone have been soaring 5-10%. On May 27, Nolda Sapphire Arte 8800 was offered at VND23.67 million per unit but the price shot up to nearly VND23.99 million on June 6. Nolda E90 retailed for VND13.3 million per unit on May 27, but rose to VND14.19 million on Wednesday.
Other mobile phone types have also been marked up, with Ericsson W200i climbing to around VND2.2 million per unit from the previous VND1.99 million.
High pressure
Mobile phone retailers like Vien Thong A, and The Gioi Di Dong say that they are facing the pressure from rising prices and falling profits at a time when the dong is weakening against the dollar.
Dinh Anh Huan, marketing director of The Gioi Di Dong, says that they must adjust the prices of ICT products under agreements with suppliers, just like mobile phones and laptops, because of the new dollar/dong exchange rate.
"Given the falling purchasing power, price hikes are a bad solution but we have no other choice," he adds.
Electronic appliances are also seen increasing soon. In May alone, electronic shopping centers saw their revenue falling 30% from the same period of last year.
Lien An Thach, sales director of Cho Lon Electronic Appliances Shopping Center, says that price increases were not planned before. However, the depreciation of the dong has resulted in the prices of electronic products denominated in dong picking up at least 10%.
"Thus, I'm sure that electronics prices will rise soon," Thach says.
A sales representative of Panasonic says that both resellers and distributors are facing mounting pressure from the weaker dong. "It is difficult to raise prices at a time of declining purchasing power. But if not, they will face more challenges."
There is concern that prices of ICT and electronic products will continue to go up if the dong continues to weaken against the dollar.
ICT resellers and distributors expect their revenue to slide by 40% from last year.
But the market researcher GfK Asia has shown optimism that the country's consumer technology market will expand 27% this year.
The researcher said in a statement that the year-on year growth of the consumer technology market will remain strong this year and that total sales are estimated to reach US$4.07billion.
VNN
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