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Foreign firms’ retail rush will lose some steam: trade ministry
Contrary to expectations, the retail rush investments, as Vietnam opens the sector to wholly foreign-owned companies next year is likely to be a muted affair, says an official of the Ministry of Industry and Trade.
The slowdown in Vietnam’s retail market will give foreign investors pause, given their own constraints in the context of the global economic recession, Hoang Thi Tuyet Hoa, deputy head of the Planning Department under the Ministry of Industry and Trade, said at a press conference in Hanoi Thursday.
While retail giants like Metro, Big C, Parkson, and Lotte had already applied to enter the Vietnamese retail market, no other foreign firms have followed them since.
The briefing was held by the ministry to announce the roadmap on opening the retail market to foreign companies, which Vietnam has to do from next month under its WTO commitments.
It was expected that foreign firms would invest more in Vietnam under the franchise model in 2009, and some others such as Metro and Big C would open more retail outlets in the country, she said.
Under WTO rules, international retailers cannot trade in sensitive or dangerous products like gasoline, books and newspapers, cigarettes, rice, sugar and precious metals.
Foreign firms will be allowed to distribute tractors, machinery equipment, cars, and motorbikes from January 1, 2009; and alcohol, cement, clinker, fertilizers, steel, iron, paper, tires, and audiovisual equipment from January 1, 2010.
Local firms with weak competitive capacity will face fierce competition from foreign firms that have huge advantages in terms of capital, human resources, and management experience, she said.
However, local businesses can better understand the culture, traditions and demands of the Vietnamese people, and this can be leveraged to their advantage.
Foreign enterprises will involve themselves mainly in modern distribution channels such as trade centers and supermarkets, said Hoang Tho Xuan, head of the ministry’s Department of Policy and Domestic Market.
The government should help domestic firms with capital access, tax breaks, timely information, human resource development, and the distribution of some major items, Xuan said.
Vietnam’s retail market revenues are estimated at US$55 billion this year, the ministry said. There are now around 400 supermarkets, 60 shopping centers and nearly 2,000 convenience stores nationwide, with the number of supermarkets expected to increase by two-thirds over the next two years.
Global management consulting firm A.T Kearney had in a June report ranked the Vietnamese retail market first among developing economies.
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DOMESTIC RETAILERS BRACE FOR TOUGH FIGHT
Many domestic retailers are striving to improve and expand their operations as the country opens its market to foreign competitors.
The Saigon Co.op, Vietnam's leading distribution chain, has launched a new convenience store chain named Co.op Food in Ho Chi Minh City, following its Co.opMart supermarkets and Co.op convenience stores.
The new store will offer a wide range of food and foodstuffs including fresh, processed, semi-processed, frozen, cooked and ready-to-cook items.
Some food processors are also trying to set up their own distribution chains.
Vissan, one of Vietnam’s largest meat processors, has set up many more stores in HCMC. It has cooperated with other food firms including Cau Tre Export Goods Processing Joint Stock Co., Kinh Do Food Corp. and seafood maker APT, in its latest venture.
Vissan has also signed an agreement with Hanoi Trade Corp., the Hanoi-based Hapromart supermarket chain operator, known as HAPRO, which allows the meat processor to display and sell its products in HAPRO outlets. |
Ngan Anh
thanhnien
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