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Easier said than done
Many Vietnamese businesses fail to grasp consumption needs in rural areas while farmers spend a lot of money but have to buy fake imported goods. The fact is that it is essential to set up closer links between domestic consumers and businesses.
For several consecutive years, the growth rate of domestic trade has posted a 1.5 or 2 fold increase over GDP growth rate.
In 2008, the total revenue of retail goods and social consumption services increased 31 percent over 2007 while total earnings in the domestic market have so far reached US$60 billion nearly equivalent to export turnover.
With 64 million people, accounting for 70 percent of the country’s national population, the rural market is considered to be a large gold mine, which has been untapped relative to its potential. However, there is still much to be done for this market.
Short of information
Regarding rural consumers’ general knowledge about different kinds of consumer goods on the domestic market, Chairman of the Vietnam Standards and Consumers Protection Association, Ho Tat Thang said that most of them lack information about the quality of goods which is normally low but sold at high prices nonetheless.
In addition, they are not entitled to fixed prices, which are only set by the State and businesses, nor can they discuss contracts for electricity and water supplies and telephone use. They easily face unknown dangers when using bogus or poor products, Mr Thang noted.
In fact, consumers are keen on imported goods thus driving the prices of such products up. For example, domestic and imported dairy products all contain the same nutrients but foreign milk is twice as expensive as domestic milk because consumers believe that the foreign milk is under stricter quality control.
After selling some products in rural areas, Director of the Vinatex Commercial Company under the Vietnam National Garment and Textile Group Nguyen Thi Hong Huong said farmers find difficult to discriminate between real and fake goods, which has resulted in an increase in trade fraud activities.
Vice Chairman and General Secretary of the Vietnam Craft Village Association said that the State should pay more attention to boosting the sustainable development of raw material areas while it is important to have closer links between craft village associations.
Domestic market to be given a boost
Vietnamese enterprises now realize that the domestic market is a treasure to explore. Vu Kim Hanh, former director of HCM City’s trade promotion centre said that due attention has not been paid to it thus. “We should not ignore the domestic market even when exports enjoy favourable conditions”, she added.
To support enterprises, the Ministry of Industry and Trade (MoIT) has implemented a programme to boost the local market in 2009, aiming at promoting Vietnamese goods, improving the way enterprises address the needs of consumers, boosting the consumption of goods from domestic enterprises and expanding the domestic market.
Deputy minister of industry and trade Nguyen Cam Tu affirmed that it is necessary to help domestic businesses to produce goods and encourage consumers to buy Vietnamese goods. Even in cities, people simply do not have access to Vietnamese products.
Mr. Hanh stated that trade promotion does not mean that the State will do everything for enterprises. The State’s support programmes should not violate WTO commitments and the State’s only role is to create open environment for enterprises to develop.
Hoang Tho Xuan, head of the Marketing Department under the MoIT said that the aim of the programme is to identify consumers and discuss guidelines to select enterprises to bring goods to rural areas. He added that such goods must be made available at a reasonable price and a level of quality satisfactory to farmers.
Where to take money to buy goods
Dr. Le Duc Thinh from the Institute of Policy and Development Strategy under the Ministry of Agriculture and Rural Development said that some people consider rural areas as a “dustbin” for the dumping of poor quality products. The problem is how to increase income for farmers by boosting the consumption of farm produce.
Mr Thinh said that to develop the economy, many countries are very wise in stimulating demand in rural areas in particular and in the domestic market in general. The first step is to get people in the country to buy domestic goods, he added.
He noted that it is necessary to pay attention to macro-economic policies and to instruct farmers in production activities to increase their income.
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