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Southern businesses marching north
While exports markets have been narrowed and the southern market has cramped up, the northern market has become the goal of many southern businesses.
Marching towards the north
On March 20, iCARE, the computer hospital chain, opened its Hanoi branch, while on March 31, iCare – iSPACE, a vocational junior college, officially became operational in the central province of Ha Tinh.
The moves have been described by Hoang Quoc Viet, General Director of Nguyen Hoang Group, as strategic moves aiming to expand the market towards the north, as the southern market has shown signs of saturation, partially because the economy has been in recession and many businesses have narrowed operations.
In fact, southern businesses once set plans to conquer the northern market 10 years ago, when the regional financial crisis occurred.
An Phuoc Company’s General Director Nguyen Thi Dien said that northern consumers are hypercritical and difficult to please. They can spend big sums of money to purchase commodities if they are satisfied with the commodities, but they will refuse commodities if they see small errors.
It took An Phuong four years to make An Phuoc brand name popular in the northern market, where the company now has 15 official shops which bring 22% of total domestic turnover. An Phuoc believes that the market will develop further when the national economy recovers.
Vinamit, after five years of working the northern market, has reported that the market brings 20% of total turnover of the company.
Vinamit’s General Director Nguyen Lam Vien also said that northern consumers prove to be difficult to please. Vien also talked about the high community level of northern consumers. Any product with problems will lead to the fact that all the markets will turn their backs on all the products of the same enterprises.
Meanwhile, according to Tran Huu Duc, Public Relations Director of Nutifood, said that northern consumers are loyal to traditional products, while southern consumers tend to use new products.
Nutifood has reported the average growth rate of 20% per annum of the company in the northern market.
Long-term solutions
Hoang Thi Minh Chau, Deputy Director of Sanding Fashion Company, said that one of the biggest problems that have prevented enterprises, including Sanding, from making investments to develop the northern market is the high fee for business premises in the north.
Meanwhile, Chau said that garment products are barely competing with China-made products which do not have high quality but have attractive prices. Thereore, Sanding’s sales in the north remain very modest, some 5% of total domestic turnover.
However, Chau admitted that the market proves to have great potential. Sanding’s products target staffs of offices, who always demand high quality and don’t like China-made cheap products. Therefore, if producers have good quality products which can meet consumers’ tastes they will be able to conquer the market.
Sanding has not made heavy investment in the market, but the stable growth rate of 5-10% per annum proves to be a good basis for Sanding to gear up when opportunities come.
Chau has revealed that Hapro supermart suggested selling Sanding’s products within its distribution system, which means an opportunity for the company to boost sales there.
The northern market, which includes the provinces from Thanh Hoa province to the north, proves to be one of the most important markets for Vinamit.
Vien said that the demand proves to be very big in the north. However, as Vinamit’s products depend on fruit materials, it still cannot meet the requirements of all local markets.
He added that Vinamit has built a storage faciltiy in Hai Duong city which is in charge of distributing products to the whole northern market of Vietnam and several big provinces in China.
“We strongly believe that the current 20% growth rate in the northern market will change once new workshops and material growing areas of the company become operational at full capacity,” Vien said.
VietNamNet, TBKTSG
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