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VN firms should switch focus to domestic market
Viet Nam is a lucrative market and it is time domestic companies turned their focus inward, deputy director of the Viet Nam Trade Promotion Agency in HCM City told a seminar on Friday.
Vuong Dinh Ngan pointed to the increased investment by foreign retailers like Metro, Big C, Parkson, and Lotte Mart who consider the country one of the most attractive emerging retail markets.
But there is a need for Vietnamese businesses, who have remained focused on export markets for long, to promote themselves and raise their profile at home, he said.
They should apply information technology to cut costs and improve their competitiveness, he added.
Dinh Thi My Loan, General Secretary of the Viet Nam Retailers Association, said the current situation is favourable for retail trade and they have the advantage of doing business at home and clearly understanding the purchasing habits of Vietnamese consumers.
Viet Nam has a growing economy and a population of 86 million, while people spend 70 per cent of their income on average on consumption needs.
But in doing business at home they will come up against the challenge of global companies that have set up shop here who have much deeper pockets and huge experience.
Most of the Vietnamese companies have not bothered to set up distribution chains here or invest in information technology.
By the end of 2008 there were nearly 400 supermarkets and trade centres, up from just 10 supermarkets and 2 trade centres in 1995.
In the first quarter this year retail sales of goods and services were worth VND360 trillion (US$18.84 billion), 24.1 per cent higher than the same period last year.
US-based market research firm RNCOS forecasts retail turnover to surpass $85 billion by 2012.
Textile, leather shoes
Pham Gia Hung, Head of the of Viet Nam Textile and Garment Association's office in HCM City, said one of the difficulties his industry faces is that 80 per cent of its raw materials have to be imported from countries like China and Korea.
Vu Van Minh, General Director of Vina Shoes Joint Stock Co, said Viet Nam is the second largest leather shoe exporter in the world after China, but Vietnamese enterprises do not focus on the domestic market.
Loan said Vietnamese textile and garment manufacturers account for a mere 30 per cent share of the domestic market.
The textile-garment sector is growing rapidly and is the country's biggest export earner. But it is being developed in an unplanned manner with the Government having no strategies to ensure its sustainable development, Loan said.
The Vietnamese fashion industry lacks qualified, professionally trained designers, a distribution system, and effective marketing strategies, she said.
Leather-shoe sales averaged 130 million pairs a year but domestic enterprises had not yet been exploited it fully, she said.
If Vietnamese businesses forged links among themselves, they could capture this market, she added.
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