Local retailers in Vietnam organise to meet future challenges

Vietnamese distributors are pursuing expanding business networks in a bid to create invigorated competitiveness for Vietnam when it opens the retail market to foreign investors in 2009. Asia Pulse reports this today. Following Vietnam’s efforts to join the WTO, foreign direct investment (FDI) in the Vietnamese retail sector will be allowed in 2009.

This will change the country’s retail sector and domestic operators are bound to compete with strong, foreign-owned multinationals that are lured to enter the market as a result of the legislative liberatisation. Allowing FDI, the Vietnamese government has a different approach than India or Thailand, whose governments are torn between the added value of modern retailing – often of foreign origin – and the interests of the small, local independent retailers

Instead of efforts to prevent FDI from happening, local retailers are proactively organising themselves in order to meet future challenges. many Vietnamese enterprises have actively banded together to build large-sized and competitive distribution systems.

"Without hook-up, local enterprises will face many difficulties because just after penetrating into the Vietnamese market, foreign groups will set up modern distribution networks and then control the retail market," said Vu Vinh Phu, President of the Hanoi Supermarket Association to Asia Pulse..

The establishment of the Vietnam Distribution Association Network Development and Investment Joint Stock Co. (VDA) was seen as the start of an industry trend geared towards greater cooperation between retailers. The Trung Nguyen (Central Highlands) Coffee Company was also a pioneer in expanding retail network. By late 2006, the company's G7 Mart system increased to 5,500 retail outlets across the country.

The enterprise is pursuing a mammoth target of opening an additional 10,000 outlets and building 18 wholesale points and seven trade centres in the next five years. The total investment for these projects is estimated at nearly US$400mn.

"Our objective is to gather Vietnamese producers to form a strong distribution system that is competitive with foreign distributors," said the company's General Director Dang Le Nguyen Vu. In addition, the company plans to branch out and build medium and large-sized supermarkets named "Viet Town" abroad.

(Source: Asia Pulse)