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January 26, 2008

VIETNAM/RETAIL BUSINESS
Retailers express concern over foreign competition
Vietnam's budding retailers face a shortage of macro policies to help them ahead of the market's opening to wholly-foreign-invested retailers in January 2009.

This issue attracted great concern at the conference, Viet Nam's Retail Market: Opportunities and Challenges, held by the Ministry of Industry and Trade and the Association of Vietnamese Retailers (AVR) yesterday in Hanoi.

Chairman of the Ha Noi Association of Supermarkets Vu Vinh Phu said, "It is necessary for policy makers to issue laws relating to retail, including laws on product quality, food safety and hygiene and consumer protection." In addition, domestic retailers have complained about problems accessing land and capital.

State offices should create favourable conditions for Vietnamese enterprises to access land and capital resources to help them expand retail systems nation-wide, Phu added.

Pham Dinh Doan, director general of Phu Thai Group, claimed that it took his company three to five years to acquire a large parcel of land in Ho Chi Minh City. This resulted in missed business opportunities for the group.

Local retailers also complained about unfair treatment in terms of tax and financial policies.

Phu pointed out that while doing the same business, some firms paid taxes on accounting and rising revenue, while others paid a fixed rate.

How to survive? "Most Vietnamese retailers are small, amateurs, and cannot possibly control the market," said Dinh Thi My Loan, deputy chairwoman and general secretary of AVR.

A rising wave of foreign retailers with professional management skills and large capital potential were arriving in the country. To survive, Loan stressed "the significant role of information technology in retail services".

"The retailers should apply IT in their management in terms of commodity classification, clients, employees and strategic partners, among other things," Loan said.

"Moreover, there is an acquisition and merging trend amidst local retailers," she added. This would help them to broaden business scale for firmer positioning.

In addition, domestic retailers must retrain labour forces, upgrade their services and set up strategic relationships with producers and distributors, experts advised.

The Government should also play a role in resolving the above-mentioned difficulties that companies were facing.

It should do more to remodel infrastructure and logistics services and should set up a university specialising in retail, said a representative from the French retailer Big C, who entered the local market over ten years ago.

AVR was established in October last year and has committed to giving more support to Vietnamese retailers at the seminar.

Promising market Looking back at the year since the country joined the WTO (World Trade Organisation), the local retail market showed its willingness to compete with international investors.

According to a survey released by AT Kearney in 2007, the retail market in Viet Nam, with a population of nearly 90 million, ranked fourth after India, Russia and China with a total value of US$37 billion per annum. Total retail sales in the country more doubled against the figure of $15 billion in 2000. Sales are anticipated to climb to $50 billion by 2010.

At present, retail sales via supermarkets account for only 10 per cent of sales, with the remaining distributed among traditional, small markets, shops and direct sellers.

However, consumption habits of Vietnamese residents, especially the youth, are changing. Vietnamese increasingly prefer to shop at modern supermarkets with better quality and service.

It is hoped that by 2017, retail sales from supermarkets in Viet Nam will account for 60 per cent of sales, equal to the current level in Thailand.

Courtesy VNA

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