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Vietnam's retailers face growing competition


October 16, 2008

Vietnam's retailers face growing competition from overseas giants

Vietnam's retailers are attempting to figure out how to keep market share amid the entrance of wholly foreign-invested retail giants as Vietnam's market will open completely next year, in accordance with World Trade Organisations commitments, reported state news agency VNA.

"Opening is expected to create more favourable conditions and to boost the business development of local retailers; however, it also brings a number of challenges," said Deputy Minister of Industry and Trade Nguyen Thanh Bien in a conference in Hanoi yesterday.

According to the WTO commitments, Vietnam must open to all wholly foreign-invested retailers in 2009. Many well-known companies such as Metro Cash&Carry, Casino, Big C Bourbon, Parkson and Wal-Mart have entered the local market already. Some representatives warned that most Vietnamese retailers are small amateurs and cannot possibly control the market.

To turn challenges into opportunities, the Ministry of Industry and Trade called on local retailers to improve competitiveness, draft out long term strategic investment plans and develop risk provision strategies.

The Association of Vietnamese Retailers (AVR) is reportedly drawing up a decree on retailing to submit to the Ministry of Industry and Trade that will come into effect in 2009.

The decree hopes to satisfy the pressing requests of the local retail community on mutual rules for protection against the misuse of powerful brand names.

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

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

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

The retail market pie is one that keeps getting bigger, as retail sales in the country totalled around $27.3 billion during the first six months of this year and are anticipated to climb to $50 billion by 2010, the deputy chairwoman and general secretary of AVR, Dinh Thi My Loan said.

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