Domestic retailers struggle to compete with foreign rivals

Consumers at a Big C supermarrket in Ninh Binh (Source:VNA)

As more and more giant retailers do business in Vietnam, domestic firms are struggling to adapt to the heated competition.

Besides Big C by France’s Casino Group and Germany’s Metro Cash & Carry, other big names include Lotte and E-mart from the Republic of Korea, Aeon from Japan, Berli Jucker and Central Group from Thailand.

According to the Ministry of Industry and Trade, foreign retailers own more than 100 supermarkets and shopping malls out 800 total nationwide. However, their operations account for as much as 40 percent of the retail sector’s total revenue, leading to concerns over the future for local competitors.

Vu Vinh Phu, Chairman of the Hanoi Supermarket Association, said foreign retailers not only offer better and affordable products but also attractive promotions and post-sale services.

They also supply products under their own brands at competitive prices, ranging from cosmetics to daily necessities such as food and beverages, he added.

Locally-made products are struggling to enter foreign supermarkets which prefer merchandise made in their own countries, not to mention other requirements such as origin or quality certificates and compulsory periodic promotions.

Phu suggested authorised agencies carefully consider licensing new foreign retailers based on the Economic Needs Test - an administrative review that a wholly foreign-owned retailer has to undergo when it wants to open an additional outlet.

In his view, domestic retailers and manufacturers should work together to generate collective power.

Former Minister of Commerce Truong Dinh Tuyen called for adopting trade some defence tools to protect local sellers.

Tran Vinh Nhung, Deputy Director of the Ho Chi Minh City Department of Industry and Trade, requested stricter regulations when it comes to mergers and acquisitions, such as capping controlling stakes, publicising tax and financial reports to prevent transfer pricing and increasing the amount of Vietnamese goods on display in supermarkets.

VNA