Vietnamese retailers need to tighten cooperation to seize opportunities and overcome challenges that may emerge from the opening of Vietnam’s distribution market from January 1, 2009 in line with the country’s commitments to the World Trade Organization (WTO), said Deputy Minister of Industry and Trade Nguyen Cam Tu at a press briefing held in Hanoi Dec. 25.
Speaking at the briefing to introduce Vietnam’s distribution market opening roadmap, Mr Tu also urged domestic retailers to work out proper business strategies, raise capacity and apply modern management methods to compete against powerful foreign rivals.
Under Vietnam’s WTO commitments, the country has allowed foreign businesses to invest and partner with local companies in retail services with a capital ratio of 49:51 per cent since January 2007.
Since January 1, 2008, foreign distributors have been allowed to contribute unlimited capital to their partnered companies but required to continue to operate in a joint venture form.
As of January 1, 2009, the country will completely open its distribution market for foreign partners, allowing them to set up the wholly foreign-owned companies.
Accordingly, foreign retailers will have rights to distribute tractors, vehicles, machinery, cars and motorbikes from January 1, 2009.
From January 1, 2010, they will be allowed to distribute additional commodities of liquors, cement and clinker, fertilizer, steel and iron, paper, vehicle tyres and audiovisual equipment.
Foreign retailers, however, will be forbidden to engage in distributing rice, sugar, cigarettes, cigars, crude or refined oil, pharmaceutical products, dynamite, books, newspapers, magazines, gemstones, CDs or data storage devices in Vietnam, said the Ministry of Industry and Trade (MoIT), adding that those restrictions will apply to new foreign retailers only, not to those who entered Vietnam before the country joined the WTO.
Contrary to expectations of strong inflow of foreign retailers in the local market as Vietnam opens its distribution market from early next year, no new foreign retailers have registered to enter the market so far apart from entered ones like Metro, Big C, Parkson and Lotte, said Hoang Thi Tuyet Hoa, Vice Head of the Information & Planning Department under the MoIT.
Next year will be the time for the boom of franchise, remarked Mrs Hoa.
According to the Vietnam Retailers’ Association, the country’s retail sales rose 25 per cent in the 2006-08 period, more than doubling the figure in the previous period. In 2008, retail sales are estimated to value VND970 trillion (US$57.3 billion).
Vietnam now has around 400 supermarkets and 60 trade centers, and 2,000 convenient stores nationwide. It is expected that the number of supermarkets and trade centers will rise 62.5 per cent and 150 per cent in 2010, respectively.
The nation has been become the most attractive emerging market for retail investment, lifting from the fourth in 2007, said the 2008 Global Retail Development Index (GRDI), an annual study conducted by AT Kearney of retail investment attractiveness among 30 emerging markets. (Young People, VNA)
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