2010: More Pressure on Businesses

Retailed sales market fully open
In accordance with the WTO road map, Vietnam will allow foreign investors to engage in wholesale and retailed sale of all Vietnamese and legally imported commodities in Vietnam. Therefore, it serves as the milestone of the open retailed sale market in Vietnam.

 

Experts believe that the Vietnam retailed sale market is attractive to world retailed sale groups because the market has great potentials and Vietnamese retailed sale companies fail to meet the demand. When foreign companies are allowed to establish their own distribution networks, Vietnamese agents and exclusive distributors will lose their jobs.

 

As a result, both Vietnamese retailed sale companies and agents face danger. Without correct policy for development, Vietnam may lose the home court.

 

2010 is also the end of protectionism for Vietnamese cane sugar in ASEAN Free Trade Area (AFTA). As a sensitive product, protection for Vietnamese cane sugar lasted until 2009, 4-5 years longer than other items. From 2010, the import tax on sugar will be down to 0-5 percent like all other products.

 

Evidently, there is an increasing pressure on Vietnamese sugar refineries which have long been under State protection. They must work hard to maintain the market share otherwise they may fail in the competition with such strong opponents like Thailand.

 

Meanwhile, in other services such as logistics, capital protection will also be lifted in 2010. Under WTO commitments, Vietnam can prolong the protection in favour of local enterprises. However, the service will be open in 2014 and 100 percent of foreign companies can freely do business in Vietnam.

 

How can Vietnamese businesses confront such pressure? According to an expert of the Ministry of Industry and Trade, the only way for them to exist and develop is to increase their competitiveness.

 

Open market is imperative to the integration process. It is also understood by Vietnamese businesses engaging in production and services. Transformation of business planning in accordance with new development is vital to Vietnamese businesses. Mr. Don Lam, Director General of Vina Capital, said that in an economic crisis, foreign investors slow down their business planning abroad to consolidate their capital and companies at home. It makes Vietnamese businesses feel relaxed even though integration pressure amounts. However, when the economy resumes its development, Vietnam will be the first target of foreign investors with its potentials and stable development.

 

 Transformation for existence and development   
Mr. Tran Van Son, Chairman of Management Board of VietTrust JSC, said that his company has rented 2.6 hectares of land in Tien Son - Bac Ninh industrial zone (IZ) to develop logistics service. As the protection time is running out, his company must develop very fast to become a strong company by 2014 to compete with foreign companies. Better late than never, Mr. Son said.

 

He also said that foreign companies though strong still need the help of local partners to understand the market, law and practice. Therefore, Vietnamese businesses must develop fast enough to compete and cooperate equally with foreign partners. Otherwise, they could only be small businesses hired by foreign companies.

 

Mr. Nguyen Nhan, Chairman of Management Board of HSTC, official partner of Kyocera Mita – one of the Top Ten Japanese office equipment companies, said that unlike Canon and others choosing foreign distributors, Kyocera has full confidence in a strong Vietnamese company to participate in the chain of value as his own.

 

Most world famous companies have come to Vietnam, especially in logistics service. For Vietnamese businesses, pressure is increasing while opportunities are diminishing.

 

According to statistics of the Ministry of Industry and Trade, only 15 percent of Vietnamese businesses are capable of exploiting benefits available from bilateral and multilateral agreements among ASEAN. In the coming years, the government will negotiate and conclude new free trade agreements giving more investment and trade opportunities for businesses. Therefore, businesses must make the best use of the opportunities.

 

Referring to opportunities after the economic crisis, former Deputy Prime Minister Vu Khoan said that opportunities after the crisis are foreseen. However, what we can gain from the opportunities depend on our own efforts. Competition after the crisis will be harder, businesses must be stronger and be well prepared for a new development period.