Japan’s Best Denki, specializing in electronics retail, has decided to penetrate Vietnam’s market by signing a franchise contract with domestic partners, instead of waiting until Vietnam opens its distribution market under WTO commitments, VietNamNet said.
Best Denki, with total turnover of $2 billion a year and more than 600 home appliance supermarts in Asia, has appeared in Vietnam.
Only days after Vietnam joined the WTO, Best Denki signed a franchise contract with Ben Thanh Marketing Company, the first contract of its kind after the Vietnamese Prime Minister’s official visit to Japan in October 2006.
Best Denki began eyeing Vietnam’s market in May 2005, sending an official to seek opportunities in the country. At the end of 2006, the group chose Ben Thanh, which owns Carings home appliance trademark, as its franchise partner.
C.J. Raj, Regional Marketing and Business Development Director of Best Denki in Singapore, said the group frankly wanted to enter Vietnam’s market right now, but Vietnam has not yet opened the distribution market, so it had to enter by franchising.
Under its WTO commitments, Vietnam will allow foreign investors to make 49 per cent capital contributions in retail joint ventures by early 2008. Best Denki and Ben Thanh will continue negotiations to upgrade their cooperation to a new level, from franchise to joint venture.
In the next four months, Carings will bear the name “Best Carings”, with an operating model like the Best Denki chain shops in Singapore. In January 2008, Best Denki will launch its joint venture and inject money in Vietnam, planning to open 10 more home appliance supermarts in big cities like HCM City and Can Tho in the south, Danang in the central region, and Haiphong in the north. Best Denki is striving to become one of biggest electronics distributors in Vietnam in the next five years.
Recent market surveys conducted by GFK and AC Nielsen show home appliance turnover might reach $3 billion a year. However, real market turnover has only reached $1.2-1.3 billion a year, or 40 per cent, leaving 60 per cent unexploited, according to Best Denki.
Besides Best Denki, in early May 2007 Jabil Circuit officially entered Vietnam by establishing Jabil Vietnam, capitalized at $100 million.
With the appearance of these giant distributors in the market, experts say, fierce competition has begun sooner than the expected time in 2009, when Vietnam has to open its market as committed. (VietNamNet)
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