Local retailers must sell superior products to dominate market

Currently, the chances of imported goods taking over the market are low. Foreign retailers in Vietnam are fighting for market share within modern retail models, while domestic retailers continue to dominate traditional retail mediums, Nguyen Thi Thu Trang, Director of the World Trade Organisation Centre of the Vietnam Chamber of Commerce and Industry, said.

Modern retail models such as shopping malls, supermarkets and convenience stores, which largely incorporate mixed-use retailing, account for 25% to 30% of the Vietnamese retail market, whereas 70% to 75% are traditional retail models such as wet markets, box stores and grocery stores.

The main supply source for domestic retailers is local producers, who have advantages such as lower logistical cost because of smaller distances, cost benefits owing to the absence of import tariffs, and the opportunity to sell fresher products. So the chances of imported consumption goods overthrowing domestic products in the retail market is slim in the near future.

However, there are worrying signs within the agricultural products and household goods sectors. For example, as of the end of 2016, Vietnam had spent US$365 million on import of vegetables and fruits from Thailand, almost twice the amount compared to the same period in 2015 (US$189 million).

These imported Thai products are available both in large supermarkets and small retail stores all over Hanoi. Despite being sold at higher price than their Vietnamese and even Chinese counterparts, Vietnamese consumers are choosing Thai products. An employee of a fresh fruit store on Ba Trieu Street, Hanoi, said that it could be because the imported products look better and are packaged better, coupled with consumer xenophilia.

The Ministry of Industry and Trade  has amended several laws related to taxes, such as value added tax and special consumption tax, to help domestic businesses cope with price competition and work to improve product quality and their distribution network.

These laws, however, also ensure that domestic producers are subject to the same taxes as foreign businesses importing products, to establish a fair ground.

The ministry had also issued directions on the distribution of goods before the upcoming Tet (Lunar New Year), urging local authorities, businesses and agencies to actively monitor demands for goods and ready a steady supply before the shopping rush begins, in addition to careful selection of imports and close watch on frauds, with help from the agriculture and rural development ministry.