Domestic retail market full of potential

The country's retail market is preparing for a massive influx of foreign retailer amid its World Trade Organisation (WTO) obligations, which will come into effect from January 11, 2015.

Under the WTO commitments, Vietnam will have to permit the establishment of wholly foreign owned businesses, including retailers, with some of the world's leading retailers expressing an interest in the Vietnamese market.

The changes have also attracted the interest of foreign investors eager to take advantage of the lax investment rules.

In response, many domestic stakeholders have raised concerns with foreign retailers setting up shop in Vietnam.

Fielding questions in an online forum held in Hanoi on November 13, Deputy Head of the MoIT's Domestic Market Department Tran Nguyen Nam said foreign firms will bring the benefits of financial resources and qualified workers.

Domestic retailers, he said, need to adapt their management systems, training and customer service to compete with foreign firms, who are skilled in these areas.

Statistics from the department showed that by the end of last year, foreign groups accounted for only 40% of around 700 supermarkets in Vietnam.

Meanwhile, 31 out of 125 commercial centres in the country were foreign-invested.

Dinh Thi My Loan, chairwoman of the Vietnam Retailers Association, said market share commanded by local retailers has increased in recent years.

She said both domestic and foreign retailers have benefited from preferential Government policies.

However, she commented that some localities have offered preferential policies for foreign enterprises. In one example, domestic firms are required to wait for longer periods to apply for land to build trade centres or supermarkets, while foreign companies receive easier access to land.

Our association has reported the situation several times, she added.

In addition, local retailers have faced difficulties with the economic downturn and decreasing purchasing power, she said, adding that domestic retail companies need to plan how they will compete in a liberalised market.

She said domestic retailers have not been good at promoting co-operation between producers and companies as foreign firms.

Talking about co-operation among four best big domestic retailers, Hapro, Satra, Phu Thai Group and Sai Gon Co.op, she said the association aims to strengthen logistic system.