With a population of nearly 90 million, Vietnam is a large market in a region which is considered the most economically dynamic in the world. The country has recorded a high and stable GDP growth rate and its consumption needs are increasing. In 2007, Vietnam’s GDP reached 8.4 percent with its trade performance valued at more than US$45 billion. According to latest statistics, total retail services in the first half of 2008 were estimated at VND447.3 thousand billion, or 30 percent higher than the same period last year. This shows that Vietnam has great potential to develop its retail distribution network. However, current retail sales make up only 10 percent of the domestic retail market. Several professional retailers are operating in the country including the Saigon Trade Corporation (Satra) with 40 affiliated units, the Hanoi Trade Corporation, Hapromart, Citimax, Fivimart, MaxiMart, and CoopMart.

Mr. Vu Minh Tuan, Director of Hanoi Supermarket Company, HaproMart:

To confront the immediate challenge, our company is trying to improve our professionalism and further connect our branches. HaproMart, led by the Hanoi Trade Corporation, has developed a strategy for a competitive and reliable retail distribution network in terms of both product and service quality. We have used modern management philosophy to improve Hapro Mart’s sales performance. In the long-term, we will broaden our retail distribution network and supermarket chain in Hanoi and other cities and provinces. We have developed projects on land allotment, and leasing as well as connecting all units within the Corporation to cooperate with other retailers to establish joint-stock companies and trade concessions. We understand that it is very important to connect domestic retailers in order to make us more competitive.

Ms. Dinh My Loan, permanent Vice President and General Secretary of Vietnam Retailers’ Association:

Domestic businesses lack human resources. They are short of staff who work directly with customers as well as middle and high level managers. Customers often feel comfortable with foreign invested supermarkets as the staff there are very professional. Meanwhile, they have often complained about domestic retailers. The Vietnam Retailers’ Association was established in October 2007. Since then, we have focused on making retailers more professional. The Association has held training workshops and talks with member businesses to help them improve their knowledge and skills in international integration and discuss with them the current state of affairs and short and long-term development strategies. The Association has consulted the Ministry of Industry and Trade on trade strategy and market opening. We have trained businesses in developing their business plans and have helped them access bank loans. We have also guided them through the maze of financial planning. The Association has effectively connected member and non-member businesses. For example, during the recent virtual rice fever in southern provinces, the Northern Food Corporation cooperated with Fivimart and HaproMart to supply rice to supermarkets so that they could stock enough rice within one day. On July 14, the Association’s Thuong Truong (Market) Magazine will be issued to provide relevant information for businesses.

Mr. Van Van Quyen, Deputy Director of Domestic Market Department: Vietnamese businesses should brainstorm

Q. Foreign investors will be allowed to establish wholly foreign invested retail supemarkets from Jan.1,2009. What are challenges to domestic retailers?

A. The strengths of foreign investors include business management skills, professional business methods, capable management staff and long-term development strategies. Those are the failings of domestic retailers who have weak and inconsistent trade foundation and poor connections. Most of Vietnamese businesses are small and short of funds. They are not able to accumulate and pool financial resources. Their business methods are outdated and unprofessional. Their managers cannot meet the needs of modern trade and international integration. After Jan. 1, 2009, the presence of foreign professional retailers will bring heavy pressure to bear upon them, particularly more than one million independent retailers. A great deal of effort will be needed from the entire business community to cope with these challenges.

A. Despite this fact, Vietnamese businesses also have certain advantages. They understand the domestic market, customers’ habits and State laws and policies better than their foreign competitors. After the arrival of foreign retailers, domestic businesses will have the chance to access new technologies and improve distribution and management skills. The Government and the Ministry of Industry and Trade will adopt more open policies to create a level playing field for domestic businesses. However, Vietnamese businesses must take advantage of every opportunity to move forward and gradually corner the market.

A. I think they must be fully aware of the need to join efforts to support and strengthen each other during the development process. Vietnam’s laws, such as the Business Law and the Investment Law, clearly define various forms of business cooperation.

According to the Businesses Law, smaller businesses can merge to become bigger. In the meantime, bigger businesses can make trade concessions to smaller ones. To overcome their weaknesses, all of them should rack their brains and come up with their own solutions.