Can anyone hold a candle to Walmart if it enters Vietnam?
If it enters Vietnam, Walmart will compete with Big C and other big foreign retail chains, and will be a formidable rival to Vietnamese retailers, analysts say.
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According to Bui Quang Tin from the HCM City Banking University, Walmart has been studying the Vietnamese retail market for one year.
“Walmart has been exploring the Vietnamese market. It especially keeps close watch over the performance of McDonald’s in Vietnam,” Tin said.
“Besides, Walmart has also been learning about the moves taken by Big C and Aeon,” he said. “I think Walmart is waiting for the Trans Pacific Partnership Agreement (TPP) to be signed officially to be able to enjoy investment incentives."
The expert, who has studied the way Walmart entered other Asian markets, thinks that the US retail giant would not ‘go the M&A (merger & acquisition) way’.
“Unlike many Asian retailers, who prefer entering Vietnam through M&A deals because this helps save costs, Walmart would not choose this way,” he said.
“It would wait until TPP takes effect and jump into the Vietnamese market,” he maintained.
Vu Vinh Phu, deputy chair of the Hanoi Supermarket Association, said that Vietnam has opened its retail market widely to foreign chains, and if foreign chains find Vietnam attractive, they will come here.
“All foreign investors – Walmart or Thai and Japanese retailers – will not be as hasty as Vietnamese enterprises. They will survey the market thoroughly and make investment only when they are sure the investments can bring profits,” Phu said.
“They will go step by step. Lotte Mart, for example, only had one supermarket at first. But now it has 11 supermarkets. And so do Big C, Metro and Aeon,” he said.
However, Phu thinks that foreign investors would penetrate the Vietnamese market through M&A rather than as foreign direct investors as they don’t want to undergo an economic needs test.
As for Walmart, Phu said its financial mechanism is special. “They (Walmart) can stay in Vietnam for a long time even if they take losses for five years,” he said.
“Walmart has been paying attention to the Vietnamese market for one year, but they still are thinking carefully before making a decision,” he added.
When asked about the power of Walmart, Tin said Walmart is present in many Asian countries; therefore, in Vietnam, it would be a match for all big players, or would even be at an advantage over Thai and Japanese.
As Walmart targets average consumers, it would be a big rival to Vietnamese retail chains which also target the same market segment.
