Great potential for market expansion

Just a few years ago the rural market did not receive much attention from businesses as they were most focused on customers in big cities. It was even considered a haven for counterfeit and low quality goods. When urban trade slowed down, businesses have shifted their focus onto rural areas, considering it a relatively lucrative market.

Many find it more convenient to transport goods to rural areas than it was several years ago. With improved living conditions, rural people have a greater demand for consumer goods, industrial and processed products. In addition, they have become increasingly interested in Vietnamese goods since the campaign “The Vietnamese use Vietnamese goods” was launched a few years ago.

Vu Kim Hanh, director of the Business Studies and Assistance Centre, says more than 70 market segments have been set up in rural areas across the country. In the first market days appeared only a few hundreds of local customers with low incomes. Thanks to sales and marketing efforts, more and more rural people have come to buy Vietnamese products as their first choice.

“Even those living in border areas now prefer Vietnamese products to foreign ones,” says Hanh.

According to the initial statistics, many market segments have fetched up to billions of VND in revenue each, and many businesses have sold out goods in just a few days. Vietnamese goods are said to have good quality, eye-catching patterns and reasonable prices.

Businesses report that their trade revenue has increased significantly in rural areas, with some products achieving annual growth rates of 30-50 percent. They say this is a positive signal in the context of trade slowdown in big cities.

Firm distribution networks

The campaign “The Vietnamese use Vietnamese goods” has not only changed the attitude of rural consumers toward Vietnamese goods, but helped businesses realize the virtue of the rural market. For a long time, they were only focused on stimulating exports and domestic consumption in big cities, neglecting customers in rural areas. Some even maintained that the rural market would not pay off well despite a high purchasing power.  

Most recently they have felt the need to develop distribution networks in rural areas.

“Market segments are considered to be the first step toward exploring the huge market. To stand firm, we have to build retail distribution networks right now,” says a business representative.

Tan Hiep Phat Group is a pioneer in developing these networks in all cities and provinces across the country, even in remote areas. Its appropriate sales and marketing as well as promotions at local exhibitions and trade fairs have helped rural consumers identify genuine products of Vietnamese brand names.  

The Ministry of Industry and Trade has warned that local business operations are facing challenges as the deadlines for tariff cuts under free trade agreements (FTA) that Vietnam has signed with other ASEAN countries are drawing near. To get the lion’s share of the domestic market, Vietnamese businesses have no choice but to develop firm distribution networks, especially in rural areas.

Dr Dinh Thi My Loan, Vice President and General Secretary of the Association of Vietnamese Retailers, says businesses must understand rural consumer trends and shopping habits in the first place before providing suitable products at reasonable prices.