Giant foreign operators crush mom-and-pop stores in Vietnam
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Local players have failed to compete effectively, financial journal says
Domestic retailers are unable to compete with their foreign counterparts because they lack the financial and managerial capacity to do so, industry insiders say.
A Thoi Bao Tai Chinh Viet Nam (Viet Nam Financial Times) report cites the Association of
Viet Nam Retailers (AVR) as admitting that five years after becoming a member of the World Trade Organisation (WTO), Vietnamese retailers have not effectively taken advantage of the opportunities offered by the membership.
Meanwhile, foreign retailers have kept widening their presence in the country, using their superior capital capacity and experience to good effect, it says.
Importantly, they accepted initial losses in order to establish their presence in Viet Nam,
AVR chairman Dinh Thi My Loan said.
Loan also said that the inefficiency of Vietnamese retailers often meant high distribution costs and higher selling prices, making them less competitive.
Domestic retailers were also handicapped by the fact that they do not have the capital to invest in infrastructure, technology and human resources.
However, even with the disadvantages, Vietnamese retailers should have done better in the local market, Loan said.
For instance, she said, domestic retailers had failed to recognise their strengths and open more convenience stores in the country.
In this sector, Vietnam lags far behind other countries in the region like Thailand and Indonesia.
Another development obstacle for domestic retail businesses is the weak support offered by the Vietnamese legal system, the Thoi Bao Tai Chinh Viet Nam report said without elaborating.
However, it did say that legal amendments allowed under WTO rules are needed to protect domestic companies.
Moreover, while other sectors have specific national develop-ment strategies developed by
the government, the retail sector lacks such a master plan, the report says.
Retail sales are predicted to increase by about 23 per cent per year until 2014.
With consumers showing an increasing preference for shopping at supermarkets and convenience shops, domestic investors should pay attention and take advantage of this trend, the report says.
It also cites experts as saying the government should encourage more investors from other sectors to invest in trade centres and markets.
The government should do more to assist domestic businesses gain access to prime retail spaces, the report says.
For their part, retailers must strengthen co-operation with distributors and producers to establish and develop their trademarks.
This will not only strengthen domestic retailers, but also help the government manage the retail market better, the report says.
