VietNamNet Bridge – A lot of business fields have been controlled by foreigners, including the fields, which were once the Vietnamese forte.
Garment producers can earn little money in domestic market
Most of the big garment and textile enterprises have been living on doing the outsourcing for foreign partners, i.e. they make products that do not bear their brands.
To date, garment products with Vietnamese brands have been exported to Cambodia only. Meanwhile, they do not think of developing the home market because of the weak demand and many other reasons. As a result, the Vietnamese market has been flooded with Chinese products.
Pham Xuan Hong, General Director of the Saigon 3 Garment Company, said that Vietnam, with 90 million consumers, remains a small market for garment companies. Meanwhile, counterfeit goods have been selling everywhere, thus making it impossible for domestic garment companies to squeeze into the market.
“If all garment companies scramble for the pieces of the small domestic market cake, they would kill each other and kill themselves,” he said.
Retailers dominate the Vietnamese market
Despite the preferences, domestic retailers still complain that it’s too difficult to compete with foreign rivals who are too powerful in finance, government skill and professionalism.
Among the foreign retailers attempting to penetrate the Vietnamese market, Takashimaya Singapore is a well-known name. In March 2012, it committed to lease 15,000 square meters of retail premises at Saigon Center.
Prior to that, Japanese Aeon officially made its presence in Vietnam, announcing the plan to build Aeon-Tan Phu Celadon shopping mall in Tan Phu district in HCM City, capitalized at 100 million dollars. The retailer hopes it can open 20 more retail centers in Vietnam by the end of 2012. The existing retailers like Metro, Big C and Parkson have been unceasingly expanding their distribution networks in recent years.
Vietnamese logistics service providers “raise white flag”
Analysts have commented that about 70 percent of the logistics market has fallen into the hands of foreigners. Logistics services were once protected and encouraged by the State. However, after the WTO admission, Vietnam has to open the market to foreigners. Some 30 leading logistics brands have been present in Vietnam, which have been undertaking the biggest orders.
The majority of Vietnamese logistics companies have small scale of operation (80 percent of enterprises have chartered capital at less than 1.5 billion dong), have poor infrastructure items and low workforce qualification, lack worldwide networks.
Ta Thi My Linh, General Director of SGN Logistics, said foreign groups in Vietnam usually hire well known logistics service providers at international stature. Therefore, Vietnamese logistics companies just can be a link of the supply chain of foreign logistics companies. They provide simple services, such as storehouses, porters and provide goods handling services.
Since foreign logistics companies now dominate the market, they can impose the rules of the games and set up their prices. Reports show that the expenses on logistics services in Vietnam now account for 20-25 percent of GDP, much higher than that in other regional countries and in the world.
Ad industry driven into a corner
There are only 30 foreign invested among the 5000 ad firms operational in Vietnam, but the minority of ad firms are holding the biggest market share.
To date, five biggest ad groups have been present in Vietnam, including WPP, Omnicom, Dentsu, Publics and Interpublic, which have been obtaining the big orders from big foreign invested enterprises. Therefore, according to Do Kim Dung, Deputy Chair of VAA, there is only a very small market share left for domestic firms.