Domestic retailers focus on brand development
At a recent meeting held by the Ministry of Industry and Trade, a number of Vietnamese retailers complained about the increasing difficulties in their businesses.
"While it is true that domestic firms lack experiences in retail marketing, a climate of unfair competition has been created by the fact that foreign businesses are allowed to buy domestic goods for export and retail distribution," said an official from Saigon Coop.
It is not unusual that Vietnamese retailers have uncompetitive prices because, being mostly small to medium-sized enterprises, they lack vertical integration and competent staff.
An official from the Hanoi Trade Corporation (Hapro) said, “The opening of the market in Vietnam is inevitable. The best model for small to medium-sized businesses to survive here is to take advantage of their strengths, such as their knowledge of the domestic market and distribution connections. This would be much better than confronting large, multi-national companies directly."
There are several officials who say that cooperation is necessary between producers and distributors to build and protect branding and trademarks.
Vu Huy Hoang, Minister of Industry and Trade, noted, “There needs to be a concerted effort to build Vietnamese brands and train a competent workforce so we can compete with international companies."
He also suggested that there are policy changes which could produce a conducive environment for such a scenario.
"Joint ventures in Vietnam could play a key role in gaining the expertise and training to create an experienced domestic workforce," he said.
After 5 years of being a part of the WTO, the number of supermarkets in Vietnam has increased from around 250 to 300 in the period between 2002 and 2011, and the number of 'trade centres' has risen by 72% in five years.
Vietnamese retail outlets have widened their distribution base through direct investment, joint ventures and franchising, such as Saigon Coop., Hapro and Intimex. Yet they are still facing significant competition from foreign firms, especially from France, Malaysia and Korea, who have established well-known brands in the country, including Parkson, Lotte and Metro.