Dec 25, 2012

Vietnam - How big is the Vietnamese branded goods market? (Part 2)

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VietNamNet Bridge – More and more well-known brands have set their foot in Vietnam not because of the high revenue the market now can bring, but because of the market potentials they believe would turn into reality in the future.

Tam Son Company has become better known after it has become the official distributor of Hermes.

The company has 10 shops which display the products with high end brands namely Hermes, Kenzo, Hugo Boss, Korloff, TAG Heuer, while planning to open 50 shops by 2015.

Sources said Tam Son is going to open a shop selling Chopard brand watches and jewelries, which may be located at Vincom A shopping mall. Chopard is a high end watch brand which has introduced the most expensive watch in the world valued at 25 million dollars.

In Vietnam, the concept “luxurious” is just understood as an expensive product; which shows the early stage of the branded goods market development.

Commenting about the opening of a series of high-end branded goods shops recently, analysts say foreign investors can see the great potentials of the fledgling market. Make investment now and the investments would bring fat profits in the future.

The bubble

A lot of Vietnamese high income earners have got exceedingly astonished when hearing that the shops selling Gucci, Dolce Gabbana and Milano branded goods have been found as selling counterfeit goods.

This shows the hard pressure that Vietnamese distributors of branded goods have to bear.

The women bear Hermes Berkin handbags in Vietnam because they want to say to others: “I am rich and I am powerful.”

However, Vietnamese branded goods traders are still not self-confident enough to hold the power. Since the Vietnamese market remains small with low purchasing power, branded goods have been entering Vietnam through distribution companies.

It is estimated that hundreds of famous brands have been present in Vietnam. However, only some 10 Vietnamese companies have been authorized by the brand owners as the official resellers in Vietnam. The companies import products themselves and distribute products directly to consumers through their retail shop networks.

Analysts have said that a lot of branded goods shops have been incurring losses; therefore, they have to try to evade tax or sell counterfeit goods. This way can help them balance their business and use the profits from these types of business to offset the losses brought about by other types of business.

A businessman in HCM City, who asked to be unnamed, said that though he has had 10 shops in the central areas of Hanoi and HCM City over the last four years, he still cannot make profit. It’s very difficult to obtain a contract with brand owner to distribute the products in Vietnam. However, he still hopes that he can get it one day.

In Vietnam, Duy Anh Fashion and Cosmetics Company has been well known as the distributor of many high end brands such as Burberry, Bvlgari, Cartier, Rolex, Salvatore Ferragamo, Versace, Bally.... The company has paid 110 billion dong in import and VAT tax so far this year, which shows the performance of the company’s business.

In fact, it is not easy to earn money from selling branded goods. Lylian, Managing Director of Duy Anh Company said that the biggest problem lies in the retail premises. Brand owners always want the shops to be located on large areas in the commercial hubs. Meanwhile, such retail premises in Hanoi and HCM City have become very expensive, which means lower profits for distributors.


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