Jul 11, 2014

Vietnam - Retailers eye Vietnam for future expansion: report

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Vietnam has become more attractive to regional retailers this year, as the country ranked second among the 10 top locations for retailers in Asia in 2014, according to a report U.S.-based real estate firm CBRE unveiled last week.

As stated in the “The Liveliness of Retail Markets in Asia – Pacific 2014” report CBRE released on Friday, Vietnam has great potential and is one of the most highly-evaluated markets in the region thanks to its young population and ever-improving purchase power due to its constantly increasing middle class.

In the report, Hanoi and Ho Chi Minh City, Vietnam’s two biggest cities, are included in the list of the top 10 Asian cities for retail expansion in 2014.

The Vietnamese capital is ranked third after Beijing and Shanghai as the city with the liveliest retail market in the region.

A large young population, after-tax income growth, and strong retail network quality are the main factors that caused Hanoi and Ho Chi Minh to reach the top of attractive retail markets for most multinational enterprises.

The two cities are also among the top 10 cities that were penetrated by the most brands in 2012 and 2013, according to a survey by CBRE.

High-end shopping centers in prime locations with lower rent compared to that of other nations in the region have created many opportunities for retail companies planning to open extensive business activities in Vietnam, CBRE said.

Some brands have recently capitalized on opportunities to expand in the Southeast Asian country, including Dunkin 'Donuts, Auntie Anne's, Starbucks, and McDonald's.

Three of the 10 cities ranked as the best locations for retail expansion are in Vietnam: Hanoi, Ho Chi Minh City, and the central coastal city of Da Nang.

Legal aspects which will be realized in the near future are the main catalyst for this, causing Asian investors to be poised to open as many new retail stores in Vietnam as possible in 2014.

Specifically, Vietnam will fully open the retail market in January 2015 under the provisions of the World Trade Organization (WTO).

Besides, Vietnam will reduce tariffs for imports from Southeast Asian countries to 0 percent for thousands of taxable goods starting next year, according to the free trade agreement clinched among countries in the Association of Southeast Asian Nations, of which Vietnam is a member.

Across the region

According to CBRE, Hanoi is in the top three cities with the most vibrant retail market in the Asia - Pacific region. The two leading cities, Beijing and Shanghai, are both located in China.

Although China's economy is showing signs of slowing down, the retail brands surveyed by CBRE kept an optimistic attitude toward the future there because average incomes are on the rise and purchasing power is still strong in comparison with other countries in the region.

In answering questions about the countries and territories where they are aiming to open new stores in 2014, one third of the survey respondents said they would choose Vietnam. The same number said they would choose Hong Kong and Singapore, and marginally fewer named Indonesia and Malaysia.

Last year, Thailand was ranked high as a potential location for future enterprises, but the recent military coup has led many investors to become uneasy about developing corporations there.

At the international level, Hanoi ranked 13th out of 19 active retail markets in the world. It is the only emerging market, while the other cities are considered mature ones.

Topping the list is Paris, the capital of France, with 50 brands opened in 2013.

Japan's capital Tokyo ranked 2nd with 48 new brands opened last year, double that of 2012, followed by Hong Kong, Abu Dhabi and Berlin.

Business & Investment Opportunities 

Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. 

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