Vietnam - Japanese retailers rush to enter Vietnam market

Many Japanese leading retailers, whose target consumers are in both the high-income and lower middle-income segments of the population, have been actively pushing their entrance into the Vietnamese market, at a time when domestic consumption in Japan is slow.

The trend was initiated as early as 2009, when the Vietnamese government allowed 100 percent foreign-invested retailers to distribute goods in the domestic market.

Takashimaya, Japan’s leading retailer, has recently completed necessary procedures to lease a 15,000-square-meter space at a prime location in Ho Chi Minh City downtown.

The Japanese giant has also planned to set up a project office, and a company in HCM City, in preparation for its official debut in the market in 2015.

World renowned luxury brand names will be on shelf at the new Takashimaya supermarkets in Vietnam, said Paul Tan, director of public relations of Takashimaya Singapore.

“Vietnam is a potential for high-class shopping, given its stable economic growth,” he said, while refusing to elaborate the exact investments put into Vietnamese market.

Choosing a different market segment, Aeon Co Ltd, another Japanese leading retailer, aims to purvey its goods and services to the working-class consumers.

Earlier this month, Aeon announced the construction project of its very first trade center in Vietnam -- the US$109-million Aeon-Tan Phu Celadon in HCM City’s Tan Phu District.

Construction of the project is scheduled to begin in September, and is set to reach completion by early 2014, according to Aeon Vietnam CEO Nishitohge Yasuo.

Vietnam, a potential market

According to the Japan External Trade Organization, or JETRO, Japanese investors in Vietnam have gradually switched from the small-scale manufacturing into the distribution sector.

For instance, the Family Mart retailing chain has expanded into 18 stores only two years after its entrance in Vietnamese market, the agency said.

Meanwhile, figures from the Foreign Investment Agency under the Ministry of Planning and Investment show that Japan is currently Vietnam’s largest investor, with a total investment worth US$1.07 billion as of last February, or 87.5 percent of the total foreign investment in Vietnam.

“A young population, increasing income, and similar consumer taste to Japanese customers are amongst the main factors making Vietnam an appealing market to Japanese investors,” said Shinichiro Hori, managing director of the Japan’s Dream Incubator Vietnam.

At a time when the Vietnamese government still applies many measures to protect local retailers, many Japanese retailers have chosen to enter into franchise partnerships with Vietnamese businesses, biding their time until the retail sector is fully exposed to market liberalization, he said.

Meanwhile, a representative of Aeon said the time when foreign retailers in Vietnam had to operate under strict restriction was long over.

Foreign investors have been making further inroads into the potential retail market in Vietnam, he said.

“Once our projects in HCM City have become operational, Aeon will expand its presence to the central and northern parts of Vietnam in the 2014 – 2015 period,” said Aeon CEO Motoya Okada.

Tuoi Tre

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