VietNamNet Bridge – A lot of distribution chains have stopped
operation or declared bankruptcy because they cannot compete with foreign
powerful giants. In fact, the deaths of domestic retailers have been
anticipated.
Domestic retailers leaving the market
When the Viet Hung new urban area
in Long Bien district was set up, the Hanoi Trade Corporation (Hapro) went
ahead of any other retailers, opening a supermarket on the first floor of the
K3 bloc in the new urban area.
After some days, FC Mart also
inaugurated a supermarket at P2 bloc in the same new area. Both the
supermarkets had been very bustling until the day Big C, a foreign distribution
giant, opened Bic C Long Bien, and Vincom, a big real estate developer, opened
Vincom Long Bien.
The supermarkets owned by Hapro
and FC Mart have become quiet since then. An officer who once worked for FC
Mart, said that the owner of the distribution chain had to lay off workers
because the supermarket’s sales were very low.
She said local residents in Viet
Hung and Long Bien district would rather to go shopping at Big C or Vincom than
going to small supermarkets in the locality.
“The quality of products and the
prices are nearly the same. However, consumers still prefer going to big
supermarkets, where there are a wide range of products and a lot of services,
including restaurants, cafes and amusement areas for children,” she explained.
Ninomaxx, Maxxstyle, Foci and
Legamex – the most well-known fashion brands in Vietnam – have decided to cut
down the number of retail branches. Home appliance distributors have either
gone bankrupt (Wonder Buy) or scaled down the business, such as Best Caring,
Pico or Media Mart.
Chair of the Hanoi Supermarket
Association Do Vinh Phu has admitted that retailers have been facing big
difficulties, adding that more retailers would go bankrupt in 2013.
In the first six months of 2012,
Hanoi reportedly had 12,000 businesses dissolved or bankrupted, ¼ of which were
distributors.
Fivi Mart, Intimex, the members
of the 21-member association have to cut down the number of retail branches,
while some others have reported the 5-10 percent falls in the turnover.
Phu said the demand has dropped
dramatically due to the price increases. People go to supermarkets just to buy
food and essential goods (70 percent).
“20 percent of inventories have
been kept at supermarkets, while the other 80 percent at manufacturers, or
importers,” Phu said.
Foreigners flocking in
Phu said that Vietnamese small
retailers with the average capital of hundreds of billions of dong cannot
compete with the big foreign guys with the capital of hundreds of millions of
dollars and the global networks.
“As for foreign groups, the
losses in some markets would be offset by the profits from other markets.
Meanwhile, Vietnamese retailers, described as the small fishing boats, would
sink immediately in a big storm,” Phu noted.
While Vietnamese retailers go
bankrupt in masses, the number of foreign invested distribution chains in
Vietnam has been increasing significantly. Metro Cash & Carry has opened 10
more centers, Big C 13, Parkson 7.
Deputy Head of the Central
Institute of Economic Management Vo Tri Thanh said that the deaths of domestic
retailers were anticipated when Vietnam became the member of WTO.
Under the WTO commitments, since January
1, 2009, Vietnam has to open the retail market to foreign investors.
However, domestic retailers have
collapsed sooner than previously expected. Thanh has noted that local
authorities have been competing with each other to attract foreign retailers.
“Once foreign investors can set
up retail branches on the advantageous positions in the localities, domestic
retailers would be surely swallowed up,” THanh said.
Nguyen Ha
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programmes. Many thanks for visiting www.yourvietnamexpert.com and/or contacting us at contact@yourvietnamexpert.com
No comments:
Post a Comment