Building barriers not a violation of WTO regulations

Establishing a firm foothold in the retail market requires close coordination among domestic businesses and support from State management agencies.

Story 1: Developing the retail sector – an uphill task

Story 2: How to tap the retail market’s potential effectively

January 1, 2009, giving Vietnamese consumers an excellent opportunity to access diversified imported products. However, it has posed a big challenge to domestic distributors.

Self-renewal

To compete effectively with foreign rivals, domestic retailers must sharpen their competitive edge. They should renew themselves by building a strong trademark and expanding their retail network. They should also be active in persuading the public to use their products. This is the way big businesses, such as the Hanoi Trade Corporation (Hapro), are building barriers to protect themselves.

Mai Khue Anh, Hapro’s managing director, says domestic producers should closely co-operate with each other in logistics and distribution.

The Vietnam Retailers Association (VRA) is helping its members remedy their weaknesses.

VRA General Secretary, Dr Dinh Thi Minh Loan says domestic retailers lack professional skills because they have not paid due attention to human resources training. Furthermore, not many businesses care about improving the logistic links in their distribution network, such as warehouses, cold storage, and specialised trucks, to meet regional and international standards.

Support from State management agencies

State management agencies have implemented a number of measures which do not violate WTO regulations to help domestic retail businesses.

Truong Hoai Nam, head of the Department of Domestic Market (DDM) under the Ministry of Industry and Trade, says the State will try to help businesses in ways that do not violate WTO regulations, such as providing market, information and opening training courses for shop assistants, or even shop managers.

The appearance of foreign retailers has encouraged modern trade practices to develop along with new buying habits.

Vo Van Quyen, Deputy Head of the DDM, says that with proper policies and roadmaps, the Government hopes that businesses, especially small-and medium-sized enterprises, can be strengthened.

The AT Kearney group ranked Vietnam first in its Global Retail Development Index in 2008 and sixth in 2009. In 2010, Vietnam dropped down to 14th among 185 countries. This is its lowest ranking in the past 7 years.

With a population of more than 86 million, Vietnam is still fertile ground for retail businesses to grow and flourish. There is high hope that domestic businesses will adjust their development strategies to gain a firm foothold in the retail market.