|Customers are seen inspecting products at a 7-Eleven convenience store in HCMC. (Photo: Saigon Times)
New regulations state that five years after the trade pact comes into force, the country will abolish the regulation that foreign retailers wanting to open their second outlets in Vietnam must ask local authorities for permission and be subject to Economic Needs Test (ENT) criteria.
Vu Quoc Chinh, from the School of International Business and Marketing of the HCMC University of Economics, said the elimination of those obstacles may result in foreign retailers flocking to the country.
Competitive prices are an advantage for local retailers, while their foreign rivals often offer better services, especially logistics.
However, Vietnam will have five more years to prepare for the influx of foreign firms, during which time local retailers should improve the quality of their products and services, said Chinh.
In recent years, numerous foreign retailers have entered the Vietnamese market. At the end of last year, Japan’s Sumitomo Group inaugurated a FujiMart supermarket in Hanoi. Also, Hong Kong’s Watsons healthcare and beauty care chain opened its first store in HCMC on January 17.
Foreign retail outlets, including supermarkets, commercial centers and convenience stores, have mushroomed in the domestic market.
Many experts forecast that even more foreign firms would penetrate into the local market, since Vietnam’s consumer market has the highest growth rate in the region. Further, rural areas and online shopping channels have yet to be fully tapped.
According to Vu Vinh Phu, chairman of the Hanoi Supermarket Association, although Vietnam has yet to remove all obstacles for foreign retailers, the local consumer market has been dominated by foreign retailers. Therefore, Phu advised local firms to conduct business honestly, provide high-quality products and not demand large discounts from goods suppliers.