Four firms to form conglomerate to fight foreign retailers

AVR’s chair Dinh Thi My Loan said the conglomerate, if established, would be a multiple ownership legal entity in the retail industry. Its four members now have total revenue of up to $4-5 billion in total.

The model had support from the government previously, but the developers could not access the retail premises in the provinces at that time.

The CEO of the Vietnam Distribution Network Development & Investment (VDA) Huynh Van Minh, said VDA was set up by the four ‘big guys’ in 2007. 

The combination of facilities, retail premises, capital, experience, market share and goods of the four retailers would create a big platform. With a strong VDA, foreign investors would have to consider carefully if they want to take over distribution and logistics chains in Vietnam. 

Minh said that VDA had planned to open hypermarkets and general depots in advantageous positions in large cities of Hanoi, HCMC and Hai Phong. However, VDA failed because of poor policies.

As soon as VDA was set up, however, the State prohibited state-owned enterprises from making investments in non-core business fields. This forced Satra and Hapro to withdraw capital.

However, to avoid repeating the same mistake, the state needs to apply policies to support the conglomerate’s development, and retailers need to find a common voice.

Minh said involved parties are calling for the establishment of a retail conglomerate under a new model with features different from the old model. 

Anyone can join the model, and the old capital contribution and management model (each partner contributes 25 percent of capital and the business is operated under the mode of consensus) would no longer exist. 

Instead, those who make bigger capital contributions will manage the conglomerate.

The local retail community has repeatedly asked the Government to develop policies to help the industry compete with foreign retailers, who are vigorously expanding in Vietnam.

Vietnam has been named among the six most attractive retail markets in the world this year by A.T. Kearney in its Global Retail Development Index (GRDI). The other five are India, China, Malaysia, Turkey, and the United Arab Emirates (UAE).