This information was released at a seminar on distribution services, infrastructure development and market and legal regulations held by the Vietnam Chamber of Commerce and Industry (VCCI) in Hanoi on May 30.

General Director of the Hoang Quan Price Appraisal Company described the Vietnamese retail network as outdated, with modern commercial activities accounting for just 15 percent of its turnover. He said there is no strategy for setting up links among producers, distributors and retailers, leading to overlapped functions. Distribution infrastructure facilities remain too weak to provide enough space for retail business operation, resulting in high rental prices at major trading centres.

Apart from that, investors only have 10 percent of the distribution network but their market share accounts for up to 50 percent.

According to AT Kearny Consulting Company, in 2007, Vietnam was considered the fourth most attractive retail market in the world after India, Russia and China. However, the rank dropped one place compared to 2006.

The Chairwoman of the Vietnam Retailers’ Association, Dinh Thi My Loan, pointed to weaknesses in the Vietnamese retail network in terms of professional skills, finance capacity, linkage and long-term strategy.

The poor retail-related legal environment also raises major concern for foreign investors, said Mrs Loan.

The Vietnamese market’s retail turnover sees an average annual increase of 20 percent, reaching VND335 billion and up 40 percent over the 2005-2007 period.

Under Vietnam’s commitments to the World Trade Organisation (WTO) on the opening of the retail market as of January 1, 2009, Vietnamese retailers will have to compete with large foreign businesses. This means both domestic and foreign investors will have a fifty-fifty chance of developing the retail market.