Vietnamese struggle to sell products at foreign-invested supermarkets
Vietnamese manufacturers are trying to display their products at foreign-invested supermarket chains, which have become familiar shopping destinations for urbanites. But it has not been an easy task.
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Le Thi Thanh Lam, deputy general director of Saigon Food, said many Vietnamese enterprises have met big problems in distribution since the day some supermarket chains were invested in by foreigners.
It is now difficult for Vietnamese manufacturers to sell their goods via the chains as the foreign retailers require high discount rates.
Most recently, VASEP had to ask Big C, a large supermarket chain, not to continue raising the required discount rates.
The discount rates of 17-20%, and 25% sometimes, set by the Thai invested chain, make Vietnamese enterprises unprofitable.
As enterprises have to pay many kinds of fees, they will have to raise the selling prices to cover the expenses. If so, their products will be uncompetitive.
“The required high discount rates will force Vietnamese enterprises to seek profits from other distribution channels and accept losses when selling products via foreign-invested supermarkets,” Lam said.
“This will help foreign-invested supermarkets reduce the selling prices of goods to compete with Vietnamese owned supermarkets,” she added. “If Vietnamese-owned supermarkets do not develop, Vietnamese enterprises will suffer.”
Reports showed that foreign invested supermarkets now hold the upper hand in the home retail market. In 2015, foreign invested supermarkets held 58% of the market share, while Vietnamese held over 40%.
It is expected that foreign invested modern retailers would obtain turnover of VND187 trillion by 2020, while Vietnamese retailers VND71.4 trillion, which means the market share of 72.4% for foreigners and 27.6% for Vietnamese.
Diep Dung, chair of Saigon Co-op, one of Vietnam’s largest retail chains, said foreign invested supermarket chains can develop very rapidly in Vietnam because they can connect suppliers for mutual benefits.
The supermarkets and suppliers share the same long-term vision, responsibility and market penetration costs. They can cut the selling prices by up to 40% to conquer the market because the market penetration costs will be shared between them.
Tran Hoang Ngan, an economist, has urged the government to pay higher attention to developing the Vietnamese-owned retail network, warning that if foreigners control distribution channels, it would be a big problem for Vietnamese production.
