The fact is that over the past few years, foreign investors such as Metro&Cash and Bourbon have increased their investment in the retail distribution network in Vietnam. This means the distribution network is no longer the “exclusively lucrative land” of domestic enterprises, forcing them to join the competition to get a lion’s share. They will certainly lose out on the domestic market unless appropriate business strategies are adopted.

PhD Ngo Kim Thanh from Hanoi University of Economics affirms that distribution is an attractive service sector as it brings in a high profit. A strong distribution service network will help domestic businesses not only make a higher profit but also minimise the unwanted impacts from fierce competition with foreign investors.

An increased investment in the retail and supermarket network in recent years shows that Vietnam has great potential for developing the retail and services market which is estimated to achieve an annual growth rate of 30 percent and earn US$20 billion.

Nearly 85 percent of the residents in the big southern provinces go shopping at supermarkets and retail trade centres such as Co-op Mart and Maximark.

However, there remains an overlap between distribution and retail services. Due to a lack of potential distributors, businesses now can distribute many similar products at competitive prices.

Rik Mekkeholt, head of the retail counselling service centre of CBRE Vietnam Company, says at least three leading global retail groups: Tesco, Wal-Mart and Carrefour are prepared to join the Vietnamese market as soon as wholly-foreign invested distributors are allowed to operate early next year. Many foreign distributors have eyed big property projects in Ho Chi Minh City, Hanoi, Hai Phong and Da Nang cities and they are ready to join when these projects get off the ground.