Retailers split over direction ahead

The concept of partnering foreign retailers to enhance competitiveness is triggering divergent opinions among local industry insiders.

“Going into joint ventures with foreign partners is of necessity to raise trading capacity and expand market,” said chairman Pham Dinh Doan of Phu Thai Group, one of Vietnam’s leading distributors.

Phu Thai Group has cooperated with Japanese giant Family Mart Group to open convenience store chain selling Japanese goods in Vietnam.

The two companies plan to open 300 such outlets around the country over the next five years.

“Partnering with Family Mart would help us take advantages of the foreign partner’s cutting-edge technology and management expertise,” said Doan.

He said Phu Thai Group would not sell its stakes in the joint venture to the Japanese partner following a rumour that the group would possibly do that in the coming period.

“Foreign retailers found it easier to source space through shaking hands with local firms. Some time later, the local firms may withdraw their capital from the joint ventures,” said Hanoi Supermarket Association chairman Vu Vinh Phu.

Phu took out the case the owner of electrical mechanical appliances store chain B.C had withdrawn capital from a joint venture with a Japanese firm after several years working together.

“Whether local firms selling their stakes to foreign joint venture partners depends on particular business targets of each firm,” Phu said, adding the foreign partners with a rich pool of experience in retail and practical business plans would bring profits to local firms.

Vietnam Retailers Association chairman Phan The Rue said local firms were often concerned about their competitive disadvantages over foreign retailers in terms of financial capacity and business techniques.

Going into associations with foreign partners would be a good option, but local firms must outline plans to enhance their capacity and sharpen competitiveness to stay healthy in the marketplace, Rue said.

Of the same mind, deputy director general of Nhat Nam Joint Stock Company, the owner of FiviMart supermarket chain, Vu Thi Hau said: “The retail field is a hard nut to crack. Thereby, going on the appropriate way to ameliorate competitive edge when the local market is entirely open to foreign retailers remains a hard puzzle in the distribution field.” – VIR

Tags: vietnam retail industry, Vietnam retail market