Vietnamese products face big challenge in capital

Although Hanoi is one of the nation’s biggest commercial centres and a distribution centre for many products, it is not a leader in the campaign “Vietnamese using Vietnamese products”.

Hanoi Old Quarter’s night market is bustlingly flooded with a wide range of goods; however, it is not easy to make a choice of Vietnamese products.

Attractive foreign goods sold at cheap prices

Many customers said that most of the goods sold there are from China, which are very beautifully designed and sell at cheaper prices than most Vietnamese products.

“We are not sure about the quality of Chinese products but most of them look very attractive at first sight,” they said.

Hang Duong and Hang Buom streets have long been a distribution centre for confectionery from the Northern provinces, but not many business here are interested in selling Vietnamese brand-name products, except on special occasions like the Mid-Fall festival or the Tet holiday.

Office stationery is another product from which that foreign businesses, especially Chinese hold more than 70 percent of the total sales revenue in Vietnam.

“Chinese goods are not only eye-catching, they are also very cheap, so they usually sell better than Vietnamese ones, especially pens, pencils, paper, and school bags,” said Nguyen Thi Kim Oanh, a shop-owner on Ly Thuong Kiet street.

Despite the fact that Vietnam is the world’s second biggest footwear producer, garments and textiles and footwear products from China are sold everywhere in the centre of Hanoi.

Many Vietnamese businesses are outsourcing for globally know companies but they can not attract consumers when they make their own products, said Nguyen Thi Tong, Secretary General of the Vietnam Leather and Footwear Association.

About 1,000 small businesses are also still facing difficulties in production because they have to import the raw materials from China, said Tong.

In addition, these businesses are not capable of creating new designs, introducing new patterns or developing a trademark, so they have to distribute their products through wholesale markets and agents. Some businesses have their own distribution network with countless wholesale shops but few retail shops, therefore consumers still find it difficult to buy their goods. In contrast, Chinese products continue to hold away in the domestic market, with a high discount rate, and their brand names listed in almost every shop.

Nguyen Van Quang, Director of the Vietnam Fashion Shoes Company, said that the domestic footwear sector has to rely on imported materials, which account for up to 95 percent of their total input. Most materials are imported from Taiwan, China and the Republic of Korea. Furthermore, the Vietnamese market is flooded with Chinese products, so local businesses can only produce small amounts of products, though they have to import the necessary technology worth tens of billions of Vietnam Dong (VND), he added.

Developing trademarks is also being promoted in the electronics sector, with some brand names such as CMS, Tien Dat Karaoke and VTB electronics. However, most locally-made products use imported materials, while a large number of electronics products sold in Hanoi’s big supermarkets are imported from other ASEAN member countries.

Nguyen Quang Duc, Deputy Head of the Marketing Department at the PicoPlaza Joint Stock Company, said that PicoPlaza focuses on selling electronic products that have international brand names. Made-in-Vietnam products only account for 2-3 percent of PicoPlaza’s total goods, mostly home utensils.

Fierce competition

Currently, some Vietnamese products still fill a niche in trade centres and supermarkets because they can enjoy the promotion to buy locally-made products. However, it will be difficult for them for long as huge volumes of foreign products are imported into Vietnam with zero import tax thanks to trade liberalisation agreements. The story of bananas imported from the Philippines successfully competing with Vietnamese bananas is an obvious example.

According to Nguyen Thai Dung, Deputy General Director of Big C Supermarket, to encourage consumers to buy Vietnamese products, it is necessary to have appropriate marketing strategies. “We always create the best possible conditions for local businesses to sell their products in the Big C Supermarket if they meet quality standards”, he said.

Economists said that one of the obstacles to the consumption of Vietnamese products is that local businesses fail to expand their markets due to a shortage of capital. Moreover, they have to face tough competition from foreign retail groups who have huge amounts of capital, good management skills, good marketing strategies and tried and tested promotional campaigns. These are also many weaknesses in Vietnamese businesses.

Tags: Vietnam retail market, Vietnamese products