Vietnam proves promising retail market

13:16' 19/06/2007 (GMT+7)

VietNamNet Bridge - Japanese electronic retailer Best Denki is negotiating with its Vietnamese partner to establish a joint venture after their franchise contract proved a great success. Best Denki and the Ben Thanh Marketing Company, which owns Carings home appliance trademark, are expected to launch their joint venture in January 2008. Best Denki aims to become one of the biggest electronics distributors in Vietnam in the next five years, said C.J. Raj, Regional Marketing and Business Development Director of Best Denki in Singapore. The group will inject money into a plan to open 10 more home appliance supermarkets in big cities like Ho Chi Minh City, the Mekong Delta city of Can Tho, the central city of Da Nang, and the northern port city of Hai Phong. Best Denki is among the many foreign companies which are looking to secure a firm foothold in Vietnam, rated the world’s third attractive retail market by a recent survey of US leading consultancy group, AT Kearney. Some earlier birds have reaped success, such as Germany’s Metro Cash & Carry, France’s Bourbon, Malaysia’s Parkson, Japan’s Zen Plaza and the Republic of Korea’s Diamond Plaza. The world’s leading retail groups such as Wal-mart of the US, Carefour of France and Tesco of the UK are also eyeing Vietnam. With the appearance of the giant distributors in the market, experts say, the fierce competition among distributors has begun, sooner than the expected time in 2009, when Vietnam allows foreign retail companies to set up wholly foreign-invested companies in the country under its commitments for World Trade Organisation accession. Vietnamese distributors now are expanding business networks to create invigorated competitiveness. The establishment of the Vietnam Distribution Association Network Development and Investment Joint Stock Co. (VDA) was seen as the start of an industry trend geared towards greater cooperation between retailers. The association was formed after the country’s four major retailers - the Ha Noi Trading Corporation (Hapro), Ho Chi Minh City Union of Trading Cooperatives (Saigon Co-op), Saigon Trading Corporation (Satra) and Phu Thai Trading Company - had earlier agreed to link up on the deal. The Trung Nguyen ( Central Highlands ) Coffee Company was also a pioneer in expanding retail network. By late 2006, the company's G7 Mart system increased to 5,500 retail outlets across the country. The enterprise is pursuing a mammoth target of opening an additional 10,000 outlets and building 18 wholesale points and seven trade centres in the next five years. The total investment for these projects is estimated at nearly 400 million USD. "Our objective is to gather Vietnamese producers to form a strong distribution system that is competitive with foreign distributors," said the company's General Director Dang Le Nguyen Vu. Many other enterprises have been in a hurry to implement projects to develop their retail systems nationwide. The FPT Information Technology Group has poured 40 billion VND (2.5 million USD) into a company that specialises in health, educational, scientific and technological products. The enterprise has launched on-line service which combines the provision of goods by nearly 500 producers nationwide. The Vietnam Garment and Textile Group (Vinatex) has come off well with a chain of 40 supermarkets in almost all big cities in the country. The group hopes to double the number by 2010. Together with challenges in competition, Vietnam 's commitment to open its retail market is offering Vietnamese enterprises many opportunities to become stronger. The increased investment of domestic and foreign investors has helped develop the Vietnamese retail market in a more diversified and professional manner, creating more distribution channels for customers. (Source: Viet Nam Net)