VietNamNet Bridge – Once Vietnamese retail chains fall into the hands of “foreign sharks”, Vietnamese goods will be dislodged from the home market, while local production will become stagnant, experts have warned.

The rapid-fire information about the opening of new foreign-invested retail shops has worried Vietnamese distributors and manufacturers.

A report of the Ministry of Industry and Trade (MOIT) showed that there are 700 supermarkets and 130 shopping malls in Vietnam, including ones run by 22 wholly foreign-owned enterprises.

The foreign-invested retail chains, which now hold a large market share thanks to their powerful financial capability, show ambitious plans to expand their business scale in the Vietnamese market.

The Thai BJC Group recently announced a deal of taking over the German-invested Metro Cash & Carry.

Meanwhile, South Korean Lotte has poured more capital into Vietnam to implement its plan to open 60 supermarkets throughout the country.

Economists warn that the presence of many big foreign players in the distribution market is a serious threat not only to Vietnamese distributors but to Vietnamese production as well.

In a market economy, production is determined by distribution and retailing, which means that distribution determines how much and what to produce.

Dr. Le Dang Doanh, a renowned independent economist, noted that he can see high risks for Vietnamese goods from the establishment of the ASEAN Economic Community (AEC) and free trade agreements (FTA) with South Korea and other countries, under which tariffs on imports from these countries will be cut to zero percent.

“Foreign-invested retailers will give priority to sell products from their home countries. This means that Vietnamese goods, including farm produce, are in danger of being ousted from supermarkets,” Doanh said.

“This will put pressure on Vietnamese agriculture and industrial production,” he warned.

Dr. Nguyen Minh Phong from the Hanoi Socio-economic Development Institute, also noted that once the retail chains are controlled by foreigners, there would be no room for Vietnamese goods at supermarkets.

“Vietnamese goods would be seen only at traditional markets and in rural areas. The sale of Vietnamese goods would be weakened, and this would have negative impact on production,” Phong said, stressing that consumption is one of the most important factors affecting production.

Doanh, while emphasizing that the risk is high, noted that Vietnamese retail groups need to cooperate with manufacturers to cement their positions in the market.

“If they cannot do this, Vietnam will turn into a market for foreign-made products, and will pay salaries to foreign workers, while Vietnamese will serve as hired workers for foreign enterprises right in the homeland,” Doanh warned.

Mai Chi