VietNamNet Bridge – Mergers and Acquisitions (M&As) by foreign companies is the fastest way to hold stakes in the Vietnamese electronic and electrical retail market.

M&As by foreign companies is the fastest way to hold stakes in the Vietnamese electronic and electrical retail market -- Photo: ictnews.vn

Dang Chuong Linh, an official at the Institute of Trade Research of the Ministry of Trade and Industry, said M&As currently have developed in quantity quickly in the country.

In 2015, Vietnam had 525 M&A cases worth more than 4.3 billion USD, or an increase of 40 percent as compared to 2014.

According to A.T Kearney of the United States, Vietnam was placed 28th in a list of the most attractive retail markets in the world.

Through M&As, domestic electronic and electrical retailers can work together to enhance their strength. However, small-scale and ailing retailers could lose to new competitors, Linh said.

In recent years, the electronic and electrical retail market has become boisterous, thanks to M&As.

Power Buy Company Limited, a company of Thailand’s Central Group, has already acquired a 49 percent stake in Nguyen Kim Trading Joint Stock Company, one of the biggest home appliance store chains in Vietnam. And it has already set a target of bringing the total number of electronic and electrical supermarkets to 50 by 2019 nationwide.

In addition, the Central Group has also bought a 49 percent stake in Pico. Japanese corporations owned a 49 percent stake, a 91 percent stake, and a 30 percent stake of Citimart, Tran Anh, and Fivimart respectively. Investors from the Republic of Korea and Hong Kong have bought a few shopping centres.

According to VHC Trading Company, the owner of Home Centre – HC supermarket channel, if they choose an eligible business partner they will sign a joint venture.

Media Mart, one of the leading electronics retailers in Hanoi, reveals that it has sought business opportunities and foreign partners.

According to industry insiders, foreign investors opt for buying well-known and prestigious distribution networks and stores instead of building a new risky distribution network. At present, legal factors allow them to carry out this objective easily. And they have powerful finance, management experience, technology and human resources.

Meanwhile, local retailers are still facing shortcomings such as inadequate finance, poor managerial skills, lack of retail store channels and qualified human resources, and a comprehensive business strategy.

Linh said that apart from the advantages of finance and managerial skills, foreign retailers always know how to make specific plans before entering a new market.

In particular, they will conduct plans to boost exports via their retail channels into a new market. This is a national strategy with a view to enhancing their exports.

By doing so, M&As will be the shortest and fastest way to hold a stake and retail channel in prestigious distribution networks and stores in Vietnam.

Ngo Quoc Bao, business director of FPT Retail said that in franchising process, Vietnamese businesses need to be sharp and flexible to understand what are their advantages and disadvantages to grab the opportunity or deal with challenges.

Franchising will help Vietnamese businesses, especially small and medium-sized companies, to make an effort in raising their competitiveness to enter the international market.

To enhance their competitiveness, Vietnamese retailers need to raise the quality of distribution and after-sales services. They need to soon shift from traditional methods of buying and selling to online purchasing and further investing in retail channels and stores to develop new retail models.

With the market changing so rapidly, concerns have been raised whether Vietnamese businesses will be able to withstand the intrusion of experienced and rich competitors from other countries. Deputy Minister of Industry and Trade, Tran Quoc Khanh, said that there will still be a place for small businesses as long as they are proactive and learn to adapt to the new situation.

VNA