VietNamNet Bridge – Vietnamese products are facing fierce competition from Thailand imports in the local market as Thai companies increasingly expand their presence in the country.

Customers shop at a Thai trade fair. Thai consumer goods like fruits, sweets, and home appliances have flooded the local market. Thai farm produce and foodstuffs can be seen at any traditional market, convenient store or supermarket in Viet Nam. — Photo vinexad.com.vn

A report from the General Department of Customs (GDC) showed that exports from Thailand reached US$7.5 billion in the first 11 months of 2015, an increase of 17 percent compared with the same period of 2014.

Thai consumer goods like fruits, sweets, and home appliances have flooded the local market. Thai farm produce and foodstuffs can be seen at any traditional market, convenient store or supermarket in Viet Nam.

The latest statistics released by the Ministry of Industry and Trade reveal that the volume of import products originating from Thailand are ranked second, after China. Currently, garments and household appliance products supplied by Thailand have been presented in nearly 9,000 traditional markets across the country. Thai electronic and electrical products currently account for 70 per cent of the market share.

Dang Thu Hien, an owner of a mini mart in Ha Noi's Nguyen Trai Street said she sold Thai goods in addition to Vietnamese products, adding that more and more people have favoured Thai consumer products because they are of high quality, durable, well-designed and quite affordable.

Hien said she intended to open one or two more stores to expand her retail store chain specialising in Thai imports as the demand of customers buying the products had increased rapidly in recent years.

Mai Phuong, a loyal consumer of Thai products, said she had been buying Thai goods for many years because every member in her family preferred using the products.

"I have bought enough food for the coming Tet holiday, and most of it is sourced from Thailand, such as rice, vermicelli, some spices and candy. I think Thai foodstuffs are more tasty than Vietnamese foodstuffs, not to mention that some of them are cheaper," Phuong said.

Phuong said many of her friends also tend to consume Thai products as they believe the products have high quality while they are much cheaper than imports from Europe and the US.

Phuong added that many local traders in her neighborhood who once sold Chinese products and Vietnamese products now shift to selling products made in Thailand.

"There are now three convenience stores near my house selling Thai products, I'm always able to find something good to buy when I visit," Phuong added.

"Not only in stores, but Thai products such as soap, fabric softener, electric fans, knives, electric rice cookers and bowls can be easily found at big supermarkets," Phuong said.

Thai retail ambition

Thai retailers have nurtured their ambition of scaling up their presence in Viet Nam for quite some time now. The retail sector has witnessed waves of international capital with the most popular retail brands in Viet Nam falling into the hands of Thai investors.

Vu Vinh Phu, Chairman of the Ha Noi Supermarket Association, gave this warning as he mentioned a number of concerns about recent deals that enable Thai companies to further penetrate the domestic retail market.

The deals mentioned include Thai company Berli Jucker's (BJC's) purchasing Metro Cash & Carry Viet Nam for over $870 million. Berli Jucker, a major stakeholder and contributor to Thai expansion in Viet Nam, is owned by billionaire Charoen Sirivadhanabhakdi, who is currently the second largest shareholder in Viet Nam's leading dairy products company Vinamilk.

Earlier, Power Buy, a subsidiary of the Central Group of Thai billionaire Chirathivat, also acquired a 49 per cent share in New Solution and Technology Development Company NKT, the owner of Vietnam's leading retailer Nguyen Kim Trading JSC. Central Group is also the owner of the Robins supermarket chain in Viet Nam, which distributes Thai goods in Ha Noi and HCM City.

Phu said the acquisitions marked the Thai giants' aggressive expansion into Viet Nam's retail sector, adding that domestic retailers might face the risk of losing market share to Thai billionaire retailers in the near future if they do not draw up strategies to defend themselves against the foreign rival.

"When these distribution channels belong to Thai investors, it is a risk for Vietnamese businesses because Thai products have good quality, competitive price and have gained the confidence of Vietnamese consumers. The near geographic distance and the open policies on tariffs of the ASEAN Economic Community (AEC) will enable the flood of Thai products in Viet Nam in the coming years," Phu said.

Phu said to combat the encroachment of Thai goods, local firms must make comprehensive reforms to enhance the quality of products and services, improve productivity, and reduce costs.

Small local enterprises should co-operate or merge to create strong links to compete with foreign retail rivals. They should also take measures to encourage customers to use Vietnamese products to maintain their market dominance, he added.

Linh Anh

VNS