VietNamNet Bridge – The Vietnamese home appliance market is witnessing a war, which gathers all the members of the market in an effort to re-define the market share for each.

A lot of home appliance enterprises has reportedly fallen into big difficulties, shut down or got bankrupt since mid 2011 after a long period of suffering losses. However, a lot of enterprises still have been trying to drag out their miserable existence. Analysts believe that a combat would occur to completely weed out the weak bodies from the market.

The analysts say that it is now the time for the big fish to take actions to swallow small ones. The most popular method they follow is to reduce the sale prices continuously, thus making small enterprises unbearable and forcing them to leave the market to give the market share for them.

Big distributors have been repeatedly launching sale promotion programs, or extending the programs, offering big price discounts and making the products cheaper than ever. Other enterprises then also have to lower their sale prices in order to compete with the big guys. The continued price decreases may make the enterprises exhausted and yield.

The big fish which are attempting to “kill” small ones are the powerful companies with profuse capital. With the big financial capability, they would accept losses for a long time to lure more customers and attacks other businesses.

Observers have said the home appliance enterprises, which list their shares on the bourse, and have powerful shareholders (foreign investment funds, for example), would follow the method. The enterprises’ top priority now is not the capital preservation, but the plan to weaken their rivals.

This explains why a lot of home appliance centers have shut down because of the big losses; others still have set up more and more new shops. Tran Anh in early August 2012 opened a new supermarket on Dai Co Viet street in Hanoi, while planning to open more supermarkets in Hanoi. Meanwhile, Pico and Nguyen Kim have also revealed it would put some distribution centers into operation in Hanoi, Hai Phong and HCM City.

Home appliance products have become cheaper than ever. With just 6 million dong, customers now can buy a LED TV. The products of less famous manufacturers are even cheaper. A 32 inch TCL brand TV is now selling at 4.9 million dong.

Meanwhile, LCD TVs, which have become out of date, have very low demand. A 32 inch TV with Japanese brand Akai, now sells at 3.9 million dong.

Analysts believe that many more sale promotion campaigns would be run from now to the end of the year, saying that the market map would be drawn up by the first quarter of 2013. By that time, the names of the manufacturers and distributors, and their market shares, would be clarified.

Home appliance manufacturers have also changed their sale policies. After realizing that the expenses would be 10 percent higher if distributing products via the third parties, a lot of manufacturers have decided to bring products directly to retailers.

In principle, big clients who order products in big quantities with manufacturers would enjoy the lower prices, while the opportunity of enjoying low price would not be reserved for small retailers.

However, in the hard times, manufacturers have reconsidered the policy, applying the same prices for all clients; no matter they order big or small quantities.

The retail premises rent has decreased sharply in big cities. In the inner areas of Hanoi, the rent is just 10 dollars per square meter a month.

A supermarket covering an area of 2000 square meters now just need to have the sales of 600 million dong a day to break even. In the past, they needed to get 2 billion dong a day.

Tran Thuy