VietNamNet Bridge – Pressure from fierce competition will increase in the local retail market this year after the ASEAN Economic Community (AEC) was established and as the Trans-Pacific Partnership (TPP) deal will come into effect in the next couple of years. Therefore, local retail enterprises need to improve the competitiveness of the goods retail distribution system.

Experts talked to Vietnam News Agency's correspondents about these issues.

Vo Van Quyen, director of the Domestic Market Department under the Ministry of Industry and Trade

Integration is an inevitable trend. It will bring more opportunities to export Vietnamese goods but in the domestic market, local products will have to face competition with imported goods with low tariffs. Integration will be a good chance for Vietnamese enterprises to improve the quality of their products for higher competitiveness with imports.

Therefore, during negotiations on free trade agreements with foreign partners, the Ministry of Industry and Trade has built a schedule on opening the local market to create competitive pressure for local enterprises and also conditions for them to have enough time for improving the competitive ability of their products. Viet Nam will open its market for goods having high competitive ability and later for the goods having lower competitive ability.

In addition, the ministry has proposed to the Government to build laws, such as the Law on Competition and the Law on Consumer Protection, for protecting local goods and consumers.

To help Viet Nam's retail enterprises, the Government should issue a general plan on the development of Viet Nam's retail market. Meanwhile, local retail enterprises need to improve the ability of management and develop skilled and professional staff, especially in services such as delivery of goods, payment and customer care.

The Government also should give support in credits and create favourable conditions for small- and medium-sized enterprises to have commercial infrastructure and join price stabilisation programmes. It will create a link chain from production to circulation and distribution.

Local retail enterprises must cooperate with others and use local goods to develop the local retail sector and production industry.

Cooperation between retail enterprises and manufacturing enterprises will help retailers to save intermediate costs, control quality of goods closely, reduce selling prices and increase competitive ability.

Le Thi Thanh Tam, deputy general director of Saigon Food Joint Stock Company

Viet Nam has had more and more integration into the world economy. That will open more opportunities and also challenges for the domestic export enterprises.

Local goods must compete with foreign goods in the domestic market. This competition is unequal because most Vietnamese enterprises are small and medium sized ones or even tiny firms. So, they have weak financial resources and lack experience in investment, production, advertisement of brand and building of distribution systems.

Viet Nam's products have good quality but they have not had good models and packaging, those are the weak points of Vietnamese enterprises.

We propose the Government to have more support for enterprises in researching and developing new products because in the past, they have had difficulties in receiving support from the Government in developing production and business.

Pham Vinh Phu, chairman of Ha Noi Supermarket Association

When Viet Nam opens its market, foreign retail groups will come to Viet Nam due to the great potential of the local retail market. Now, 10 foreign direct invested retail groups have had retail joint ventures or opened directly invested retail companies in Viet Nam.

It is unequal when domestic retailers must compete with foreign rivals in the local market because the foreign retailers have large capital, low expenditure and a professional business strategy.

In addition, foreign companies often use value chains from purchasing to distribution around the world so they have had low expenditures and popular brands. Meanwhile, Vietnamese retailers have not had specific business strategies from the state level to sector level and enterprise level. For the workforce, 90 per cent of directors at local supermarkets have not had retail training. The most important thing in the local market is the lack of co-operation among local retailers so they must face many difficulties while integrating into the world economy.

To improve the competitiveness of Vietnamese retailers, they should co-operate among themselves to develop a chain from production to distribution, leading to efficient use of the workforce in the retail sector. In addition, the Government should give support in land, capital and policies to develop a professional retail sector at the local market.

The local retail sector needs a large production industry because with the existing manufacturing sector having inefficient production, low capacity and unstable quality, Viet Nam can't develop a modern retail market with a high competitive ability.

VNS