According to WTO integration roadmap, in 2009 foreign investors are allowed to set up 100%-foreign-capital company in trading and retailing industry instead of proposing for a permit or joint-venturing as at present. At the meeting on "Domestic commerce" held by Ministry of Trade on May 2, Vietnamese retailers are frankly share their current difficulties as well as methods needed to maintain the domestic market.

Capital comparison with "foreign" enterprises: Hopeless fight

As said by Vietnamese retailers, most domestic retailing enterprises are small and medium size with limitation in capital and business experience, whereas "foreign" investors who have been breaking into Vietnam market are all "giants" at international stature. These foreigners completely surpass domestic competitors in both experience and finance. It is the issue that causes domestic retailers' headache.

Representative of Co.op (Saigon Co.op) retailed supermarket chain, Mrs. Nguyen Thi Nghia, Chairman of Board Director of Saigon Co.op said Vietnamese retailers are facing a lot of challenges, such as difficulties in finding location to open supermarket or plaza. To find an area which is large enough to open plaza requires not only strong finance but also support from outside. Mrs. Nghia also said that Saigon Co.op had an idea to solve land problem. They wanted to make use of open-air markets by establishing plaza beside them. However, this idea was rejected by small traders in open-air market.

Mrs. Nghia added the reason that prevented Vietnam commerce from developing as expected is inappropriate care. This matter lies in policies of the government. Specifically, Vietnamese retailers are at a disadvantage as the Government has no assistance or preferable policy to help them in building infrastructure. "Set up a supermarket costs much time and money for infrastructure and facilities such as air conditioner, folding-ladder, etc. This equipment must be imported but the company can not enjoy preferable tax", Mrs. Nghia shared.

Capital is a difficult exercise. According to Mrs. Nghia, supermarket investment costs a lot of capital (at least from VND 50-60 billion/supermarket) and capital return lasts years. This added pressure on domestic retailers when they want to think about long term development strategies.

At his point of view, Mr. Huynh Van Minh – Director of Sai Gon Trading General Company (Satra) expressed “Trading companies like us are under pressure as time to open retailing market is up. The fight is unbalance when Vietnamese SMEs face strong international retailers.”

Mr. Minh also added, Satra is now interested in taking the initiative in company’s capital. He said that the government should build freer mechanism in managing enterprises to let them self-control. Then they can take initiative in every activity such as recruit talent for the development of the company’s trading system.

Facing

Besides, Vietnamese retailers have created many projects to face competition in the coming time in order to maintain the market share.

To be strong in finance, Vietnamese enterprises have make use of committee strength, in which the four top Vietnamese retailers including Saigon Co.op. Satra of Ho Chi Minh City, Hanoi Trade General Company, and Phu Thai Limited Company of Hanoi cooperate to form VDA retailing group. This group will build general warehouses in main areas throughout the country. From these warehouses products are delivered to distribution channels of the enterprises. They are also the place to buy products served for exporting and building hypermarkets, etc.

Not only retailers expected unity will make things but also Mr. Truong Dinh Tuyen, Minister of Ministry of Trade at the VDA foundation ceremony asserted it was happy sign when the four top Vietnamese retailers joined to set up a distribution company with national-wide infrastructure, and good financial ability to compete with foreign groups.

In addition to the readiness of enterprises to face competition, according to Mrs. Nghia, the government should carefully weigh pros and cons, as well as calculate position of the country’s commerce. “If this industry is important, the government should have promotion policies to create good conditions for its development. The matter is not only land, capital but also human resources for commerce”, said Nghia.