Under the commitment in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), effective from the beginning of 2019, Vietnam will remove restrictions on “Opening more points of sale” after 5 years for foreign corporations.
The relaxation of this barrier is expected to make the retail market in Vietnam step into a more fierce battle.
Because up to now, the regulation of Vietnam is that when foreign enterprises (businesses) want to open a second retail outlet onwards, they must ask permission from the management agency, they must go through the economic needs test criteria ( ENT) as the size of the market area; number of retail establishments operating in the region; the impact of retail establishments on the stability of the market and the business activities of the traditional retail establishments and markets in the region … This is considered as a “shield”So that foreign retail system does not expand too fast, as well as domestic enterprises have more advantages to expand.
But Mr. Vu Vinh Phu, former Chairman of Hanoi Supermarket Association, commented that foreign retail systems have been constantly growing. Big C and MM Mega Market alone have 54 supermarkets out of about 100 large supermarkets across the country. Not to mention the mini supermarket system, convenience stores of foreign corporations also cover the whole country. Recent large corporations have approved the merger and acquisition to quickly penetrate the market. Therefore, even technical conditions such as ENT are no longer important and effective for domestic retail businesses.
In fact, there are many supermarkets and trade centers far from residential areas but still attracting many customers. Therefore, location, location is also one of the determinants of a retailer’s success that is not the most important. As Vietnam increasingly opens its borders, the more bilateral and multilateral free trade agreements are signed, the import tax on many products will be reduced to 0% and foreign goods will enter more. But it is a fair competition in quality, product prices … And if you lose the distribution channel, you will lose the manufacturing industry.
Therefore, according to retail expert Vu Vinh Phu, the government needs to have specific policies to encourage domestic enterprises in this field, creating opportunities to expand the system, as a counterbalance to water distribution units. in addition to bringing Vietnamese goods to all regions of the country.
“While foreign supermarkets increase their discount by 20-30%, stop sudden contracts like Big C or use many tricks to remove Vietnamese goods from the system, Vingroup’s willingness to discount 0% for domestic businesses is It is advisable. The state must clearly plan the distribution system. Even in some cases, if domestic and foreign enterprises also meet the same conditions, priority must be given to the selection of domestic enterprises. Moreover, investment and tax evasion must be controlled in foreign retailers to create a fair business environment. At the same time, the government must sharply reduce operating and production costs so that domestic goods can enter the market with the lowest price.Mr. Vu Vinh Phu shared more.
* Source: Youth