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HCMC looks to challenge foreign retailers

Released at: 10:58, 31/05/2016

HCMC looks to challenge foreign retailers

Photo: Duc Anh

People's committee meets with local retailers to identify how to combat the increasing market share held by foreign rivals.

by Quynh Nguyen

The Ho Chi Minh City People’s Committee has met with local retailers in the city to identify solutions to countering the rising number of foreign retailers.

The meeting was held on May 30, but no solutions or detailed plans have been made available to the public.

Mr. Nguyen Thanh Phong, Chairman of the People’s Committee, was quoted as telling the meeting that without control and direction Vietnam’s retail market will be strongly affected by foreign retailers.

“Retailers from South Korea see Vietnam’s retail market in general and Ho Chi Minh City’s retail market in particular is an ideal destination,” Mr. Phong said. “Foreign investors want to turn Vietnam’s retail market into the second-largest retail market in the region after Malaysia.”

The meeting gathered a number of major enterprises in the retail and distribution sectors in the context of Thailand’s Central Group recently completing the acquisition of Big C, worth $1.14 billion.

After the acquisition local retailers have said that the domestic retail market is being redrawn, towards the expansion of foreign retailers. Figures from the Ministry of Industry and Trade (MoIT) show that foreign retailers now account for over 50 per cent of Vietnam’s retail market share.

Ms. Dinh Thi My Loan, Chairman of the Vietnam Retailers Association, said that mergers & acquisitions (M&As) have become common in Vietnam’s retail market, via which foreign players are penetrating into the country.

Central Group is the second Thai giant to purchase a retail chain in Vietnam. The Berli Jucker Corporation (BJC) previously acquired Metro Cash & Carry Vietnam for $706.2 million. While many foreign retailers promote M&As in Vietnam, Parkson, one of Malaysia’s leading retailers, had to close Parkson Paragon in Ho Chi Minh City’s District 7. It also closed its Parkson Keangnam Landmark center in Hanoi last year.

According to figures from MoIT, Vietnam’s retail market in 2015 was estimated at $102 billion. There are now over 700 supermarkets and 132 trade centers, of which 22 are 100 per cent foreign-owned.

It is expected that retail growth will reach 11.9 per cent by 2020 with a retail market size of $179 billion, of which modern retail will account for 45 per cent.

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