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Preparing for retail competition

Update: April, 05/2014 - 09:22

The domestic market is on the threshold of international integration and faces opportunities and challenges, Ha Noi Supermarket Association President Vu Vinh Phu, told Hai quan (Customs) newspaper.

What are the opportunities and challenges for our domestic market in the near future?

Viet Nam is gradually integrating deeper into the regional and international trade economy. As a result, our domestic market will have to bear a high pressure, which will surpass that of its exports. By now, quite a few big international groups have already commenced operations in our country.

Of course, the en mass inflows of foreign goods into the country will offer the people – the buyers – more choices. This may lead to many Vietnamese manufacturers and traders going bankrupt, particularly the small and medium-sized enterprises. Faced with such a situation, it is very important for the Vietnamese distribution network to be aware of this danger and to adopt proactive measures to secure its foothold right in the domestic market in order to compete with foreign-made goods.

Do you think that Vietnamese manufacturers and distributors are aware of the opportunities and challenges they are facing?

Some people have raised concerns that the retail industry, from the perspective of the government, the enterprises, and the trade sector, in general, think that there is no need to worry about the influx of foreign goods into our market. There is no need to panic. However, in my opinion, it is time for us to amend our old market practices or else we will have to face defeat right in our own backyard by strong foreign enterprises whose finance and technology are much better than ours. Moreover, their production costs are quite low.

I have to concede that currently, several of our supermarkets are operating without profits or even incurring loss. In such a grim situation, many of them are forced to close down their branches. A case in point is the Fivimart supermarket. It has closed down all its branches in the South.

What steps and measures should we adopt to fill the existing gaps in our domestic market?

The first step to be taken on top priority is to carefully review the current export and import activities in the country. It is imperative to focus our efforts to control the production chain, while tightening our management of the product origins, from production to import, before circulating them in the market. For instance, if our farmers are able to increase the sugar cane yield from 60 to 120 tonnes per ha, then undoubtedly, we will be able to cut down the price of sugar by half. I am certain that sugar smuggling will cease as it will not be a profitable venture. As we all know, profits are the driving force behind smuggling activities.

Other crucial factors are the issues of food safety and trade mark.

Regarding imports, I think that the inputs into our domestic market must be tightened right at the entrance or border gates.

In addition, it is high time for us to create a supply chain from farms to forks, particularly, for essential goods, such as rice, fish and meat, vegetables and fruits, medicines, and dairy products. Of course, these goods should be reasonably priced and of high quality.

All in all, we have to build a fair trade industry in our country. At a macro level, we have to develop a long-term strategy for our retail market at three levels: the government, the trade sector, and enterprises.

In your opinion, what should the enterprises and the consumers do to protect themselves and our domestic market?

I think that the enterprises should optimise the government's policies, continue to improve their governance capacity, and apply advance technologies to cut down production and circulation costs. I think by doing so, the enterprises will be able to protect and even expand their market niches in the country.

Last but not the least, fair and close cooperation among production firms, between production firms and distribution agents and also among distribution agents will help to generate an integrated strength in the market in order to cope with the influx of foreign goods.

I also want to call upon the companies to pay special attention to the business culture, which serves as an important base for the development of a sustainable trade, production, and the economy as a whole.

To the consumers, it is important to have a correct understanding about the consumption of Vietnamese products so that they will adopt a frugal approach. — VNS

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