Local companies struggle shifting from cheap and fast

Foreign chains now account for more than half of the nation’s retail sales, says the Association, and many local producers have started complaining they are struggling to get their products on retail shelves nationwide

Vu Vinh Phu, chairman of the Hanoi Association of Supermarkets, was recently widely quoted as saying that a supermarket in the northern city of Hai Phong experienced a revenue drop of over 30% in the six months following the opening of a foreign supercentre at a nearby location.

Local manufacturers and retailers are failing to make the transition from cheap and fast to quality and sustainable, says Mr Phu. As a result, products from countries such as Japan, Malaysia, the Republic of Korea and Thailand are becoming more and more popular.

Le Thi Thanh Lam, chief financial officer of Saigon Food Joint Stock Company, is one of those who doesn’t believe local companies have the savvy to compete with the foreign competition.

Mr Lam points out that the Thai Central Group and Berli Jucker Corporation (BJC) based out of Thailand have swept in and gobbled up more than 50 supermarket and convenience store chains.

Not only does Saigon Food have to compete with all of the products from Thailand entering the market they have to compete with foreign producers in Japan and the RoK who are selling their goods through AEON and Lotte.

Mr Lam thinks the solution is for the government to step in and form a department to assist companies like Saigon Food distribute their products and negotiate agreements with the foreign retailers to sell their products.

Nguyen Thi Nga, CEO of Viet Herbs Joint Stock Company, is another who doesn’t like competition. She doesn’t like the fact that she sends lists of her company’s products to many supermarkets, waits for months for them to respond, only to be rejected.

Mrs Nga, would prefer the government force foreign retailers to sell her company’s products.

Le The Bao, president of the Vietnam Association for Anti-counterfeiting and Trademark Protection, also thinks the government should interject itself into the situation and create a distribution channel for local manufacturers and retailers.

Competition is just too stiff for local companies, says Bao, because of the sheer number of companies vying to get their products on the retail shelves of the major foreign retailers.

He says from his experience, those stores don't want to work with inpidual companies, but want to work with a distributor and he contends the government should establish a distributorship to represent local companies.

If every local brand brought their product to the big foreign stores, he says, they would have to cut a check for each brand. So the big grocers want local companies to work through a distributor.

The big foreign retailers have a stranglehold on local brands stores, said Mr Bao and the nation needs to find a way to force them to carve out sections of retail space in their establishments specifically for local brands.