Traditional trade – Tasty cake will certainly be no more

The “elephant” eats all tasty foods in the biggest cities, only leaving rural markets. Picture: Phan Thu.

Not ignore.

Along with the integration process, modern trade has grown rapidly, even dominating the traditional trade (market network). Supermarkets, trade centers, shopping malls are mushrooming. Domestic trade activities have attracted many participants, beside State-owned enterprises, there are many enterprises of all economic sectors with increasing number. Even in recent years, many foreign distribution groups have participated in the domestic trade activities like Metro, Big C, Lotte, Aeon.

The emergence and rapid development of modern trade with traditional trade has brought a new face for the distribution system in our country towards civilized and modern, consistent with the trend of development. However, reviewing the 4 divisions of distribution system found that, FDI enterprises are mostly focussing on the retail sector, while not invested so much in wholesale or agents.

Mr. Hoang Tho Xuan, former Director of Domestic Market Department under the Ministry of Industry and Trade said the expanation of FDI enterprises in the retail sector has made domestic enterprises tired of competing with foreign products at“home”. Accordingly, with the advantages of capital, scale, management and professionalism, FDI enterprises “surpass” domestic enterprises and dominate the retail market. Statistics show that the retail sales of FDI group only accounted for 4% but sales in those retail points of sale is 3-4 times higher, even 7-8 times higher than the sale in some domestic supermarkets.

About this issue, Ms Trinh Thi Thanh Thuy, Institute of Trade (under the MOIT) adds, though domestic distributors have a long time to prepare, they hardly compete at “home” with foreign distributors having strong economic potential and operational experience.

The process of accumulation and concentration of foreign groups in the distribution system has made the domestic market on the verge of losing control if we do not have reasonable solutions”, Ms Thuy said.

Comment about FDI enterprises dominating markets in the big cities, Mr. Xuan describes it as “an elephant eats all tasty foods in the biggest cities, only leaving the rural markets with weak purchases. However, this “cake” may fall in the hands of FDI enterprises because “although foreign distributors have not yet thought of it, it does not mean they will ignore”.

Keeping strategy?

So, how to keep the “cake” that FDI enterprises have not yet noticed?

According to an expert in the trade sector, we must be concerned and support these areas. “I often joke that foreigners would like to invest into the urban areas is not smart, but investing into the rural area is smart because this is a potential market”, Mr. Xuan shares.

Many experts recommend that one of the strategic directions of domestic trade development in the coming time is to continue to strengthen and develop traditional markets in rural areas, in which apply the theory of market segments, focus on public markets (Class III, retail), type of market having the most important location and role in rural market, where meet the demands of production and daily life. Also, we will develop plenty of convenience stores distributed widely, becoming the “home-maker” of for everyone. “For Vietnam, to lead and attract a million grocery stores and small businesses into the path of integration and development, it needs support both from the State and foreigners. If not quickly, the rest of the cake will fall into the hands of FDI investors”, Mr. Xuan said.

To “revive” the market for commercial development in the coming time, Vietnam needs to build and develop the agricultural supply chain and select key agricultural products. We have 7 economic areas, we must choose each item for each economic area. How to look at the economic map, we can see 7 different supply chains such as where planting vegetables, where supplying fruits, where fishery… An expert said: “That is the commercial civilization. Also, when we have an agricultural supply chain, we can control issues of food safety. If we do not do, someday foreign enterprises will”.

For enterprises, Ms Thuy said it is necessary to improve competitiveness of domestic enterprises. In the context of global economic integration, instead of supporting directly, the State can support enterprises indirectly through improving business environment, strengthening to provide information and build directions for enterprises. In fact, there are many improving competitive programs for enterprises, but the ability to access this policy is still limited, especially in small and medium enterprises. This leads to the State still investing its budget to develop enterprises but the effects are not clear.