Roundup: Thai goods flooding Vietnamese market cause mixed feelings

With Thai retail giants buying leading supermarkets in Vietnam, consumers have more choices, but Vietnamese enterprises and management bodies are more worried.

To date, Thailand's big firms have wholly or partly owned many well-known supermarkets in Vietnam, including Big C, Mega Market (formerly Metro), Robins, B's Mart and Nguyen Kim, creating opportunities for Thai goods to penetrate more deeply into the Vietnamese market. Most recently, Central Group poured over 1 billion U.S. dollars into buying Big C.

Vu Vinh Phu, Chairman of the Hanoi Supermarkets Association, stated that such well-known supermarkets will become Thai products' official distribution channels. According to him, Thai goods are winning Vietnamese people's confidence because many consumers prefer products made in Thailand to those in some other countries, while they have good models, big promotions and discounts.

Now, 80 percent of goods on sales in supermarkets are Vietnamese products, but this percentage will drop, Phu said. Some supermarkets such as Aeon and Lotte Mart have already strengthened sales of Thai goods.

Besides, more and more Vietnamese companies are being established to import and distribute Thai consumer goods. They directly sign contracts with some brands in Thailand and then distribute them to agents in Vietnam. For example, Phu Minh Production and Trading Company imports such goods as glassware, foodstuffs, plastic-ware, clothes, cosmetics and detergents produced at factories in Thailand and then distribute them via retail networks in Vietnam.

"My husband still drives a Thai-made Honda Dream II which was bought nearly 20 years ago. It is durable and still nice. That's why I have also prefer Thai consumer products," Nguyen Thanh Phuong, a middle-aged accountant from Ho Chi Minh City's Tan Phu district, told Xinhua on Tuesday.

According to statistics from the Vietnamese Ministry of Industry and Trade, Vietnam spent 8.3 billion U.S. dollars importing Thai products in 2015, up from 7.1 billion U.S. dollars in 2014.

Thailand is now Vietnam's biggest automobile exporter, although it is not until 2018, ASEAN import tariffs on vehicles will decrease to zero percent.

According to the General Department of Vietnam Customs, Vietnam imported some 29,000 automobiles worth 733 million U.S. dollars from foreign countries in the first four months of this year, posting respective year-on-year declines of 16.7 percent and 16.4 percent, but with vehicle imports from Thailand surging.

From January to April, Vietnam imported nearly 10,200 completely-built automobiles worth nearly 183 million U.S. dollars from Thailand. Meanwhile, Vietnam spent 191 million U.S. dollars importing automobile components and spare parts from Thailand.

According to Vietnamese experts, Thai companies are taking drastic measures to gain bigger shares in the Vietnamese retail market.

"Thai officials and entrepreneurs are actively learning Vietnamese to understand the Vietnamese market and psychology of Vietnamese people. Thailand is deeply interested in assisting its firms in penetrating into Vietnam. They have consultant organizations for market penetration," Vietnamese veteran economist Le Dang Doanh told a recent business seminar.

Thailand has well conducted trade promotions which focus on quality, not quantity, said Vietnamese experts. Thailand is also taking advantage of the ASEAN Economy Community with many low or zero tariff lines imposed on many kinds of products.

Vu Vinh Phu said Thai firms are implementing a dual strategy which simultaneously dominates retail outlets and speeds up production in Vietnam to create a self-contained business chain.

Their firmer foothold in Vietnam is making Vietnamese entrepreneurs worried, with some of them already finding it hard to sell their products in Thai-owned supermarkets. Vietnamese companies now have to make comprehensive reforms from pricing, quality to packaging to compete with Thai rivals.

Phu said: "Thailand's strong points are agricultural products, foodstuffs and consumer goods. Therefore, Vietnamese enterprises should become better in terms of quality, price, marketing and relations between production and distribution." Phu and other Vietnamese officials and business people also said the State should have more proper policies to help local firms to compete with foreign rivals.

On Monday, at a meeting on socioeconomic development in Ho Chi Minh City, Nguyen Thanh Phong, Chairman of the municipal People's Committee, instructed the city's Department of Industry and Trade to develop the retail market, otherwise it will be dominated by foreign giant retailers, especially those from Thailand and South Korea.

"Without strategies, our market will be completely dominated by foreign investors. It is late to have strategies now, but late is better than never," Phong said.

Vietnam is poised to become the region's second biggest retail market, after Malaysia. The Vietnamese retail market is forecast to reach 179 billion U.S. dollars in 2020. Endit