Domestic retailers enhance internal power to deal with competition from FTAs
12:14 | 23/06/2020

VGP – Domestic retailers have been strengthening their internal capabilities to adapt to integration and competition waves from free trade agreements (FTAs), especially the European Union-Viet Nam Free Trade Agreement (EVFTA) which is predicted to pose great challenges to distributors in the country. 

Domestic retailers enhance internal power to deal with competition from FTAs

Adapting to the new context

As assessed by experts, when the EVFTA is implemented, together with the opportunities, commitments to open the service, investment and distribution markets are also among the reasons driving large businesses of EU member states to accelerate investment in the distribution and retail industry in Viet Nam.

Economic needs test (ENT) was previously considered an extremely useful tool and a technical barrier for Viet Nam to restrict the foreign retail network expansion and protect domestic retailers.

However, with the country having participated in new-generation FTAs with ENT removal commitments, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EVFTA, this instrument no longer exists.

Enhancing inner strength through M&A and digitization

In fact, not just distribution companies have so far focused on strengthening their internal power to overcome challenges from integration, but many large enterprises, such as Saigon Co.op, Masan and Satra, also proactively made the move before that.

For example, Saigon Co.op, a large domestic retailer, has gradually expanded its outlets and now owns more than 800 points of sale across the country.

Especially, to adapt to new trends, the company has integrated consumer data in both offline and online sales, while cooperating with partners to bring digitalization into retails.

Like Saigon Co.op, Masan has set its foothold in the retail sector by establishing an integrated consumer ecosystem platform through the completed merger of Masan Consumer Holding and VinCommerce (the owner of VinMart/VinMart+ retail chains) to set up a leading consumer & retail corporation in Viet Nam.

Apart from the two aforementioned retailers, the Vietnamese retail market has also recorded the growth of many other domestic retailers such as the Green Department retail system of Mobile World (nearly 500 stores) and the retail system under the Saigon Trading Group (Satra), which feature over 200 Satrafoods convenience stores, Satra Center Malls and Tax supermarkets. 

According to experts, in addition to proactively enhancing internal capabilities, retailers should improve their sources of goods by taking advantage of imported products subject to zero tariffs as soon as the new-generation FTAs take effect.

The rebalancing of supply sources will help retailers reduce risks and focus on certain suppliers with high-quality sources to attract consumers.

By Vien Nhu

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