Supermarkets and convenience stores race for market share

Big C An Lac store is crowded with shoppers in a file Photo - Photo: Quoc Hung The local distribution market recently has witnessed two trends: foreign distributors are expanding to new provinces to cash in on new opportunities, while domestic distributors are cooperating with foreign investors to grow their businesses. Foreign distributors go out of town Foreign distributors have their eyes on provincial markets and small towns. Casino Group, the owner of Big C store chain in Vietnam, last week opened one more hypermarket in the northern province of Nam Dinh, bringing the Big C outlets nationwide to 14. The US$4-million Big C has a total area of 6,500 square meters, stocks some 40,000 food and non-food items. Last month, the French distributor opened two hypermarkets in Vinh Phuc and Nghe An provinces. After 12 years of operation in Vietnam, the group now has outlets in most big cities and provinces, such as HCMC, Hanoi, Danang, Haiphong, Dong Nai and Thua Thien-Hue. The interest in smaller markets is due to the dearth of retail space in big cities like HCMC and Hanoi. The South Korean supermarket group Lotte has also turned their eyes to provinces. The Korean retailer, Lotte Mart under the Lotte Group, last month inked a deal with Charm Engineering (Korea) to open a trade center in the southern province of Binh Duong. Jeon Yong Ho, marketing director of Charm Engineering Co., said the two companies signed a business cooperation contract (BCC) to develop a shopping center at the Charm Plaza project under progress in Di An Town in Binh Duong. Lotte Mart will open business at the first five floors of Charm Plaza project which will officially go into operation in early 2013. The shopping center will have a total area of 12,500 square meters. This will be the third Lotte Mart shopping center in Vietnam after the first two in HCMC. Jeon told the Daily that the shopping center project in cooperation with Lotte Mart was not related to a project which Lotte Mart intends to develop in the provinces Thu Dau Mot Town. In November last year, leaders of Lotte Vietnam Shopping Co. went to the province to look for a location in Thu Dau Mot Town for the firms project. At a meeting with the provincial authorities, Lotte said it highly appreciated the position of Binh Duong, and that the company would prioritize Binh Duong in its strategy of developing a network of 30 department stores in Vietnam. After the working session, Lotte said it would quickly select a site for building Lotte Mart Binh Duong in Thu Dau Mot. The company expects to put the project into operation next year. Lotte Vietnam Shopping Co., a unit of Lotte Mart, currently operates two Lotte Marts in HCMC, with one in District 11 and the other in District 7. It plans to pour some US$5 billion into 30 department stores countrywide, including in HCMC, Hanoi, Danang, Can Tho and Haiphong. In the meantime, German-invested wholesale chain operator Metro Cash & Carry has just opened its 13th wholesale store on National Road 51B, Vung Tau City, Ba Ria-Vung Tau Province. Metro Vung Tau is the fifth provincial center Metro Cash & Carry has set up after Dong Nai, Binh Dinh, An Giang and Binh Duong. The

companys first eight centers are all located in major cities like HCMC, Hanoi, Danang, Haiphong and Can Tho. The expansion of the distributors gives a strong boost to the businesses of local producers. According to the producers, the move helps them penetrate the market in provinces where they have been reluctant to access due to the small market size and high costs for transport, personnel and premises. However, the markets in provinces have proved attractive to distributors. Distributors said that local consumers are now familiar with shopping at supermarkets. They have begun to pay attention to the quality, safety and hygiene of products and are ready to pay for such products at modern shopping facilities. Previously, local consumers were not familiar with shopping without bargaining and always thought that products at supermarkets were more expensive than those outside. Domestic distributors join hands with foreign firms With the strong increase of foreign distributors in the local market, domestic firms look to join hands with other international distributors to expand operations and competition. The local distribution Phu Thai Group has cooperated with the Japanese convenience store chain Family Mart to open the groups first stores in the country. The Family Mart retail system opened under franchise with Phu Thai Group. The two companies plan to open 300 outlets around the country over the next five years. As the countrys leading retail store chain operator, Saigon Co.op with 50 Co.opMart supermarkets nationwide and more than 10 Co.op Food stores in HCMC, also has plans to cooperate with foreign distributors. Saigon Co.op will cooperate with Singapore retail giant NTUC FairPrice Co-operative (FairPrice) to set up a new hypermarket chain in Vietnam. The two partners signed a joint venture agreement in Singapore last month to set up a chain of hypermarkets in the country, with the first store expected to open in 2012, said Nguyen Ngoc Hoa, chairman of Saigon Co.op. The new chain of hypermarkets will leverage Saigon Co.ops network of supermarkets existing loyalty programs and large customer base. The cooperation is aimed at diversifying the retail business in Vietnam, Hoa said, adding it would not affect the current operation of Co.opMart. Hoa said the agreement had been built on the cooperation between the two partners over the years in exchange and training. In Vietnam, Saigon Co.op will be able to better meet the growing needs of its customers by offering a wider range of food products, more competitive prices and greater accessibility. FairPrice and Saigon Co-op will also hold exchange programs for their employees to facilitate knowledge transfers. FairPrice is the largest supermarket operator in Singapore. The group has some 100 supermarkets across the island, including over 50 outlets of Cheers convenience stores. Meanwhile, G7 Service and Trading Joint Stock Company, a member of Trung Nguyen Group, last month signed a strategic cooperation agreement with Japanese convenience store operator Ministop Co. Ltd., a member of AEON Group, which has retail and financial services companies in China and Japan, to open hundreds of stores in Vietnam. G7Mart said G7 and Ministop would set up a 75:25 joint venture, which will have initial total capital of US$10 million. The first store is expected to be up and running in May 2011, and the forthcoming joint venture is looking to open 100 stores within the first year of its operation and at least 500 in the following five years. Vietnam is the fourth country Ministop has selected for expansion outside Japan. There are currently 2,032 Ministop convenience stores in Japan, 1,381 in South Korea, together with 320 and 12 stores in the Philippines and China respectively.

Despite the global economic slowdown and high domestic inflation, the distribution market in Vietnam has continued to grow and offered much room for expansion.

Is unsafe food poisoning Vietnamese people?

VietNamNet Bridge Unsafe food has become a hot topic in Vietnam - from rotten fat to dried food with maggots. But is it a media induced panic or should Vietnamese people be very concerned about what they are eating? Unsafe food has become a burning issue in Vietnam. Vietnamese people have never had to face so many public food scares. And the risks go way beyond simple stomach upsets as people are increasingly concerned about acute diarrhea and even cancer. According to a scientific conference on food safety held in Hanoi in December 2009, up to 56 percent of food samples tested were infected with chemicals, growth stimulants and processing substances all of which are potentially damaging to those who eat it. Experts discussed at the conference that more and more types of food are infected with chemicals and stimulants. The recent discovery of food containing listeria monocytegene, which can cause poison and complications related to pregnancy is one example. Since early 2009, Vietnam has recorded 111 food poisoning cases with over 4,100 victims, including 31 deaths. The number of food poisoning cases and discoveries of unsafe food have been on the rise since late 2009. After first detecting rotten fat headed to a full moon cake baker in September 2009, Hanoi police later seized 50 tonnes in total at a warehouse in Dong Anh district. After that police in Da Nang, HCM City and Thua Thien,Hue continued finding similar loads - seizing nearly 100 tonnes of dirty fat. In December, Hanoi police found further links between dirty fat processers and bakers - including an enterprise processing cakes and maize in La Phu village, Hoai Duc district, Hanoi. Most recently, an enterprise processing dried fruit for Tet in HCM City hit the headlines for having maggots in its ingredients. Meanwhile, state agencies have launched a campaign calling for consumers to be educated in choosing food. However, its hard to keep up with sophisticated tricks of producers and what is deemed unsafe. At the Long Bien wholesale market in Hanoi, local authorities discovered addled squid had been freshened by chemicals. Workers described the freshening process as follows: rotten squid is cleaned and then put into a water tank with 1/2kg of salt, ice and 250ml of hydrogen peroxide for one hour. Then squids are then put into centrifugal spinner. After that the squid are washed and boxed for sales. Reporters who joined police officers in the inspection at Long Bien market saw by with their own eyes boxes of squid. It smelled bad and was covered with worms and dirt and yet tonnes of food in this state were being processed every day. No one taking charge in the fight against unsafe food

While unsafe food remains a real threat to health in Vietnam, the responsibility for ensuring quality and hygiene belongs to five ministries and, it seems, all are happy to avoid these duties.. At a recent National Assembly question and answer session, many congressmen questioned the cabinet about responsibility for imported fruits containing toxic preservative substances. The Ministers of Health, Trade and Industry, Agriculture and Rural Development stood up to answer but none of them had a clear response. The Minister of Health had to stand up three times but in the end he asked if he could submit a written response to questions instead. Health minister, Nguyen Quoc Trieu, outlined the responsibility of related ministries in controlling food hygiene and safety. The Ministry of Agriculture and Rural Development is responsible for pesticide in food. The Ministry of Trade and Industry is in charge of the processing technology and the use of artificial colourings in food. The route taken by food from farms to the dinner table is the Health Ministrys responsibility. However, the three Ministers were confused when NA deputies asked them about a specific case.

In fact, up to five ministries are associated with food hygiene control: the Ministry of Health, Ministry of Industry and Trade, Ministry of Natural Resources and Environment, Ministry of Agriculture and Rural Development and Ministry of Science and Technology. However, none of them have stepped forward to take overall responsibility. Admitting a key role in managing food hygiene, health Minister, Nguyen Quoc Trieu, requested sympathy for his ministry. He said that it is important to have a clear mechanism among related ministries in controlling food hygiene because one ministry cannot order another around. Prof. Nguyen Minh Thuyet, vice chairman of the NAs Committee for Culture ,Education ,Youth and Children, said that the existing Order on Food Safety doesnt have detailed regulations and doesnt specify responsibility of related agencies. Thuyet said their is an absence of strong sanctions against producers and traders of food products as well as state management bodies so it is difficult to deal with food scandals. Establishment of independent agency for food hygiene suggested The need to have a government body to unify the control of food hygiene was discussed by experts when they compiled the Law on Food Safety. According to the draft law, the Ministry of Health will assume the highest responsibility for food hygiene and safety. However, many people suggested setting up an independent agency controlling food safety, which is under the government. Each province and city will have a local branch, which is managed by the Peoples Committees. Thuyet proposed to learn from the experience of the the UK and the US, which have national committees for food and drugs. This committee meet on a monthly basis and meetings are aired live. The people have the right to attend these meetings and question the committee. Thuyet also suggested assigns this responsibility to the Ministry of Science and Technology because the Ministry of Health is too busy.

US dollar in Vietnam: the currency with three sides

VietnamNet Bridge The US dollar in Vietnam has a green side when it is transacted among banks, a red side when it is in hands of management agencies, and a black side when it is traded on the black market.

The decision by the State Bank of Vietnam to devaluate the local currency Vietnam dong by more than 9% has stirred up the public. Hundreds of VietnamNets readers have emailed to the editorial board, expressing their surprise about the decision. They wrote that they could not imagine that the Vietnam dong would depreciate so sharply. Its necessary to shut down the black market laohac...@yahoo.com wrote: The US dollar in Vietnam has a green side when it is transacted among banks, a red side when it is in hands of management agencies, and it has a black side when it is traded on the black market. The reader believed that what is necessary to do now is to shut down the black market. Under the current law, the dollar can only be transacted among banks, between banks and businesses to serve the import-export activities, also to individuals who have demand for foreign currencies when traveling abroad. However, in reality, dollars are being traded on the black market as well. As a result, the foreign currency market has become a chaotic market, he wrote. Agreeing with laohac...@yahoo.com, Phi Hung thinks that Vietnam is running after the dollar price, while it is not stabilizing the dollar price. In order to stabilize the dollar price, we need drastic administrative measures to shut down the black market, not a move to devaluate the currency, he said. If we dont take drastic measures with the black market, the black markets dollar price will continue increasing, and the state bank will have to further devaluate the local currency.

Having concerns about the possible high inflation rate after the dong devaluation, Nguyen Anh Minh, a VietNamNet reader wrote that the latest move by the State Bank will certainly create new price level of goods and services, which will be much higher than the price level seen in late 2010. The national economy will, once again, confront a new price storm. Nevertheless, other readers keep a more optimistic view over the issue. Divivu thinks that even if the dollar price hadnt had increased, the prices of essential goods and services will still increase. He also thinks that the price increases will be reasonable, and not as sharp as warned by some experts. Therefore the readers believe that the State Bank has made the right move when adjusting the exchange rate. Its necessary to increase production capacity, not to increase exchange rate Some readers believe that the nature of the exchange rate adjustment is productivity and the value of products. If our production capacity is high, and our products have high quality and strong brand names in the world market, our products will be sold well. High exports will generate trade surpluses and Vietnam will not have to devaluate the local currency. If so, Vietnamese will feel secure to keep Vietnam dong in their pockets, and dollarization will not occur, a reader named Alex wrote. Also according to him, in theory, the devaluation of the local currency aims to reduce the trade gap. However, the reader believes that in reality this move will not bring the desired effects. Therefore, the most important solution for now is to upgrade the competitiveness of Vietnamese goods. The state should apply all necessary measures to have Vietnamese enterprises build their brand names, promote trade such as providing preferential loans with low interest rates, maybe at 1% per annum as applied in other countries in the world. This will help improve sales. Especially, the state should think of offering tax exemption or reduction to leading enterprises so that the enterprises can reinvest, like PetroVietnam which is allowed to use 3.500 billion dong of the state budget for foreign investments, he wrote. Besides, the reader has also suggested upgrading the investment efficiency (it is necessary to stop dispersing capital to too many projects). It is also necessary to improve the competitiveness of enterprises (giving consultancy, providing capital, training the labor force. Especially, it is necessary to dissolve unprofitable businesses). He stressed that it is necessary to improve the ICOR index which is relatively to high at 10

Inviting Chinese manufacturers to Vietnam Why not?

Vietnamnet Bridge Vietnam is importing Chinese products in big quantity, which has raised worries about the trade deficit with China. However, if Vietnam can invite Chinese manufacturers to set up production bases in Vietnam, its imports would decrease, according to Bui Hong Phuc former Vietnamese Ambassador to China. Bui Hong Phuc worked as Vietnamese Ambassador to China for five years, in 1997-2003. He is now Deputy Chair of Vietnam-China Friendship Association, advisor to the Vietnam-China Business Forum.

Vietnamese people are always suspicious of the quality of Chinese goods: Troubles occurred at the power plants where Chinese enterprises are EPC contractors, a lot of Chinese food have been found as containing toxic substances. What would you say about that?

In fact, there is a wide range of Chinese products. There are both low quality and high quality products. Not all goods are fake and low quality products. The question is why so many bad products have appeared in Vietnam?

The problem is that Vietnamese investors do not choose the right equipment suppliers. Their knowledge about Chinese contractors is not good, When doing business with such a big trade partner, who can provide such a wide range of products with different quality classes, Vietnamese enterprises should learn more about their partners. I think that many Vietnamese enterprises do not understand their Chinese partners well. Vietnamese enterprises always accept the conditions offered by Chinese partners easily and while they do not research the partners profile and their financial capability.

I think Vietnamese enterprises should consult the Vietnamese Embassy and Trade Affair sections overseas before deciding who to do business with and whose products to buy.

Vietnam has been under economic influence of China our economy that has been rising rapidly in recent years. Vietnams trade gap with China has become bigger and bigger despite its effort to restructure its imports and exports. Do you have any suggestions on how to improve the current situation?

I have one suggestion. Lets list the products which we are importing from China but can be produced in Vietnam. We should invite Chinese enterprises to Vietnam to make these products right in our country.

If we can attract those Chinese manufacturers who can make the products we want, we will be able to reduce imports from China. These can be machinery and? equipment, fertilizers

If we can invite Chinese manufacturers to Vietnam to make the products that Chinese consumers need as well, we will be able to increase exports to China. Chinese manufacturers know what Chinese consumers need and want. Say, the rubber industry. We are exporting raw rubber to China. Why dont we invite the Chinese to make rubber products right in our country for export? The same applies to wooden products. Chinese like finished products but we only make unprocessed products.

I mentioned such a co-operation model in the working trips to China and it was welcomed by the Chinese. Which means the idea is realistic. The problem is how to ensure benefits for all the involved parties.

Another solution that ministries need to consider is to diversify the import markets. We are now relying too much on China.

You have said that attracting FDI from China will settle the trade gap problem. However, Chinese direct investment remains modest. What to do, then?

It is because Chinese enterprises still think Vietnam market is not attractive enough. The legal framework in China can create favorable conditions for Chinese enterprises. Meanwhile, in Vietnam the administrative procedures are very complicated. The government and ministries need to reconsider current regulations if they want to attract Chinese investors.

China is a vast market. How can Vietnam take full advantage of these?

China has 31 provinces and cities which should be seen as 31 different markets. Therefore, Vietnamese enterprises find out the characteristics of specific markets to decide what and where to export. The provinces in the east and on the coast are developing well while the markets in the west are less developed. There is a big gap between localities. We should research this carefully to provide what they want.

We should learn to research Chinese markets more carefully. we can work directly with local authorities, instead of the central level.