Building and Perfecting the Legal System to Create a Favorable Environment for the Development of Modern Retail Systems

more businesses. It is forecasted that the number of customers shopping at foreign supermarkets and shopping malls will continue to increase.

Although competitive pressure will increase in the coming time, the opportunities for experienced foreign retailers are still huge.

3.5. Solutions for Vietnamese retail businesses

3.5.1. Solutions from the state

3.5.1.1. Building and perfecting the legal system to create a favorable environment for the development of a modern retail system

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Currently, when Vietnam has become an official member of the World Trade Organization (WTO), perfecting the legal system, creating an open and equal business environment for all economic sectors at home and abroad, in accordance with the principles of most-favored-nation treatment (MFN) and national treatment (NT) is the top urgent requirement.

In recent years, our government has issued many laws and regulations related to retail activities and has also regularly reviewed and amended them to gradually perfect policies and management mechanisms. However, the limitation is that the stability of the laws is very low, causing difficulties for business activities of enterprises. That is a regulation on supermarkets and shopping malls. However, the current Regulation on supermarkets and shopping malls has revealed many shortcomings as analyzed in Chapter 2. In the coming time, the government needs to have more detailed legal documents with higher legal binding for modern retail business activities. First of all, the regulation needs to be completed to overcome the shortcomings in the name, thereby more clearly defining the types subject to regulation and management of the Regulation. The Government needs to complete, adjust the supermarket classification standards to suit reality and create conditions for management. At the same time, the regulations need to be studied to upgrade to the Draft Law on Retail Business in Vietnam. This draft law should be built as soon as possible to promptly become the legal framework to regulate retail activities that will develop explosively in the near future.

Regarding the Law on Food Safety and Quality Standards:

One of the legal frameworks that has the greatest impact on retail activities is the Food Safety Law. Currently, Vietnam has regulations on food safety under Decree No. 12/2003/PL-UBTCQH dated July 26, 2003 on food safety , but the supervision and implementation of this law in supermarkets and stores in the past has been lax, leading to a series of supermarkets selling "unclean" goods to consumers. We need to build a system of managing the quality of goods on the market with a unified standard nationwide. This work must be undertaken by specialized agencies to avoid overlaps that cause difficulties for circulation. At the same time, the State should have unified regulations on the code system.

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The State needs to identify modern retail systems as pioneers in complying with food hygiene standards. To protect consumers' rights and raise the sense of responsibility of businesses in the retail sector, the State needs to clearly stipulate the standards of goods sold in supermarkets and convenience stores and conduct regular inspections and supervision of these units. This will help authorities gradually apply food hygiene management measures to other forms of retail, ending the unmanageable chaos that exists in traditional markets and stores.

3.5.1.2. Solutions to build mechanisms and policies to encourage the development of modern retail systems

Financial and credit policy

The biggest difficulty of Vietnamese retail businesses today is the lack of capital. Due to the characteristics of modern retail business, which requires a large initial investment capital but low initial profits, the State needs to have preferential credit policies and other incentives for businesses. Up to now, our country has not had a preferential credit and financial policy for development.

modern retail system. Enterprises wishing to do business must prepare their own capital without receiving any incentives. The State should have support policies to help domestic enterprises access capital more easily; use state development investment capital sources including central and local budget capital, capital from development support funds , etc. to provide credit incentives for modern retail business entities.

To increase the competitiveness of supermarkets compared to traditional retail formats such as markets and department stores, tax policies for supermarket businesses also need to be adjusted appropriately.

Land and planning policy

Due to the lack of unified planning nationwide, modern retail outlets are often built spontaneously. In the coming time, the government should have a specific plan for the network of supermarkets and shopping centers. The plan needs to specifically identify which places will give priority to domestic enterprises and which places will call for foreign investment. In addition, when auctioning land use rights in favorable locations, it is necessary to base it on planning rather than price, reserving adequate area and suitable location for domestic enterprises. Currently, domestic enterprises are facing many difficulties in convincing localities to allow them to conduct business and access resources, especially land. Many enterprises have to spend 3-5 years to access land, and even if they want to have a business location, they have to participate in auctions at extremely high costs. Meanwhile, foreign enterprises are allowed to lease land and they also have enough potential to participate in buying land.

The State also needs to reserve a certain amount of land for the development of supermarkets, convenience stores , etc. and the policy for this land fund should be treated the same as the policy for land funds for the development of wholesale markets; invest in upgrading domestic trade infrastructure. In addition, it is necessary to create conditions for equal access to business premises for all economic sectors.

Using supermarket planning measures is one of the effective measures to manage supermarket development. The State needs to consider the quantity and distance of supermarkets and hypermarkets appropriately to avoid the concentration of too many supermarkets in one area, which can lead to unfair competition.

Policy to support the development of commercial infrastructure

Investment in building a synchronous infrastructure plays an important role in determining the scale and efficiency of the modern retail system. The synchronous infrastructure of the distribution system includes: network planning, investment in building new supermarkets, hypermarkets, wholesale markets, wholesale centers, all logistics activities from purchasing, processing, storage, warehouse systems, transportation coordination, equipment systems and sales tools, etc. The synchronously invested infrastructure will create conditions to accelerate the modernization of the distribution system in general and the modern retail system in particular.

Policy to strengthen market information forecasting

In the coming time, the State needs to improve the quality of market information and forecasting and trade promotion activities. The State needs to support and coordinate with businesses to forecast the demand for goods in the market, the trend of price fluctuations, especially in long-term and periodic forecasting so that businesses have business orientation. When having accurate information, modern retail businesses will plan to import and purchase goods to serve market demand, avoiding shortages or surpluses of goods in unfavorable circumstances.

Human resource training support policy

The State needs to support modern retail enterprises in training human resources for supermarket business and have policies to encourage enterprises to train and develop human resources for themselves. In addition, the State needs to pay due attention to promoting

Exchange information and experience domestically and internationally in the form of modern retail, through investment in sending staff to study foreign experiences or organizing specialized seminars for managers of supermarkets, shopping centers , etc. The State can open training courses to improve professional skills for managers. These courses should invite experienced foreign experts to teach, or senior leaders of successful retail corporations in the world. In addition, the State regularly organizes meetings and seminars to exchange information between enterprises and state management agencies to exchange aspirations and promptly resolve arising problems.

3.5.1.3.Coordination in modern retail system management

Currently, the Ministry of Industry and Trade is the state management agency for trade, but the licensing of foreign investors in the retail distribution sector is under the authority of the Ministry of Planning and Investment. The Ministry of Industry and Trade may recognize the unreasonableness in the development planning, but it does not have the authority to coordinate. Not to mention the role of the People's Committees of provinces and cities is also very important. Therefore, there needs to be a coordinated policy to be able to manage and best orient the development of the modern retail system.

Modern retail formats are developing rapidly (especially the explosion of supermarkets), while the state's management capacity has not yet changed to meet new demands. The old management measures of traditional formats cannot be applied to the modern system, but stricter management standards are needed. Therefore, inspection and supervision work needs to be innovated and especially focused on the following specific issues:

- Develop inspection, examination and supervision regulations for each type of retail in accordance with the state management objectives and the business characteristics of each type.

- Check food hygiene and safety, origin of goods, quality of goods, time of use ... At the same time, there needs to be a unified nationwide product quality management system to facilitate management.

- Check the transparency in price listing. This is a particularly important measure to avoid the situation where businesses use price tools to compete unfairly, especially the risk that foreign corporations, thanks to their large financial potential, accept losses to attract customers, thereby monopolizing the market.

- Monitor the quality of promotional discount programs of supermarkets and shopping malls. Currently, supermarkets often apply promotional periods to attract customers, but some establishments turn this into a measure to consume inventory, poor quality goods ... Through surveys, it is shown that many promotional programs only provide ambiguous information, causing confusion for customers.

3.5.1.4.Encourage retail businesses to make connections

Vietnamese retail businesses are currently operating separately, lacking cohesion to share benefits and business experiences. The State should play the role of "glue" for the "cohesion" of businesses. Recently, under the initiative of large retail businesses, with the support of the Ministry of Industry and Trade, the Vietnam Retailers Association was established with 130 members who are businesses, organizations and individuals operating in the retail sector. In the coming time, the State should support the association to promote its role well, enhance cooperation and information exchange among members. At the same time, the retail association also helps increase the competitiveness of domestic businesses against foreign corporations.

Relevant ministries and localities need to stand up to mobilize and guide domestic enterprises to unite into large retail distribution corporations, build strong brands, and develop into supermarket chains and stores of various sizes in cities, towns, and townships to focus on

Combining strengths, enhancing competitiveness, increasing market share. With greater capital potential, expanded business networks, domestic enterprises will create combined strengths to increase business efficiency.

3.5.1.5. Harmoniously develop modern and traditional retail systems

Research shows that in the next 5 years, the Vietnamese retail system will undergo many major changes towards modernization. Supermarkets and convenience stores will develop widely and attract more and more customers.

Traditional distribution channels such as markets, grocery stores, wholesale stores, retail stores... currently account for 90% of the distribution network in Vietnam and will face great difficulties when foreign retail groups enter the retail market. The distribution network is "huge" in quantity with nearly 350,000 grocery stores and more than

9,000 markets distributed across the country but in this very backward place are gradually losing their advantage to the modern distribution system and are facing the possibility of bankruptcy, especially in urban areas, when the competitive pressure in the upcoming retail market will increase very strongly.

The solution is that the state should encourage the rapid development of modern retail systems in urban areas, encourage distribution enterprises to develop systems and link up in chains (supermarket chains, shopping mall chains, convenience store chains, etc. ). Gradually mobilize shops, grocery stores, independent and traditional retail stores, and business households to join the system of convenience store chains and specialized stores. This is a measure to modernize the traditional retail system to meet the increasing needs of consumers. Gradually convert small markets and traditional markets into supermarkets and convenience stores; limit the construction of new markets in inner-city areas due to limited land funds.

In rural areas, the traditional market system and retail network will still play an important role and be the main distribution channel for goods in the coming years. Therefore, it is necessary to renovate and upgrade markets to better serve people, with

Rural areas with conditions can pilot the opening of specialized stores and small supermarkets.

With appropriate policies, the government can gradually transform the retail system towards modernity while still limiting too much fluctuation. The Vietnamese retail market will modernize but can still maintain two parallel modern and traditional retail systems, like Japan or Korea have successfully implemented.

3.5. 1.6. Other solutions

The issue of building and protecting brands of Vietnamese retail businesses is still limited, the state should play a role in guiding and assisting businesses in building and promoting their brands.

Finally, although Vietnam is bound by WTO commitments and the MFN and NT principles, the government should not allow foreign retail enterprises to invest widely, leading to the risk of monopolizing the domestic market. The government needs to cleverly set up technical barriers to protect the domestic retail market, such as limiting the number of supermarkets or shopping malls of foreign retail corporations, and strictly regulating the scale, scope, quantity, distance, etc. when investors want to open new business locations.

The solutions from the state are mainly in terms of policy and law. If done well and wisely, these will be important measures in supporting retail business, helping Vietnamese retail businesses grow stronger and more competitive with foreign companies.

3.5.2. Solutions for modern retail businesses

In addition to government support, the most important thing is that retail businesses must improve their business efficiency, improve themselves in the context of fierce competition, and contribute to building a modern retail system in Vietnam. To do that, businesses must build their own development strategies that are suitable for their own characteristics.

3.5.2.1. Changing business awareness and building a professional style

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