d) Most modern retail formats have appeared, especially supermarket systems. Convenient payment methods by credit cards have also appeared, in the context of Vietnam's economy making strong and steady progress. The retail distribution system has begun to develop in a linked and systematic manner in the product chain. Up to now, Vietnam has formed a supermarket network in major cities and urban areas across the country and supermarkets have contributed significantly to creating a new look for retail trade in Vietnam. However, traditional business methods still play an important role in retail services. Household-owned retail stores account for a fairly large proportion. These stores serve a wide range of both food and non-food products. Independent grocery stores still play an important role in the business of food items to meet daily essential needs.
2.1.2.2. Weaknesses:
a) Firstly, the influence of Vietnamese shopping habits: Traditional markets and small retail stores still account for 90% of Vietnamese consumption habits. Shopping at shopping malls and supermarkets is still only developing in some large cities or modern urban areas.
b) Second, the number of retail distribution enterprises is large but small in scale, scattered, accompanied by outdated technology and equipment. In 2006, the majority of enterprises had a scale of 5-9 employees, only 3 enterprises had 1000 to 4999 employees. Compared to 2004, there was an increase in scale but it was still very small.
Table 5: Number of retail distribution enterprises by labor scale as of December 31 (2004-2006)
Year
Total number of businesses | Under 5 People | From 5 up to 9 people | From 10 to 49 People | From 50 to 199 People | From 200 to 299 People | From 300 to 499 People | From 500 to 999 People | From 1000 to 4999 People | |
1= 2+3+…+9 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
2004 | 11,042 | 5,437 | 3.353 | 1,991 | 207 | 28 | 15 | 9 | 2 |
2005 | 13,401 | 6,383 | 4,291 | 2,455 | 219 | 22 | 21 | 7 | 3 |
2006 | 16,313 | 5,341 | 8,045 | 2,654 | 219 | 26 | 14 | 11 | 3 |
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Source: General Statistics Office (2008), Current status of enterprises through survey results 2005, 2006, 2007 ; Statistics Publishing House
In general, the capital scale of retail distribution enterprises in the Vietnamese market is still small. In 2006, the majority of enterprises had capital from 1 to 5 billion VND (56.11% of the total number of enterprises), only 7 enterprises had capital from 500 billion VND or more. Small capital scale is a major obstacle in the competition process of enterprises.
Table 6: Number of retail distribution enterprises by capital size 2004 - 2006
Year
Total number of businesses | Below 0.5 billion VND | From 0.5 under 1 billion copper | From 1 to under 5 billion VND | From 5 to under 10 billion VND | From 10 under 50 billion copper | From 50 up to under 200 billion VND | From 200 under 500 billion copper | From 500 billion or more | |
1= 2+3+…+9 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
2004 | 11,042 | 4,932 | 2,482 | 3,073 | 315 | 197 | 31 | 9 | 3 |
2005 | 13,401 | 5,384 | 3,196 | 4,085 | 428 | 255 | 45 | 6 | 2 |
2006 | 16,313 | 2,263 | 4.015 | 9,153 | 459 | 327 | 77 | 12 | 7 |
Source: General Statistics Office (2008), Current status of enterprises according to survey results 2005, 2006, 2007; Statistical Publishing House
Due to the small scale of enterprises and low capital, the ability to equip equipment is still limited, most enterprises have not applied ISO; inventory management, order processing, transportation organization, information and reporting... are all at low technology level and not in line with international standards; inevitably leading to poor competitiveness and low efficiency.
c) Third, human resources and management experience: One of the general weaknesses of the labor force in Vietnam is low qualifications and lack of experience. Most businesses have to train their workers themselves (accounting for 85.06%), not having workers trained through a centralized vocational school system. This leads to high labor training costs but low levels of scientific and technical knowledge and sales skills of workers, which greatly limits the promotion of initiatives to improve sales technology.
d) Fourth, urban planning is not uniform and fragmented: One of the important factors for the retail space market to develop is concentration.
of residential areas as well as the quality of people's lives. However, the quality of urban planning in Vietnam today cannot be highly appreciated.
e) Fifth, the rental price is too high and the procedures are complicated: Making it difficult for many retail businesses to rent the premises they want. According to statistics up to the end of July 2008, in Ho Chi Minh City, the rental price of retail premises in the central area reached an average of 65 USD/m2 / month, with good locations the average price reaching 85 USD/m2 / month and the highest rental price in this area reaching 250 USD/m2 / month; the rental price of premises in the area outside the center is slightly cheaper, at an average of 40 USD/m2 / month.
From January 1, 2009, Vietnam will open its retail market to foreign distributors. The inherent characteristics, when placed in a vibrant economic context, will reveal many opportunities and challenges. The biggest opportunities and challenges are from the fact that many foreign retailers have promoted the expansion of their presence in Vietnam. Bourbon, Parkson and Metro are expanding their store systems in Vietnam, while Tesco, Wal-Mart and Carrefour are likely to invest in Vietnam in the near future. Metro is currently planning to open its 8th store in Vietnam. According to sources, Parkson plans to open 10 stores in Vietnam in 2009. However, the global economic crisis is ongoing, and foreign retailers and investors will not enter our country immediately because they still have to solve problems in the host country and need time to do more in-depth research on the market and risk management as well as restructure capital sources. Therefore, it is forecasted that in 2009, the retail market will not have many changes compared to 2008. The impact of the full opening of the retail market to international retailers according to the WTO commitment is forecasted to not have a profound impact on the domestic retail market in 2009, but this will be a year that will have a lot of influence on the following years, when the world economy recovers and international retailers continue their expansion plans.
2.2. Vietnam's WTO commitments on retail services
2.2.1. Opening up services in the WTO
The GATS Agreement sets out principles, regimes, and international legal standards to regulate commercial aspects of the provision of services between WTO member countries and lays the foundation for the provision of services between WTO member countries, laying the foundation for the construction of a more comprehensive legal system in the future to regulate a very new, very complex but promising field of international trade, which is trade in services. These principles on the one hand promote liberalization and market opening of trade in services, on the other hand create a balance of rights and obligations of member countries, especially for developing and underdeveloped countries with opportunities to participate in international trade in services.
The basic principles stipulated in GATS include:
1) Most-favored-nation (MFN) principle
According to this principle, the government of a member country is not allowed to discriminate between services or service suppliers of other member countries but must give them treatment no less favorable than that which the member country has, is giving or will give to any third party.
2) National treatment (NT) and market access principles
Accordingly, in the areas listed in the Schedule of Specific Commitments, each member must accord to services and service suppliers of any other member country treatment no less favorable than the treatment that the member has accorded, is according, or will accord to its own services and service suppliers. Treatment that does not satisfy the requirements of the national treatment principle is treatment that makes the competitive conditions more favorable to domestic services or service suppliers than to foreign services or service suppliers.
3) Principle of transparency of policy system
According to GATS, liberalization of trade in services cannot be achieved if service suppliers lack the necessary information about the regulations they must comply with when entering the market of another country. Therefore, GATS clearly stipulates the obligation to be transparent about the policies of WTO member countries, especially through regulations and related legal documents.
4) Mutual recognition
GATS requires that member countries provide equal opportunities for accession negotiations to any interested member country in respect of recognition agreements or conventions that it has concluded or concluded with another member country. These agreements must be non-discriminatory and must not be used as a means of disguised protectionism.
5) Exclusive and exclusive service provision
Under Article 8 of the GATS, member countries may grant certain service sectors exclusive rights and privileges. This is perfectly legal and the GATS does not prevent the maintenance of such monopolies, but requires member countries to ensure that the activities of the monopoly service supplier are consistent with the general obligations and commitments of that member country.
International trade in services is regulated in GATS according to international legal standards based on 4 methods of providing services for profit (Article I, Clause 2 of GATS Agreement), which are:
Mode 1 : Cross-border supply - services are provided from one country to another (for example: A US financial consulting firm advises a Vietnamese company by phone). The characteristic of this type of service provision is that only the service itself crosses the border, while the service provider is not present in the country receiving the service;
Mode 2: Consumption outside the territory - consumers of one country (or their assets) consume services in the territory of another country. For example, Vietnamese tourists
Nam travels to China on a tour organized by a Vietnamese company. Or in the case of a Vietnamese ship being sent abroad for repairs, Vietnam has imported services from abroad.
Mode 3: Commercial presence - a foreign company establishes a branch or subsidiary to provide services in another member country. For example, a US bank establishes a branch in Vietnam. This method directly involves investing in another country's market to establish a business.
Mode 4: Presence of natural persons of a member country directly providing services in another member country. For example, a Korean singer comes to Vietnam to perform in programs organized by Vietnamese organizers.
The requirement for countries to open their markets for the development of world trade in services through four modes of service provision with the basic principles of the WTO on MFN, NT, including competition in GATS leads to the fact that GATS will have a great impact on the change and development of the laws of member countries. However, promoting the opening of the market for services of GATS is not a requirement to break the legal regulations of member countries but rather promoting the efforts of members in perfecting national laws to comply with the international "rules of the game", taking into account the characteristics and economic - political - social situation of each country.
2.2.2. Commitment content
2.2.2.1. Vietnam's general commitments on trade in services
In Vietnam's service opening commitment schedule, we have general commitments for all service sectors and sub-sectors and specific commitments for each sector.
- For method 1 and method 2 in general, our country commits to no restrictions (there are a few individual services with restrictions included in specific commitments).
- For method 3, our country commits to not restrict and makes the following exclusions: Representative offices of foreign companies established in Vietnam are not allowed to operate.
direct profit-making activities (direct business); no commitment to establish branches (except for some specific sub-sectors); contracts signed before joining the WTO will not be restricted under the new commitment; FDI enterprises are allowed to lease land to implement projects; foreign equity capital in Vietnamese joint stock enterprises does not exceed 30% of the enterprise's charter capital. After 1 year, this 30% capital restriction will be lifted (except for commercial banks and some specific service sectors).
- For method 4: we have not committed, except for the case of entry and temporary stay of natural persons in the following groups: (i) Persons moving within an enterprise with a commercial presence in Vietnam for the positions of manager, director and expert. The stay is 3 years and can be extended. However, the enterprise must ensure that at least 20% of the total number of employees working as managers, directors and experts of the enterprise are Vietnamese citizens. (ii) Service sellers, persons responsible for establishing a commercial presence, service providers under contract (without a commercial presence); are allowed to enter and stay for no more than 90 days but are not allowed to directly sell or provide services in Vietnam.
2.2.2.2.Vietnam's commitments on distribution services
Distribution is the link between production and consumption. Distribution services are one of 12 service sectors. WTO defines distribution services as including 4 main groups:
- Authorized agent
- Wholesale services
- Retail services
- Franchising.
Vietnam does not commit to the following items: cigarettes and cigars; books, newspapers; magazines and recorded items; precious metals, precious stones; pharmaceuticals; explosives; crude and processed oil; rice; cane and beet sugar.
Vietnam commits to fulfill its obligations for 4 groups of distribution services: 1. Commission agency services; 2. Wholesale services; 3. Retail services; 4. Franchising. For specific commitments on distribution services, see Appendix 1 .