The Impact of Commitment on Vietnamese Retail Businesses

It can be said that the commitment in the distribution service sector is basically maintained as in the Vietnam - US Bilateral Trade Agreement (BTA) and is stricter than that of newly joined countries. First of all, the time allowed to establish 100% foreign-owned enterprises is the same as the BTA (January 1, 2009). Second, similar to the BTA, we do not open the distribution market for gasoline, pharmaceuticals, books, magazines, video tapes, cigarettes, rice, sugar and precious metals to foreign countries (China only reserves cigarettes and salt). Many sensitive products such as iron and steel, fertilizers, cement... we only open the market after 3 years. Most importantly, in the retail sector, we limit the ability of foreign-invested enterprises to open retail outlets (opening from the second retail outlet onwards must be permitted by us on a case-by-case basis). China does not reserve this restriction.

The above commitment level can be said to be lower than the current situation of our country. In fact, we have allowed a number of large distribution corporations to establish 100% foreign-owned supermarkets and open a series of supermarkets in provinces and cities in Vietnam. However, by maintaining the restriction on opening retail outlets, the service commitment schedule has kept for us a control tool. Our country should take advantage of this tool to support domestic distributors through State management tools.

2.2.3 Impact of commitments on Vietnamese retail businesses

First of all, opening the distribution market according to the WTO accession commitment will promise dynamic and prosperous development of Vietnam's retail market.

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Second, the business environment of the retail distribution system will become increasingly transparent due to the implementation of WTO accession commitments along with the implementation of the policy of encouraging all economic sectors to develop production and business of goods, industries and fields that are not prohibited by the State, which will make the process of trade liberalization in Vietnam stronger and deeper.

Third, the increased participation of multinational companies in the distribution system in the domestic market: Multinational Corporations

- MNCs) are playing an important role in the world economy. In the coming years, with mergers and consolidations, investment and market expansion, the ability to dominate, control and control the global distribution system of MNCs will increase. Besides the large distribution corporations already present in Vietnam such as Metro Cash & Carry, Bourbon Espace (Big C), Parkson, Dairy Farm, ..., the world's leading retail corporations such as Wal-mart (USA), Carrefour (France), Tesco (UK), Marko (Netherlands) ... are expanding their markets and penetrating deeper and deeper into the world's retail market, and will soon be present in emerging and attractive markets like Vietnam.

Fourth, the organization and management methods in the retail distribution system will develop in a modern and civilized direction. Along with the wave of foreign direct investment in the distribution sector, traditional retail models will still exist alongside modern models but will gradually narrow and weaken. Domestic enterprises will mature and learn a lot of experience in organizing, managing and modernizing the system of foreign enterprises to strengthen their own systems. In the immediate future, foreign distribution corporations will focus on opening wholesale and retail supermarkets, but gradually they will expand to non-store retail forms, specializing in sales via catalogs, telephones, the Internet, vending machines and home delivery... bringing a civilized and modern look to the Vietnamese distribution system.

Fifth, the consumption style of Vietnamese people will change towards civilization, modernity and integration. Joining the WTO means that Vietnam has deeply integrated into the global economy. In the face of the strong development of the globalization wave with the free movement of goods, services, capital and people globally, the development of information technology and the Internet and the spread of knowledge globally, the lifestyle of Vietnamese people, especially the young generation who currently make up the majority of Vietnam's population, will change to suit.

more suitable for modern life. Of course, this change contains both positive and negative factors, both opportunities and risks. If we know how to exploit the positive aspects and limit the negative aspects and risks, we will have contributed significantly to improving the quality of life of the Vietnamese people and raising the intellectual level of the country.

2.2.3.1. Positive impacts and new opportunities

Vietnam's official membership in the WTO has had a positive impact and brought many opportunities to the retail sector:

Firstly, encourage healthy competition, creating momentum for the development of the Vietnamese retail market. The appearance of international retail "giants" has changed the face of the Vietnamese retail market and created a fierce competition in controlling distribution channels between domestic and foreign distributors. Modern supermarkets not only make the Vietnamese retail market more vibrant but also help consumers have the opportunity to access many new types of distribution. Online distribution or e-commerce is developing strongly with countless Vietnamese websites conducting online transactions. Domestically, with the support of the Ministry of Industry and Trade, domestic enterprises such as Saigon Trading Corporation, Intimex Import-Export Company have proposed development programs such as upgrading existing facilities, building new supermarkets, shopping centers, self-service stores... preparing to compete with international retailers.

Second, promote the formation of a modern, civilized retail system that serves production and people's lives well, overcoming the weaknesses of the existing system: small, local, backward, high costs, and dishonesty in buying and selling goods. In the future, the number of service consumers, especially foreign investors and tourists, will continue to increase due to factors such as Vietnam being a WTO member, having a strategic location, a rapidly growing economy, stable macro-economy, dynamic business areas, and an expanding domestic market.

Third, facilitate and encourage Vietnamese retailers to expand their operations abroad through joint ventures and partnerships with distribution corporations.

distribution abroad or through product introduction centers, Vietnamese trade centers abroad. This will lead to an increasingly smooth Vietnamese retail distribution system, the connection between domestic and foreign distribution systems is increasingly developed.

Fourth, encourage institutional and administrative reforms, create an open and market-friendly distribution business environment, promote competition, improve the efficiency of the distribution industry, contribute to production development, improve living standards and improve the quality of life for people.

2.2.3.2 Negative impacts and new challenges.

Firstly, the risk of Vietnam's retail market being manipulated by MNCs: Through commitments on market opening, Vietnam is required to open its retail market. Joining the WTO, Vietnam can benefit from attracting FDI capital but must face the possibility of foreign retail corporations manipulating the domestic market, considering the potential of international retailers: capital, advanced management methods and hundreds of years of development experience.

The presence of foreign professional retailers will create huge competitive pressure on domestic retailers, especially small-scale enterprises and more than one million individual business households. In fact, Vietnamese retail enterprises are all small and very small in scale, newly established and weak in competitiveness, especially in quality management. These companies lack important resources for development, especially highly skilled human resources, capital, technology, management skills, marketing skills, foreign language skills, information and market knowledge. These weaknesses are really challenges when they try to overcome the current situation to develop and achieve global criteria in international competition.

Second, negative social impacts may come from bankruptcy and unemployment of small Vietnamese retail businesses due to having to directly face unequal competition with large foreign distributors. Competition in providing distribution services in the world market is very fierce today. A system

How will the traditional retail system with hundreds of thousands of small traders and more than one million individual businesses of a small, low-level but potential commodity production industry cope with the world's leading MNCs such as Wal-mart, Carrefour, Tesco...? This question is not only posed to domestic retailers but also causes headaches for state management agencies for the distribution service market. Due to many weaknesses and low competitiveness, Vietnamese distributors really need a suitable business environment, a supportive policy and legal system, and a service trade development program that needs to be implemented soon to improve competitiveness, cope with challenges and seize opportunities in a timely manner. In fact, China's lesson on this issue is very valuable. It is calculated that within a radius of 35 km on Chinese soil, if the world's number 2 retailer Carrefour opens a large supermarket, three Chinese distribution giants will simultaneously go bankrupt. This risk may repeat itself in Vietnam in the near future, if the distribution market is opened and domestic retailers do not have appropriate countermeasures.

In its WTO accession commitment to open the distribution services market, Vietnam has gained control over the opening of second retail outlets by foreign-invested commercial enterprises. Vietnam needs to specify this right in a legal document guiding FDI enterprises to open second retail outlets in order to achieve the goal of balancing trade for all distribution service providers.

2.3. Current status of State management of Vietnamese retail enterprises

2.3.1. State management by legal regulations:

2.3.1.1. The legal system regulating the establishment and operation of enterprises

Developing Vietnam's distribution system has received special attention from the government, ministries, branches and localities, especially in the context of Vietnam officially becoming a new member of the World Trade Organization (WTO).

The State's major policies on domestic trade development in recent times include:

- The Enterprise Law 2005, effective from July 1, 2006, regulates the establishment and operation of non-state enterprises and enterprises with foreign direct investment such as limited liability companies and joint stock companies.

- The 2005 amended Commercial Law, effective from January 1, 2006, confirms the legal status of foreign traders in Vietnam in the following forms: representative offices, branches, joint venture companies and 100% foreign-owned companies.

- Decree No. 35/2006/ND-CP dated March 31, 2006 of the Government detailing the implementation of the Commercial Law on franchising activities.

- Decree No. 12/2006/ND-CP dated January 23, 2006 of the Government detailing the implementation of the Commercial Law on international goods trading activities and activities of agency for trading, processing and transit of goods with foreign countries.

- The Law on State Enterprises (amended) 2003 regulates the establishment and operation of State enterprises.

- The Law on Cooperatives (amended) 2003, effective from January 1, 2004, regulates the establishment and operation of cooperative economy and cooperatives in Vietnam.

- Decree 23/2007/ND-CP detailing the Commercial Law on goods trading activities and activities directly related to goods trading of foreign-invested enterprises in Vietnam.

These are the legal foundations for businesses in the retail distribution sector to establish and operate in Vietnam, build strong joint ventures and associations in the form of establishing parent-subsidiary companies and domestic corporations, creating strength for development in an increasingly liberalized and competitive environment.

2.3.1.2. Legal system regulating activities in the market

- Implementing international commitments on opening the distribution sector, Vietnam has adjusted its laws accordingly. Adjustments to comply with international laws affecting the Vietnamese market include: the 2002 Ordinance on Most-Favored Nation (MFN) and National Treatment (NT), the Ordinance on Self-Defense in Trade.

Import of goods from foreign countries into Vietnam in 2002, anti-subsidy ordinance on imported goods into Vietnam in 2004, anti-dumping ordinance on imported goods into Vietnam in 2004 to prevent unfair trade practices originating from outside Vietnam's borders but adversely affecting fair competition in the Vietnamese market.

- The Competition Law 2004, which took effect in 2005, is an important law to regulate the market. With regulations regulating acts of anti-competitive agreements, abuse of dominant position, economic concentration and unfair competition... to create a fair and equal competitive environment, protect and encourage healthy competition in the distribution market, prevent acts that restrict competition and unfair competition...

- Through the 2005 General Investment Law and the 2005 Commercial Law, the Government divides prohibited, restricted, conditional and free investment and business sectors.

- The government passes tax laws: import and export tax, value added tax, special consumption tax, corporate income tax... to regulate income, encourage or restrict investment and business in accordance with economic development strategies and plans over time.

- The legal system regulating the market also includes the 2005 Civil Code, the 2005 Intellectual Property Law, the 2005 Law on Electronic Transactions, the 2007 Law on Product and Goods Quality, and the 2002 Price Ordinance, which stipulates that the Government can stabilize prices for a number of key commodities of the national economy such as gasoline, liquefied gas, cement, iron and steel, fertilizers, rice, coffee, cotton seeds and cotton fibers, sugarcane, salt, and some medicines for human diseases...

- Legal documents on market management include:

+ Decision 311/QD-TTg dated March 20, 2003 of the Prime Minister approving the project "Continuing to organize the domestic market, focusing on developing rural trade until 2010" with the aim of arranging and expanding the domestic market, ensuring smooth circulation of goods...

+ Decree 02/2003/ND-CP on market development and management.

+ Directive No. 13/2004/CT-TTg dated March 31, 2004 of the Prime Minister to implement a number of key solutions to strongly develop the domestic market.

+ Decision No. 1371/2004/QD-BTM dated September 24, 2004 of the Ministry of Trade on promulgating regulations on supermarkets and trade centers.

+ The Government's issuance of Decree No. 57/2006/ND-CP on e-commerce on June 9, 2006 marked a major step forward in continuing to perfect the legal framework on e-commerce. This Decree recognizes the legal value of electronic documents in trade-related activities. This is the basis for businesses and consumers to confidently conduct e-commerce transactions, protect the rights and interests of the participating parties, and is also the legal basis for adjudication when there are disputes related to e-commerce activities...

Vietnam is considered a country that is very responsive to the online business model. However, e-commerce activities in Vietnam are still in their infancy. Peacesoft Company, owner of the website chodientu.vn, said that according to the company's calculations, in Vietnam there are currently over 100 businesses doing online business in the form of customer to customer (C2C), while the form of company to company (B2B) is still very limited. The majority of transactions on the website are between companies and customers (B2C).

Currently, businesses trading on e-marketplaces are all registered as normal businesses. Card payments are almost not used and Vietnamese customers buying and selling on international e-marketplaces often have their payment cards blocked for security reasons. Online business networks in Vietnam currently still play the role of promoting products and business brands rather than operating as a complete business model.

The following author would like to clarify some legal regulations directly related to the retail service market, specifically:

(1) Some regulations in the Regulations on supermarkets and commercial centers according to Decision No. 1371/2004/QD-BTM dated September 24, 2004 (See Appendix 2 ).

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