As for traditional retail stores, with about 350,000 stores and grocery stores, the average area is only about 14.8 m2/store with rudimentary equipment, messy displays...
3.3. Modern retail distribution forms have begun to appear and develop. Although the scale is still small and the number is not much, it has brought a new vitality, opening the process of reforming the goods distribution system in general and the retail distribution system in particular in Vietnam.
With the strategy of constantly expanding the network and developing new facilities, a number of enterprises have been forming their own modern retail business models to gradually operate according to the chain model and operate more and more professionally. Domestic enterprises include: Saigon Trading Corporation with Tax Trade Center; Ho Chi Minh City Trade Cooperative Union with Co-op Mart supermarket chain and 30 other small stores; An Phong Trading - Service Company Limited with 4 Maximark supermarkets in Ho Chi Minh City, Nha Trang and Binh Duong; Dong Hung Trading - Service Company Limited with 5 Citimart supermarkets in Ho Chi Minh City and 2 supermarkets in Hanoi and plans to open 5 other Citimart supermarkets in the Mekong Delta provinces and Da Lat; members of Vietnam Textile and Garment Corporation with 16 supermarkets and modern specialized stores named Vinatex, Hoang Nam Company Limited with 3 Pho Xinh furniture supermarkets in Ho Chi Minh City and Da Nang. Foreign-invested enterprises include: Big C supermarket system with 4 supermarkets in operation and 3 others under construction, Diamond Plaza department store, Parkson shopping center, Zen Plaza shopping center...
Besides the emergence of many new facilities, there are old facilities that have been renovated, expanded business premises, upgraded equipment, diversified products... Or there are businesses that are upgrading and modernizing activities related to warehouse networks, preservation, classification, packaging... and each
The step of applying logistics technology to control part or all of the path of goods from production to consumption.
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Some large distribution enterprises have built long-term investment strategies for production, creating a stable and highly competitive source of goods, and are forming close ties between manufacturers, importers... and distribution enterprises in ensuring supply sources, as well as when wanting to launch a new product on the market. Therefore, after more than 10 years of formation and development, in modern distribution channels, an interesting reversal has taken place: imported goods accounted for nearly 100% in the early period, but have gradually decreased, and the proportion of Vietnamese goods in supermarkets and shopping malls has increased significantly (to date, accounting for 70% of goods, some groups of goods such as food, cosmetics account for 85-95%).
More and more retail distributors are branding their products alongside the manufacturer's product brand as a guarantee of quality.
There has been and is increasingly fierce competition among modern goods distribution facilities. Supermarkets and shopping centers continuously carry out promotional programs, expand and improve the quality of services for customers, many businesses have created their own style in buying and selling activities and attracting customers.
Recently, there has been a significant change in the price of goods between modern distribution channels and markets. If a few years ago consumers were reluctant to go to supermarkets/shopping malls because the prices here were often higher than in markets, now there are many items with prices equivalent to or lower than in markets.
The proportion of goods through modern retail formats is gradually increasing, better meeting people's shopping needs, affecting the progress of the goods distribution system, promoting import and domestic production activities with orders with high requirements on quality, design, origin... contributing to brand promotion, enhancing the reputation of manufacturers with consumers.
3.4. Vietnamese retail businesses are facing many difficulties in the development process.
Not only facing increasingly strong competitive pressure from foreign retail corporations, Vietnamese retail businesses are also facing enormous challenges in terms of policies and laws, capital, logistics, human resources, professionalism in management, etc.
Chapter 3
SOLUTIONS TO DEVELOP VIETNAM'S RETAIL MARKET
1. THE NEED TO DEVELOP THE RETAIL MARKET IN VIETNAM.
1.1. World context
Currently, in each country as well as globally, the process of economic restructuring is taking place at a rapid pace. In developed countries, the economy is shifting from an industrial - service - agricultural structure to a service - industrial - agricultural structure. The proportion of the service sector in GDP in developed countries is increasing rapidly and accounts for about 70 - 80%. In these economies, domestic trade (distribution services - including retail services) has a great impact and is a very important part of economic growth.
The path of a product from production to market goes through 3 main stages: determining demand - organizing production and finally carrying out consumption. Instead of previously, developed countries only cared about production, now they have shifted their focus to exploiting inventions, patents, designs, useful solutions (associated with exclusive trademark registration) and putting that product into a strong distribution system along with implementing propaganda, advertising, promotion campaigns... Accordingly, the product will be consumed at a price much higher than the production cost. Therefore, the distribution system is becoming increasingly important, decisive and of special interest to developed countries.
The trend of globalization is increasingly profound, the nature of which is the expansion of markets according to bilateral, regional and global institutions. Through commitments to open markets, the development of transnational corporations
The national and multinational distribution sector is growing stronger and stronger. The formation of large transnational and multinational distribution companies with global networks has become a strong force, imposing the game on manufacturers. If Vietnam does not soon consolidate and develop a good domestic distribution system before opening the market, Vietnam can only benefit from attracting FDI capital due to the process of re-allocation of production structure, while the risk of foreign distribution corporations manipulating the domestic market is not too far away and is inevitable. Domination in distribution leads to domination in production. The economic growth process will be difficult to increase because the added value in the production stage is getting lower and lower.
In the world, the general development trend of the distribution system from the mid-90s to present is:
The distribution system is increasingly centralized. In retail, small-scale, independent stores are being replaced by supermarket chains, shopping malls, and shopping centers. The average size of these types (area, sales, labor, etc.) is increasing while their density is decreasing; more and more supermarkets, hypermarkets, and shopping malls with extremely large scale, operating in chains, are appearing. The appearance of large enterprises in the distribution sector makes the relationship between production, wholesale, and retail increasingly close and intimate, creating a professional, integrated, and increasingly effective goods distribution system.
The franchise business method of large distribution enterprises has linked small-scale stores in the same system, creating higher competitiveness due to better service quality.
The emergence and rapid development of online trading methods such as online sales, postal sales, etc. also affect wholesale and retail businesses with traditional trading methods. E-commerce is a new, modern trading trend that has emerged in recent times.
Digitalization helps customers transact very quickly, businesses reduce store opening costs while still increasing sales of customers (including customers outside national borders) with almost unlimited transaction frequency in an extremely short period of time.
The trend of developing new management methods (branding, automating business technology processes, etc.), new business methods (e-commerce, franchise distribution "chain" linkage, etc.), new types of business organizations (hypermarkets, supermarket chains, trading floors, wholesale warehouses, convenience stores, etc.) is growing faster and stronger, increasingly replacing traditional management methods, transaction methods, and types of business organizations.
Vietnam needs to develop such a synchronous and modern structure for the distribution service sector, compatible with the general trend, if it does not want to fall into the risk of falling behind, or even being "abandoned" in this field.
1.2. Domestic context
1.2.1. Integration roadmap in the field of retail goods services in
Vietnam in the context of international economic integration.
Scope of commitments to open the distribution service market in the Vietnam-US Trade Agreement23: The Agreement specifically stipulates a number of business rights related to the retail service sector as follows: Allowing US companies to establish retail joint ventures in Vietnam with capital contributions not exceeding 49%; By December 2007, US joint venture companies are allowed to establish retail joint ventures in Vietnam with capital contributions of over 49% but less than
100%; As of December 2008, US companies may establish 100% foreign-owned trading companies in Vietnam. However, opening additional retail outlets beyond the first retail outlet will be subject to licensing on a case-by-case basis.
23 Vietnam-US Bilateral Trade Agreement - (http://ftu-forum.net/forums/showthread.php?t=996)
case; Franchise services are carried out in accordance with the law and regulation development process.
Scope of commitment on opening the distribution service market in the Vietnam-Japan Investment Promotion and Protection Agreement: This is the agreement with the highest level of protection, higher than the Vietnam-US Trade Agreement. According to this agreement, Japanese investors will be allowed to establish joint ventures with capital contribution of no more than 49%, over 49% and enterprises with 100% Japanese capital at the time Vietnam allows any third country investors to take effect, whichever comes first.
For AFTA, the general principle is that countries set a certain deadline for a specific roadmap for market opening through reducing tariff and non-tariff barriers, forcing members to implement it together.
In the coming years, Vietnam will participate in negotiations within the framework of the ASEAN free trade area with ASEAN plus partners (including ASEAN countries and Japan, China, and South Korea).
For APEC and ASEM, the general principle of cooperation is that the parties set a target deadline without a specific mandatory roadmap. Countries voluntarily and flexibly build and implement the roadmap.
Regarding the WTO, we must acknowledge the five basic principles of the WTO: Trade without discrimination; ensuring stability and transparency for trade activities; increasingly freer trade through negotiations; creating an increasingly equal competitive environment and providing special conditions for developing countries. The principles and rules of the WTO are highly binding and member countries are responsible for strictly complying with them.
1.2.2. Impact of international economic integration on the retail distribution system in Vietnam.
From the retail development trend in the world and the current retail market situation in Vietnam, we can conclude that: the process of international economic integration will have a profound impact on the distribution system in general and the retail distribution system of Vietnam in particular. Those impacts are:
1.2.2.1. Significant increase in production and business entities in the goods distribution system.
The Resolution of the 9th National Party Congress has determined the policy of developing an economy with many forms of ownership, many components and many forms of business organization. Thanks to the above policy and thanks to the implementation of the Enterprise Law, the Commercial Law, the Cooperative Law..., a huge change has been created in the reform of economic institutions, leading to the emergence of many different types of enterprises, along with millions of small traders participating in the goods distribution system in the domestic market. With the target of an average GDP growth rate of 7-7.5%/year in the period 2001-2010, the scale of the total domestic LCHHBL in 2010 will be at 600-650 thousand billion VND. Thus, there will be a large increase in economic entities in the Vietnamese goods distribution system belonging to different economic sectors such as state economy, cooperative economy, individual and smallholder economy, private capitalist economy, state capitalist economy and foreign-invested economy.
1.2.2.2.Barriers to entry and exit from the distribution system will gradually decrease.
In the trend of trade liberalization in the world, our country has carried out the process of trade liberalization right from the beginning of the implementation of the renovation policy by allowing all domestic enterprises (regardless of production or trade) to be allowed to do retail business in the domestic market. In the coming years, with the State's policy of encouraging all economic sectors to participate in developing production and trading of goods and industries