VIETNAM RETAILING 2015: FIERCE COMPETITION

It is easy to see that 2015 was a very active year of Vietnam’s retail market, especially in merger and acquisition (M&A), association and joint venture activities… both in manufacturing and trading of retail businesses such as Kinh Do, Citimart, Metro and Nguyen Kim.

According to Euromonitor International – a market research firm, the retail sales in Asia – Pacific was about 4,000 billion USD in 2012 then the top 500 leading retailers accounted for 1,000 billion USD, representing for 24% of total sales. Vietnam retail market is considered attractive and high potential despite the world economy remains difficult.

In 2014, most of the domestic businesses tend to cluster and maintaining position, except some large enterprises like Co.opmart and Saigon Trading Corp (Satra). Even a few enterprises withdrew locations like Fivimart withdrew all locations in the South or Intimex, Hapro also withdrew some locations in the North. This was intended to reinforce the quality of the business and rebranding. Excepting for Satra and Co.opmart still have more new locations this year. Currently, Saigon Co.opmart has presented on 71 locations including 29 supermarkets in Ho Chi Minh City (HCMC) and expanded to 42 nationwide supermarkets, along with around 100 Co-op Food convenience stores.

According to the experts, the retail market of Vietnam is shifting from the model of mature market to postmodern market. The market is gradually concentrated and the number of companies decreased. Some large retailers failed, saturated real estate market. The model of hype supercenters dominates the retail industry in the postmodern period. At the end of the growth period will be an important change in the retail market for both retailers and suppliers.

Retailers seek future growth because there is no retail channel dominates the growth. Part of the development of hypermarkets in the mature phase will focus on the discount channel. According to the trend, the discount channel continues to grow in the postmodern period. Currently and in the coming time, retailers will frequently launch discount programs and deals to attract customers.

The factors that impact the global distribution market are the speed of technological change, change in demographics, buying behavior requires lasting communication connection and knowledge-based purchases. Therefore, retailers must take care of customers regularly with the best service.

As for foreign companies, except Walmart corporation (USA) is in the exploratory stage, most of the major corporations in the world have joined the Vietnam retail market such as Lotte, Big C, Metro, Parkson , Aeon… Foreign enterprises are entering Vietnam market by many different ways: joint venture, association, cooperative transfer location.

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Benefits of Setting up Business in Hanoi

Benefits of Setting up Business in Da Nang

Benefits of Setting up Business in Ho Chi Minh City

Assistance in Setting up Business in Vietnam

M&A Services in Vietnam

Vietnam retail market is very potential. Currently, Vietnam has more than 90 million people, in which the young population accounts for more than half. The average GDP of this country is approximately 2,000 USD / person. In the future, this figure will increase and that will be a prerequisite for the development of Vietnam retail industry, especially modern retail. According to statistics of the Ministry of Industry and Trade, the market share of modern retail in Vietnam makes up only 25% of total retail sales. The whole country has about 724 supermarkets and 132 shopping centers. Moreover, the number of truly convenience store, which is branded and operated in store chain, is just hundreds stores. Most supermarkets and shopping centers concentrated in major cities and urban areas. In rural areas and suburbs, they are virtually absent from the retail system, they are major distribute in installments. Therefore, the market share of modern retail market of Vietnam is still quite a lot.

However, this market will have fierce competition between domestic and foreign enterprises. Foreign investors are not only penetrating into Vietnam by the ways of joint ventures in the distribution chain right from production process. For example, C.P Company, which is belong to C.P Group (Thailand) is accounting for 50% market share of eggs, 30% market share of chicken, 7% market share of animal feed in Vietnam. Hence, foreign companies are holding a supply chain from production to distribution. Besides, foreign companies are mostly big enterprises that have advantages in capital and experiences. They have good strategies and that will be the biggest challenges for domestic businesses on the path to affirm its position.

2015 and the coming years, Vietnam retail market will continue to be active and witnessing fierce competition among enterprises, particularly between foreign and domestic firms. We will continue to witness the landing of foreign enterprises in Vietnam market such as: Aeon Japan with the Aeon Mall Him Lam project in Sai Dong, Long Bien; the Lotte Group plans to open 60 locations (now have 9 locations). The domestic businesses are making plans to expand the distribution points not only in the city center but also the suburban areas such as Citimart has extended an additional 70 locations with scale from 1,000 to 2,000 m2 / location in the coming time…

2015 is also a year full of opportunities and challenges for the retail sector of Vietnam. From the date of November 1st 2015, Vietnam allows the establishment of 100% foreign investment capital retail companies under Vietnam’s commitments upon WTO accession. Besides, 2015 is year that ASEAN economic community (AEC) has officially been established, which allows the flows of resources, goods and human capital… to be freely moving in the area. Moreover, the TPP agreement with 12 participating countries that was signed in 2015. With this agreement, more than 10,000 kinds of goods from the member countries will be completely tariff eliminated. This will cause many difficulties and disadvantages for domestic goods but it is also the motivation for the production and distribution, enhance the competitiveness of enterprises in Vietnam.

According to the survey, the majority of retail brands that selected Vietnam in 2015 on par with Hong Kong, Singapore, even higher than Indonesia and Malaysia. Three big cities that are Hanoi, Ho Chi Minh City and Da Nang belong to the top 10 of the most vibrant retail markets in Asia – Pacific region due to its large and young population, after-tax income growth rapidly, quality retail networks that can attract multinational enterprises.

Vietnam currently has about 8,546 markets, 1 million small shops, 724 supermarkets, 132 trade centers and more than 400 convenience stores. Currently, the rural market with nearly 70% of the population but almost completely overlooked. As planned by 2020, Vietnam would grow up to 1,200 – 1,300 supermarket, 180 trade centers and 157 shopping centers. This suggests that the Vietnam retail market is very attractive for manufacturers, businesses and retailers to penetrate.

Read More

VIETNAM RETAILING 2015: FIERCE COMPETITION

It is easy to see that 2015 was a very active year of Vietnam’s retail market, especially in merger and acquisition (M&A), association and joint venture activities… both in manufacturing and trading of retail businesses such as Kinh Do, Citimart, Metro and Nguyen Kim.

According to Euromonitor International – a market research firm, the retail sales in Asia – Pacific was about 4,000 billion USD in 2012 then the top 500 leading retailers accounted for 1,000 billion USD, representing for 24% of total sales. Vietnam retail market is considered attractive and high potential despite the world economy remains difficult.

In 2014, most of the domestic businesses tend to cluster and maintaining position, except some large enterprises like Co.opmart and Saigon Trading Corp (Satra). Even a few enterprises withdrew locations like Fivimart withdrew all locations in the South or Intimex, Hapro also withdrew some locations in the North. This was intended to reinforce the quality of the business and rebranding. Excepting for Satra and Co.opmart still have more new locations this year. Currently, Saigon Co.opmart has presented on 71 locations including 29 supermarkets in Ho Chi Minh City (HCMC) and expanded to 42 nationwide supermarkets, along with around 100 Co-op Food convenience stores.

According to the experts, the retail market of Vietnam is shifting from the model of mature market to postmodern market. The market is gradually concentrated and the number of companies decreased. Some large retailers failed, saturated real estate market. The model of hype supercenters dominates the retail industry in the postmodern period. At the end of the growth period will be an important change in the retail market for both retailers and suppliers.

Retailers seek future growth because there is no retail channel dominates the growth. Part of the development of hypermarkets in the mature phase will focus on the discount channel. According to the trend, the discount channel continues to grow in the postmodern period. Currently and in the coming time, retailers will frequently launch discount programs and deals to attract customers.

The factors that impact the global distribution market are the speed of technological change, change in demographics, buying behavior requires lasting communication connection and knowledge-based purchases. Therefore, retailers must take care of customers regularly with the best service.

As for foreign companies, except Walmart corporation (USA) is in the exploratory stage, most of the major corporations in the world have joined the Vietnam retail market such as Lotte, Big C, Metro, Parkson , Aeon… Foreign enterprises are entering Vietnam market by many different ways: joint venture, association, cooperative transfer location.

Read More

Benefits of Setting up Business in Hanoi

Benefits of Setting up Business in Da Nang

Benefits of Setting up Business in Ho Chi Minh City

Assistance in Setting up Business in Vietnam

M&A Services in Vietnam

Vietnam retail market is very potential. Currently, Vietnam has more than 90 million people, in which the young population accounts for more than half. The average GDP of this country is approximately 2,000 USD / person. In the future, this figure will increase and that will be a prerequisite for the development of Vietnam retail industry, especially modern retail. According to statistics of the Ministry of Industry and Trade, the market share of modern retail in Vietnam makes up only 25% of total retail sales. The whole country has about 724 supermarkets and 132 shopping centers. Moreover, the number of truly convenience store, which is branded and operated in store chain, is just hundreds stores. Most supermarkets and shopping centers concentrated in major cities and urban areas. In rural areas and suburbs, they are virtually absent from the retail system, they are major distribute in installments. Therefore, the market share of modern retail market of Vietnam is still quite a lot.

However, this market will have fierce competition between domestic and foreign enterprises. Foreign investors are not only penetrating into Vietnam by the ways of joint ventures in the distribution chain right from production process. For example, C.P Company, which is belong to C.P Group (Thailand) is accounting for 50% market share of eggs, 30% market share of chicken, 7% market share of animal feed in Vietnam. Hence, foreign companies are holding a supply chain from production to distribution. Besides, foreign companies are mostly big enterprises that have advantages in capital and experiences. They have good strategies and that will be the biggest challenges for domestic businesses on the path to affirm its position.

2015 and the coming years, Vietnam retail market will continue to be active and witnessing fierce competition among enterprises, particularly between foreign and domestic firms. We will continue to witness the landing of foreign enterprises in Vietnam market such as: Aeon Japan with the Aeon Mall Him Lam project in Sai Dong, Long Bien; the Lotte Group plans to open 60 locations (now have 9 locations). The domestic businesses are making plans to expand the distribution points not only in the city center but also the suburban areas such as Citimart has extended an additional 70 locations with scale from 1,000 to 2,000 m2 / location in the coming time…

2015 is also a year full of opportunities and challenges for the retail sector of Vietnam. From the date of November 1st 2015, Vietnam allows the establishment of 100% foreign investment capital retail companies under Vietnam’s commitments upon WTO accession. Besides, 2015 is year that ASEAN economic community (AEC) has officially been established, which allows the flows of resources, goods and human capital… to be freely moving in the area. Moreover, the TPP agreement with 12 participating countries that was signed in 2015. With this agreement, more than 10,000 kinds of goods from the member countries will be completely tariff eliminated. This will cause many difficulties and disadvantages for domestic goods but it is also the motivation for the production and distribution, enhance the competitiveness of enterprises in Vietnam.

According to the survey, the majority of retail brands that selected Vietnam in 2015 on par with Hong Kong, Singapore, even higher than Indonesia and Malaysia. Three big cities that are Hanoi, Ho Chi Minh City and Da Nang belong to the top 10 of the most vibrant retail markets in Asia – Pacific region due to its large and young population, after-tax income growth rapidly, quality retail networks that can attract multinational enterprises.

Vietnam currently has about 8,546 markets, 1 million small shops, 724 supermarkets, 132 trade centers and more than 400 convenience stores. Currently, the rural market with nearly 70% of the population but almost completely overlooked. As planned by 2020, Vietnam would grow up to 1,200 – 1,300 supermarket, 180 trade centers and 157 shopping centers. This suggests that the Vietnam retail market is very attractive for manufacturers, businesses and retailers to penetrate.

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FOREIGN EXPERTS FELT “BREATHE EASY” WHEN LIVING IN VIETNAM

Vietnam ranked 21st in the economic ranking, but ranked 5th when talking about the saving ability of foreign experts.

According to the survey from HSBC. Most of foreign experts believe that Vietnam had a more comfortable life with less spending on housing costs (62%), travel (73%), clothing (68%), goods and necessities (62%), essential services like electricity, water, telephone (70%) and bills (77%).

Thus, experts are likely to save more (68%) while living in Vietnam.

More than half of the foreign experts (62%) said that in Vietnam they can afford to hire a maid and nanny, something that they cannot afford while living at home country, and can enjoy the luxury vacation (52%), compared with only 28% and 36% of global experts.

The survey from HSBC also showed that Vietnam ranked 22nd in the ranking on experience, but 2nd in the ability to make friends. More than half of the foreign experts (56%) find that they integrate quickly into life and culture of Vietnam, and the majority of foreign experts find it easy to make new friends in Vietnam (68%).

Stabilize the life in Vietnam is relatively easy, with 36% of the experts feel like home once or within six months after moving to Vietnam. Most of foreign experts also enjoy integrated into in Vietnam (61%), enjoy and cook Vietnamese foods (78%).

Vietnam ranked 31st in the ranking about family. Almost half of the foreign experts (43%) said that the cost of child care in Vietnam is less expensive than at home country, and most of foreign experts (74%) send their children to the international School.

Vietnam is developing very fast and owns a dynamic business environment. This is an attractive destination for entrepreneurs seeking start-up opportunity and new business projects.

As an emerging market, Vietnam brings foreign experts many challenges and chances to develop career. With significant attractions in terms of tourism, culture and people, Vietnam also brings foreign experts wonderful experiences along with ease of integration and stabilizes the life in Vietnam.

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GOOD RISK MANAGEMENT FOR ENTERPRISE – THE KEY TO SUCCESS

Risk is an inevitable factor in business operation activities, higher return is always accompanied by higher risks. Coping and managing risk is an integral part of any business if you want to make profit and create value to shareholders. However, in fact, there are a lot of businesses does not manage risk effectively and furthermore not fully understand about the risks that they are facing.

Risk can be defined broadly as any factors or events could drive business and production activities of the enterprise below forecasted. Specifically, the measures that are commonly used as capital risk, profit risk or cash flow risk, depending on the emphasis that are accounting balance sheet and statement of cash flows.

According to the Vietnam Ministry of Industry and Trade, in recent times, there are many corporate scams between Vietnam and foreign enterprises. In particular, the main behaviors are foreign companies purchase/sell goods or provide services for partners in Vietnam and the Vietnam partner fail to make payment.

Typically, a director has scammed 3 billion VND of foreign companies and he was arrested. Although his company does not have pepper but he still receives nearly 350,000 USD of the Egyptian company, then appropriated half. According to the investigation, a few years ago, Vinamex Co., Ltd signed contract with a Libya company in Egypt to sell 4 black pepper containers with price of 669,600 USD even though the Vinamex Company do not have condition to implement the contract and also do not have goods.

To obtain the money of partners, the Director of Vinamex forging multinational bills of lading, certificate of plant quarantine and then send to Lybia Company. The Lybia Company then transfer to Vinamex a deposit amount of 348,300 USD. After that, Vinamex’s director withdraws all money to pay for his company’s debt.

After months have been urging, the Vinamex Company buy a container of black pepper worth 174,150 USD and then send to Lybia Company. The remaining amount equivalent to 3 billion VND was appropriated by the Vinamex’s director. The Lybia Company has adopted Vietnam embassy in Egypt to submit the denunciation.

In fact, many business leaders often put heavy emphasis on the business activity, profit, and revenues instead of concentrating more on risk management. Improving risk management process will create a tight and effective control of the Board of Directors, on the other hand will help integrate the risk management process into every daily decision-making process.

Businesses do not improve the risk management process will be faced with a lot of different types of risks: financial losses serious, adverse effects on cash flows and the value of shares, as declining prestige with customers, employees and investors.

Businesses that do not improve the risk management process will have to face with a lot of different types of risks: serious financial losses, adversely affecting cash flows and the value of shares, decreasing prestige with customers, employees and investors.

In the period of global crisis had been predicted that almost bottomed out and started to show signs of recovery, although the recovery process can occur with different speed and characteristics depending on sector and location of the business, the fully preparation of business in all aspects including process and risk management strategy could helps business not falling into the passive and also have more possibilities to take advantage of growth opportunities after the recession.

Read More

GOOD RISK MANAGEMENT FOR ENTERPRISE – THE KEY TO SUCCESS

Risk is an inevitable factor in business operation activities, higher return is always accompanied by higher risks. Coping and managing risk is an integral part of any business if you want to make profit and create value to shareholders. However, in fact, there are a lot of businesses does not manage risk effectively and furthermore not fully understand about the risks that they are facing.

Risk can be defined broadly as any factors or events could drive business and production activities of the enterprise below forecasted. Specifically, the measures that are commonly used as capital risk, profit risk or cash flow risk, depending on the emphasis that are accounting balance sheet and statement of cash flows.

According to the Vietnam Ministry of Industry and Trade, in recent times, there are many corporate scams between Vietnam and foreign enterprises. In particular, the main behaviors are foreign companies purchase/sell goods or provide services for partners in Vietnam and the Vietnam partner fail to make payment.

Typically, a director has scammed 3 billion VND of foreign companies and he was arrested. Although his company does not have pepper but he still receives nearly 350,000 USD of the Egyptian company, then appropriated half. According to the investigation, a few years ago, Vinamex Co., Ltd signed contract with a Libya company in Egypt to sell 4 black pepper containers with price of 669,600 USD even though the Vinamex Company do not have condition to implement the contract and also do not have goods.

To obtain the money of partners, the Director of Vinamex forging multinational bills of lading, certificate of plant quarantine and then send to Lybia Company. The Lybia Company then transfer to Vinamex a deposit amount of 348,300 USD. After that, Vinamex’s director withdraws all money to pay for his company’s debt.

After months have been urging, the Vinamex Company buy a container of black pepper worth 174,150 USD and then send to Lybia Company. The remaining amount equivalent to 3 billion VND was appropriated by the Vinamex’s director. The Lybia Company has adopted Vietnam embassy in Egypt to submit the denunciation.

In fact, many business leaders often put heavy emphasis on the business activity, profit, and revenues instead of concentrating more on risk management. Improving risk management process will create a tight and effective control of the Board of Directors, on the other hand will help integrate the risk management process into every daily decision-making process.

Businesses do not improve the risk management process will be faced with a lot of different types of risks: financial losses serious, adverse effects on cash flows and the value of shares, as declining prestige with customers, employees and investors.

Businesses that do not improve the risk management process will have to face with a lot of different types of risks: serious financial losses, adversely affecting cash flows and the value of shares, decreasing prestige with customers, employees and investors.

In the period of global crisis had been predicted that almost bottomed out and started to show signs of recovery, although the recovery process can occur with different speed and characteristics depending on sector and location of the business, the fully preparation of business in all aspects including process and risk management strategy could helps business not falling into the passive and also have more possibilities to take advantage of growth opportunities after the recession.

Read More

VIETNAM AND EUROPEAN UNION WILL ELIMINATE OVER 99% IMPORT TARIFFS ON EACH OTHER

At a press conference on October 30th in Vietnam informed of important agreements between Vietnam and European Union (EU), Mr. Bruno Angelet – Ambassador, Head of Delegation of the European Union (EU) said that early August 2015, the EU and Vietnam has announced the conclusion of negotiations but the negotiation group continues to resolve the remaining technical issues, while improving documents.

Once completed, the Agreement must be approved by the National Assembly of Vietnam, the Council and the European Parliament. Accordingly, Vietnam and the EU will eliminate over 99% of import tariffs.

For the few remaining tariffs, both parties will grant each other tariff quota or tariff reduction. This can be seen as the highest level of commitment that Vietnam has achieved in the FTA has been signed so far.

In the investment sector, the commitments to ensure an open business and investment environment to help promote high quality investment flows of both the EU and other partners in Vietnam. Thus, Vietnam has the opportunity to become the connection for trade and investment activities between EU and other countries in the region.

In addition, the commitments related to investment, liberalization of trade, service, Government procurement and intellectual property protection… will also open up opportunities for both sides to approach each other’s markets and ensure balance overall benefit.

EU can become the best partner in the future of Vietnam because Vietnam is also becoming one of the most dynamic countries and have good relationship with EU in the region. EU can support Vietnam in many fields such as governance models and provide excellent services in the field of infrastructure, training and education, the judiciary and law, health, social insurance and sustainable energy.

ANT Consulting is here to assist you from the outset; providing intelligence, information, management or support and administrative services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice
• Outsourcing Services

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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ITALIAN BUSINESS EXPAND INVESTMENT IN BINH DUONG

Ambassador of Italy in Vietnam and Binh Duong provincial leaders have attend the opening of the investment support office of Emilia Romagna (Italy) in Binh Duong.

This is the first representative office of the business community, investors of Emilia Romagna in Vietnam, which functions to create a bridge of cooperation between the two countries and promote Italian businesses to invest in Binh Duong.

On the same day in Binh Duong province, the ceremony to sign a memorandum of cooperation between Becamex IDC Corporation (under Binh Duong Provincial People’s Committee) with the Emilia Romagna region, Bonfiglioli Group and Unimore University (Italy). Content of the memorandum is to cooperate in economy, science, technology and education between the parties.

The Italian Embassy in Vietnam said Emilia Romagna is a dynamic economic region with many Italian famous enterprises in the field of manufacturing industry.

Through the opening of a representative office for the business community in the Binh Duong and signed a cooperation will open more opportunities, create the wave of investments by Italian enterprises to Vietnam in general and Binh Duong in particular.

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