Vietnam risks losing entire retail market to Thailand
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Industry insiders have warned that Vietnam is on the brink of losing its entire retail market to neighbor Thailand. Made-in-Thailand goods, from confectionery to luxury items, are making their largest-ever ‘invasion’ of the Vietnamese market, and many local firms are looking like being acquired by Thai investors.
Last month, Thailand’s TCC Holding Co. officially acquired Metro Cash & Carry Vietnam’s operations from Germany’s giant retailer Metro Group for an enterprise value of €655 million (US$712.14 million).
The business includes 19 wholesale stores and related real estate portfolios across Vietnam.
Another major Thai investor, Berli Jucker (BJC), is also is keen to buy the Big C Vietnam supermarket chain from its French operator, Casino Group.
The French company reportedly wanted to sell its Vietnam business after completing the transfer of its business in Thailand, Thai Big C, to home player TCC in a $3.5 billion deal earlier this month.
“If Big C Vietnam is sold to a Thai investor, it can then be said that the entire Vietnamese retail market is in Thailand’s hands,” said Vu Kim Hanh, chairwoman of the Business Association of High-Quality Vietnamese Goods.
In 2013, BJC acquired the Vietnamese convenience store chain from Japan’s Family Mart and renamed it B’s Mart.
Later that year, Family Mart teamed up with a new Vietnamese partner to keep the Family Mart chain running, not to be confused with the Thai-operated B’S Mart.
“A supermarket chain is the missing piece at a time when Thai companies are already running wholesale markets, convenience stores, and even traditional retail channels in Vietnam,” Hanh told us recently.
With multiple retail channels under their control, Thai investors can easily cut costs and increase competitiveness, and “it will be more difficult for Vietnamese goods to enter Thai-controlled retail outlets,” Hanh said.
In fact, Thai goods are currently dominating the B’s Mart chain in Vietnam following its acquisition from Family Mart, according to the director of a processed food company.
“There have been huge changes in the way these stores source products, with Thai candies, snacks and packaged food dominating shelves,” she told Tuoi Tre.
A real threat
Shelf space for Thai goods has also increased in other Thai-owned retail channels in Vietnam.
One executive from a Ho Chi Minh City-based frozen foods trading firm said they had stopped making private-label products for Metro late last year, even before the cash and carry business was sold to TCC.
“In 2013, BJC acquired the Vietnamese convenience store chain from Japan’s Family Mart and renamed it B’s Mart.”
Private-label goods are typically those manufactured or provided by one company sold under another company’s brand name.
“Several procedures have taken longer than usual since the Thais have controlled Metro,” she added.
“It took me six months to pull some products from their shelves, and requests to adjust prices also took a long time to be effected.”
Other Vietnamese businesses said the trading policies of Metro, under the new owner, have changed a lot.
“We are offered higher commissions, but sales have been much slower,” one company director said.
N.T.C., director of a fresh food producer, said Metro Cash & Carry Vietnam has a new marketing policy that openly favors Thai suppliers.
“Across product categories, only the Thai ones are subject to repeated promotional campaigns, which leave Vietnamese suppliers like us in shock,” he said.
The presence of Thai-made products has even increased in retail outlets not owned by the Thais, including South Korea’s Lotte Mart and Co.op Mart, which is Vietnam’s largest supermarket chain.
“Thai businesses are receiving huge support from the government, in terms of both policies and capital, in their ‘invasion campaign’,” said Vo Xuan Trung, director of IBP Co., a local distributor of Thai snacks.
While there used to be only one annual Thai goods fair in Ho Chi Minh City, the event has been held four times annually since 2014, Trung said.
“Having said that, we should acknowledge that most Thai products are of better quality and available at more attractive prices than their local competitors,” he said.
Tran Anh Tuan, general director of Pathfinder, a Ho Chi Minh City-based market consulting firm, said it was a real threat for Vietnam to lose its home market to Thai retailers.
“Once Thai retailers are in Vietnam, it is certain that they will try to increase the presence of their goods,” he said.
Tuan underlined that timely policies should be made before the second, bigger risk comes.
“Soon we will see not only our consumers rush to buy Thai goods, but also Vietnamese firms acquired by Thai investors,” he warned.
Questions & Answers
Q.What significant acquisitions have Thai investors recently made or are currently pursuing in the Vietnamese retail market?
What significant acquisitions have Thai investors recently made or are currently pursuing in the Vietnamese retail market?
TCC Holding Co. Acquired Metro Cash & Carry Vietnam's operations for €655 million. Also, Berli Jucker (BJC) is keen to buy the Big C Vietnam supermarket chain from its French operator, Casino Group, after its sale of Thai Big C.
Q.How has the ownership change at Metro Cash & Carry Vietnam reportedly impacted Vietnamese suppliers?
How has the ownership change at Metro Cash & Carry Vietnam reportedly impacted Vietnamese suppliers?
Vietnamese suppliers have experienced longer procedures for product adjustments and price requests. Some report being offered higher commissions but experiencing slower sales, and Metro's new marketing policy openly favours Thai suppliers with repeated promotional campaigns.
Q.What advantages do Thai investors gain by controlling multiple retail channels in Vietnam?
What advantages do Thai investors gain by controlling multiple retail channels in Vietnam?
With control over wholesale markets, convenience stores, and potentially supermarket chains, Thai investors can more easily cut costs and increase competitiveness. This also makes it harder for Vietnamese goods to enter Thai-controlled retail outlets.
Q.Are Thai-made products only becoming more prevalent in Thai-owned retail outlets within Vietnam?
Are Thai-made products only becoming more prevalent in Thai-owned retail outlets within Vietnam?
No, the presence of Thai-made products has also increased in retail outlets not owned by Thai companies, such as South Korea's Lotte Mart and Vietnam's largest supermarket chain, Co.op Mart.
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