Fashion
The sector has turned attractive due to the free trade pacts the country has reached, as part of WTO, according to a government report.
When Vietnam negotiated to join the WTO, it committed to let investors establish 100 per cent foreign-owned retail businesses from January 2015. In addition, the report attributed the increasing number of retail M&A deals to deeper integration of the country through the Trans-Pacific Partnership (TPP) and the ASEAN Economic Community (AEC), which will see tax exemption for thousands of commodities delivered into each member state.
“Systematic retail chains account for only 25 per cent of the total market share, while it is 33 per cent in the Philippines, 34 per cent in Thailand, 51 per cent in China, 60 per cent in Malaysia and as much as 90 per cent in Singapore,” the report cited.
The government expects that with the free flow of goods, human and capital resources within the region, Vietnam’s retail market will become more competitive.
It projects that the market share will touch 45 per cent by 2020, proving Vietnam to be fertile ground for retail investment.
Thai retailers are probably the most aggressive in building their presence in Vietnam. Central Group made a debut in 2015 with the acquisition of a 49 per cent stake in electronics stores Nguyen Kim, then later in the year, Berli Jucker, whose parent TCC Holding paid for Metro Cash&Carry in Vietnam, announced its keenness to acquire Big C supermarket operations of French player Groupe Casino. Other interested bidders are Singapore’s Dairy Farm and South Korea’s Lotte Shopping.
“Both of the two new potential investors are financially strong,” said the report, “Dairy Farm is the second largest retailer in Singapore and Hong Kong, owning popular brands of Cold Storage, Guardian, Wellcome Giant and Hero.” Its revenue hit $13 billion in 2014.
Meanwhile, Lotte Shopping is South Korea’s biggest retailer with $23 billion turnover in the same year.
According to the report, Japanese retailing firm AEON, which acquired local peers Fivimart and Citimart last year, is also keen on the deal.
This year might also be strategic for Japan’s 7-Eleven, as the chain is planning to open its first stores in Vietnam in April 2017.
“Not only foreign retail giants use M&A deals to enter the market, Vingroup has also, through the M&A route, forayed into the retail industry,” the report said.
The country’s largest homegrown retailer, Vingroup took over Vinatexmart and Maximark in 2015.
