SEIKO   IDEAS  CORPORATION  

 
 
 
 
 
 
 
 
 

 
[Type   the  document   title]    

TPP  and  Vietnam's  retail  market  

 
Research  &   Consulting  Department  
27/02/2015  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[The  paper  highlights  the  influences  of  Trans-­‐Pacific  Partnership  (TPP)  in  Vietnam's  retail  industry  as  well  as  
opportunities  for  competition;  and  recommend  the  trend  of  the  market  in  the  near  future.]  
  

     
Table  of  Contents  

Abbreviations ...................................................................................................................................... 2  

The TPP’s negotiations relating to retail ............................................................................................ 3  

The attraction of Vietnam's retail market ........................................................................................... 5  

Young population with high growth rate ...................................................................................... 6  

Quick urbanization ....................................................................................................................... 7  

Rising income and purchasing power ........................................................................................... 7  

Retail sales on upward trend ......................................................................................................... 8  

Improving consumer confidence .................................................................................................. 9  

How wide has Vietnam opened its retail market? ............................................................................ 10  

Competition pressure ........................................................................................................................ 13  

The trend to develop rural markets ................................................................................................... 19  

Contact Information.......................................................................................................................... 20  
 

 
Page  |  1    
 
  

Abbreviations  
 
 

AEC   ASEAN  Economics  Community  

AFTA   ASEAN  Free  Trade  Agreement  

AVR   Association  of  Vietnam  Retailers    

BTA   The  US  -­‐  Vietnam  Bilateral  Trade  Agreement  

CCI   Consumer  Confidence  Index  

ENT   Economics  Needs  Test  

FTA   Free  Trade  Agreement  

MoIT   The  Ministry  of  Industry  and  Trade  

TPP   Trans-­‐Pacific  Partnership  

WTO   World  Trade  Organization    

 
 

 
Page  |  2    
 
  

The  TPP’s  negotiations  relating  to  retail  

 

The   year   2015   will   be   a   challenging   year   for   Vietnam's   retail   industry.   Since   January   11,  
2015,   Vietnam   will   allow   establishment   of   100%   foreign   invested   enterprises   in   the   retail   industry,  
following  Vietnam's  commitments  under  WTO.  Besides,  the  year  2015  will  be  the  year  which  the  
ASEAN   Economics   Community   is   officially   valid,   permitting   flows   of   resources,   goods,   capital,  
human   resources,   etc   to   move   freely   and   smoothy   in   the   region.   Particularly,   more   than   10,000  
kinds  of  commodities  with  the  original  from  nation  members  will  be  free  from  tariff.    

Although  the  government  continues  to  exercise  control  over  retailing,  the  sector  has  been  
liberalised   under   the   conditions   of   Vietnam’s   membership   under   WTO   and   other   trade  
agreements.  Nevertheless,  any  given  change  in  the  regulations  and/or  policies  of  the  government  
with  regard  to  the  retail  sector  will  bring  both  opportunities  and  challenges  to  retailers.  

WTO  membership  

Foreign  investors  have  been  allowed  to  own  49%  of  capital  in  joint  ventures  since  2008.  In  
early  2009,  fully  foreign-­‐  owned  companies  could  also  be  established  and  were  allowed  to  operate  
in   the   market   independently,   leading   to   the   entrance   of   many   foreign   retail   outlets.   In   addition,  
under   the   WTO   agreement,   Vietnam   will   allow   foreign   retailers   to   set   up   businesses   with   100%  
foreign  capital  from  January  2015.  

With   their   rich   experience,   abundant   capital   and   structured   modern   operating   methods,  
international  retail  groups  have  gained  increasing  popularity  in  the  market  and  brought  on  intense  
competition  for  the  domestic  retailers,  pressuring  the  latter  to  modernise  in  order  to  contend  with  
the  new  players.  

Trans-­‐Pacific  Partnership  (TPP)  

Vietnam  is  currently  undergoing  negotiation  to  participate  in  the  Trans-­‐Pacific  Partnership  
(TPP).  Should  Vietnam  participate,  competition  between  domestic  and  foreign  retailers  will  likely  
take   place   on   a   more   equal   footing.   In   addition,   Vietnam   is   expected   to   experience   an   influx   of  
retailers   from   Japan,   South   Korea   and   Thailand.   Large   developers,   such   as   AEON   Mall,   Central  
Group,   and   CJ   Group,   have   expressed   great   interest,   gradually   expanding   their   presence   and  
announcing  long-­‐term  plans  for  the  market.  

Other  regional  Free  Trade  Agreements  (FTAs)  

Vietnam   has   participated   in   a   number   of   FTAs   such   as   the   ASEAN-­‐China   Free   Trade  

 
Page  |  3    
 
  

Agreement,   ASEAN-­‐Korea   Free   Trade   Agreement,   ASEAN-­‐Japan   Comprehensive   Economic  

Partners,   ASEAN-­‐   Australia-­‐New   Zealand   Free   Trade   Agreement,   and   Vietnam-­‐Japan   Economic  
Partner  Agreement,  which  may  impact  the  Vietnam  retail  market  due  to  tariff  commitments,  for  
example,   when   companies   are   allowed   to   take   advantage   of   lower   or   zero   tariff   rates.   This  
arrangement   allows   companies   to   manufacture   goods   in   Vietnam   and   export   them   to  
neighbouring  countries  where  manufacturing  costs  would  have  been  higher.  

Economic  Needs  Test  (ENT)  

Currently,  a  foreign  retailer  must  obtain  a  business  licence,  which  entitles  it  to  open  a  single  
retail   outlet.   Opening   additional   outlets   will   subject   it   to   the   ENT.   During   the   ENT   process,   the  
licencing   authority   will   examine   the   compatibility   of   the   project   with   the   population   density,  
number  of  retail  outlets  and  market  stability  in  the  district,  as  well  as  the  district’s  Master  Plan  and  
scale.  

However,   as   of   June   2013,   a   change   via   Circular   08/2013/TT-­‐BCT   provided   an   ENT  

exemption  for  foreign  investors  looking  to  establish  additional  retail  outlets  of  500  square  metres  
or  less  in  an  approved  area  and  completed  infrastructure.  Whilst  foreign  investors  are  still  required  
to   obtain   a   business   licence   for   additional   retail   outlets,   the   latest   Circular   provides   a   great  
improvement  in  the  process  and  is  a  significant  development  in  attracting  foreign  investors.  

 
Page  |  4    
 
  

The  attraction  of  Vietnam's  retail  market    

Vietnam’s  retail  market  is  characterised  as  being  one  of  the  most  dynamic  markets  in  the  
region   with   high   annual   growth   rates.   Hanoi   and   HCMC   have   been   ranked   amongst   the   top   10  
Asian  cities  for  retail  expansion  in  2014.    

In   Vietnam,   there   are   about   700   supermarkets   and   shopping   centers.   40%   of   these   are  
foreign  retailers.  Out  of  125  shopping  centers,  there  are  31  ones  of  FDI  sector,  accounting  for  25%.  
According  to  the  Ministry  of  Industry  and  Trade,  by  2020,  Vietnam  will  have  about  1,200  -­‐  1,300  
supermarkets,  180  department  stores  and  157  shopping  centers.    

Additiona
Number   of  
convenien
l  quantity  
ce   stores  

Now  
&  by  
2020

According   to   the   Association   of   Vietnam   Retailers   (AVR),   till   the   end   of   2013,   retailing  
contributes   15%   to   Vietnam   GDP.   In   the   first   quarter   of   2014,   revenues   of   retailing   rose   5.1%  
compared  to  the  same  period  last  year,  equivalent  to  VND701  billion.    

Modern'Trade'in'some'countries'in'Asia'
100%$
90%$

80%$

60%$
60%$
51%$

40%$ 33%$ 34%$

25%$

20%$

0%$
Vietnam$ Philippines$ Thailand$ China$ Malaysia$ Singapore$
 

 
Page  |  5    
 
  

Modern   retailing,   including   supermarkets   and   department   stores,   currently   accounts   for  
25%.  This  rate,  however,  is  still  lower  than  those  of  other  countries  in  the  region.  Especially,  almost  
all  of  segmentations  of  the  Vietnamese  modern  retailing  have  presence  of  foreign  firms.    

    Recent  major  entrants,  expansions  and  potential  entrants  

  New  entrants   Expansions   Potential  entrants  
Shopping  centers   Aeon   Big  C   Carrefour  
SC  Vivo  City   Citimart   Tesco  Lotus  
Takashimaya   Co.opmart   Walmart  
Fivimart  
Lotte  Mart  
Maximark  
Retailers   Banana  Republic   Baskin  Robins   Auchan  
Central  Group   Mango   7-­‐Eleven  
Christian  Dior   Parkson  
Ermenegildo  Zegna  
Hermes  
Payless  ShoeSource  
Springfield  
Topshop  

Young  population  with  high  growth  rate    

  With   population   of   approximately   90   millions   and   70%   of   these   being   young   consumers,  
Vietnam  has  been  regarded  as  the  target  market  for  investors  in  the  retail  sector.  

Vietnam's  total  population  and  growth  rate  in  2008  -­‐  2017F  
110.0   1.1   1.1   1.1   1.1   1.1   1.2  

1.0   1.0   1.0  

0.9   0.9   1.0  

100.0   0.8  

93.2   0.6  
92.3  
91.3  
90.5  
89.7  
90.0   88.8   0.4  
87.8  
86.9  
86.0  
85.1  
0.2  

80.0   0.0  
2008   2009   2010   2011   2012   2013   2014   2015F   2016F   2017F  

Population  (million)    Growth  rate  (%)  

 
 

 
Page  |  6    
 
  

Vietnam's  demographic  breakdown  

100%  

80%  

60%   68.7   69.4   70.0   70.4   70.6   70.7   70.8   70.8   70.8   70.7  

40%  

20%  

0%  
2008   2009   2010   2011   2012   2013   2014   2015F   2016F   2017F  

0-­‐14  years   15-­‐64  years   65  years  &  above  

 
Quick  urbanization  
  In   2014,   33.1%   of   Vietnam’s   population   was   concentrated   in   cities,   representing   an  
increase  of  approximately  6.7  million  since  2008.  With  increasing  urbanisation,  the  modern  retailer  
will  soon  have  greater  opportunities  to  extend  its  reach  into  previously  untapped  markets.  

Urbanization  level  in  Vietnam    

50.0%  

40.0%  

32.6%   32.2%   33.1%  

29.9%   30.9%  
29.4%  
27.9%  
30.0%  

20.0%  

10.0%  

0.0%  
2008   2009   2010   2011   2012   2013   2014  
 
Rising  income  and  purchasing  power  
  Disposable   income   in   Vietnam   has   increased   significantly   in   the   last   decade,   and   is  
expected   to   keep   growing.   Vietnam   has   evolved   into   a   middle-­‐income   country   with   a   total  

 
Page  |  7    
 
  

personal  disposable  income  of  US$127  billion  and  total  consumer  expenditures  of  US$111  billion  in  
2013.   This   increase   in   income   will   likely   lead   to   a   subsequent   rise   in   purchasing   power   and   growth  
in  consumer  retail  spending.  

Vietnam's  total  personal  disposable  income  and  total  

household  consumption  in  2008  -­‐  2017F  
200   187  

168   169  
154   153  
150   138   137  
127   124  
USD  billion  

110   111  
100  
95  
100   83  
89  
74   70   75  
70   70  

50  

0  
2008   2009   2010   2011   2012   2013   2014   2015F   2016F   2017F  

Total  personal  disposable  income   Total  consumer  expenditure  

 
Retail  sales  on  upward  trend    
  Over   the   last   few   years,   Vietnam’s   retail   sector   has   also   witnessed   healthy   growth   rates,  
with  retail  sales  growing  by  60%  from  2009-­‐2013,  and  forecasted  to  reach  US$109  billion  in  2017.  

Vietnam's  retail  sales  in  2008  -­‐  2017F  

120  

100  
USD  billion  

80  

60  

40  

20  
2008   2009   2010   2011   2012   2013   2014   2015F   2016F   2017F  
 

 
Page  |  8    
 
  

Improving  consumer  confidence  

  Vietnam’s   Consumer   Confidence   Index   (CCI)   improved   gradually   after   the   recession,  
reaching  98  points  in  the  fourth  quarter  of  2013  –  its  highest  level  in  the  last  two  years.  For  the  
first   two   quarters   of   2014,   Vietnam’s   CCI   remained   well   above   the   average   global   consumer  
confidence  level,  despite  dropping  one  point  in  Q2  2014  from  Q1  2014.  Relative  to  neighbouring  
countries,   Vietnam   recorded   an   index   rise   in   the   last   two   quarters   of   2013,   second   only   to  
Indonesia,  while  other  regional  peers  experienced  a  reduction  over  the  same  period.  

Comparison  of  Vietnam's  CCI  with  neiboring  countries  

130  

120  

Indonesia  

110   Malaysia  

Philippines  

98   99   98   Singapore  
100   96   97  
95   Thailand  

Vietnam  
90  

80  
Q1-­‐2013   Q2-­‐2013   Q3-­‐2013   Q4-­‐2013   Q1-­‐2014   Q2-­‐2014  
 

  Despite  the  positive  outlook,  Vietnamese  consumers  remain  prudent  with  their  spending.  
85%   of   consumers   have   changed   their   spending   habits   to   save   on   household   expenses.   In  
particular,  spending  on  new  clothes  and  entertainment  outside  the  home  are  the  first  items  to  be  
foregone,  followed  by  more  careful  use  of  gas  and  electricity.    

 
Page  |  9    
 
  

How  wide  has  Vietnam  opened  its  retail  market?  

If   distribution   service   market   in   Vietnam   is   the   particularly   attractive   market   to   foreign  
investors,   retailing   service   has   been   considered   to   be   one   of   the   most   tempting   parts   with  
remarkable  growth  rate  even  in  the  most  difficult  periods  of  the  economy.    

Therefore,  it's  not  surprising  when  distribution  service  in  general  and  retailing  in  particular  
is  the  field  attracting  partners'  most  requirements  in  negotiating  and  implementing  international  
trade  commitments  of  Vietnam.  Admittedly,  Vietnam  has  a  pretty  open  viewpoint  to  approach  this  
issue.    

This   has   been   regarded   as   the   characteristic   throughout   almost   all   of   Vietnam's  
commitments  to  open  distribution  and  retailing  channels  in  Vietnam  so  far.  

The  very  first  commitment  of  Vietnam  to  open  retailing  market  is  the  US  -­‐  Vietnam  Bilateral  
Trade   Agreement   (BTA)   in   2001.   The   degree   of   opening   market   was   as   wide   as   its   recent  
commitments.   However,   the   influence   of   BTA   was   actually   not   very   large.   This   might   be   attributed  
to   the   limited   partner,   only   the   US   meanwhile   the   US   retailers   hardly   paid   any   attention   to  
Vietnam  at  that  time.  

Up   to   now,   major   commitments   to   open   market   in   the   field   of   distribution   have   been   ones  
to   join   WTO   in   2004   with   four   key   points   which   demonstrated   Vietnam's   open   way   to   approach   in  
this  field.    

Firstly,   from   the   perspective   of   the   sub-­‐sector   commitments,   Vietnam   has   committed   to  
open   market   for   foreign   suppliers   in   almost   every   sub-­‐sector   of   distribution   services   of   WTO,  
including  commission  agents,  wholesales,  retailers,  multi-­‐level  sellers,  franchising.    

In   deed,   this   was   a   strong   commitment   because   the   rule   for   negotiating   to   open   service  
market   in   WTO   was   "positive   list"   approach   which   meant   that   nations   were   able   to   pick   a   number  
of  service  fields  to  open  market.  The  other  fields  without  any  commitments  were  optional  to  open.  
Vietnam   seemed   to   be   very   cautious   in   opening   service   market   with   commitments   in   only   110   out  
of  155  sub-­‐sectors  under  the  service  sector  in  WTO.    

Secondly,   regarding   the   degree   of   opening   market,   the   progress   to   open   market   applied   to  
foreign  retailers  were  quite  short  compared  to  other  sub-­‐sectors.  In  details,  Vietnam  committed  to  
allow   foreign   investors   in   take   part   in   distribution   activities   in   Vietnam   after   Vietnam's  
participation   in   WTO   in   January   11,   2007.   The   activities   were   under   the   form   of   joint   venture   with  
Vietnamese   partners.   The   capital   ratio   of   foreign   investors   in   these   kinds   of   joint   venture   was  

 
Page  |  10    
 
  

compulsorily  under  49%.  Since  January  1,  2008,  foreign  investors  were  allowed  to  perform  under  
the   form   of   joint   venture   without   any   limits   of   capital   ratio   as   well   as   to   set   up   100%   foreign  
invested  companies  in  the  retail  sector  since  January  1,  2009.    

Within   less   than   3   years   since   participation   in   WTO,   Vietnam   fully   opened   retail   market.  
This   schedule   was   considered   to   be   rather   short   compared   to   the   five-­‐year   schedule   of   delivery  
service,   stock   service,   transport   service,   etc   and   even   shorter   than   other   services   without   any  
commitments   about   the   time   to   open   market   such   as   basic   telecommunication   service,   audio-­‐
visual  service,  movies,  tourism,  etc.    

In  fact,  it's  not  until  2009  that  Vietnam  accepted  to  open  retail  market  for  foreign  suppliers.  
Vietnam's  commitments  in  WTO  was  even  considered  to  be  pretty  "close"  compared  to  previous  
ones  when  Vietnam  issued  licenses  for  big  international  retail  groups  to  invest  into  Vietnam  long  
before  taking  part  in  WTO  such  as  Casino  (France)  with  the  brand  Big  C  in  1990  under  the  form  of  
joint  venture,  Metro  Cash  &  Carry  (Germany)  in  2002  under  the  form  of  100%  foreign  investment.    

Thirdly,   as   for   the   scope   of   performance,   a   condition   that   Vietnam   made   in   the  
commitments  to  open  market  under  WTO  was  that  foreign  retailers  were  only  allowed  to  provide  
retail   service   through   setting   up   retail   outlets   (such   as   stores,   supermarkets,   etc)   and   to   open   only  
one   retailing   location   automatically   (without   any   conditions).   Except   the   first   outlet,   setting   up  
other  retail  outlets  must  be  licensed  by  authorised  agencies  based  on  the  ENT  rule.  

Actually,  ENT  in  the  retail  sector  is  a  kind  of  technical  barrier  which  nations  had  to  accept  
for  Vietnam  to  fully  open  its  retail  market.  ENT  was  designed  as  a  tool  allowing  Vietnam  to  control  
the  quantity  of  retail  outlets  of  a  foreign  retailer  in  Vietnam  and  the  limit  to  this  quatity  depended  
on  the  economic  need  in  specific  situations.    

Of   course,   Vietnam   couldn't   use   ENT   arbitrarily.   However,   if   Vietnam   know   how   to   use   it  
effectively,   ENT   can   be   an   important   "stop"   of   Vietnam   in   controlling   foreign   suppliers   in   the  
domestic   market,   especially   when   the   market   were   already   fully   open.   It's   not   surprising   when  
foreign  retailers  usually  complained  about  Vietnam's  using  ENT.  However,  there've  been  no  legal  
cases   affirming   that   Vietnam   abuses   ENT   and/or   violates   WTO.   According   some   retailers,   some  
provinces  even  seemed  to  be  rather  "easy"  in  applying  ENT,  causing  the  fact  that  foreign  retailers  
dominate  every  locations  and  "buffet"  local  retailers.    

Fourthly,  from  the  perspective  of  products  that  foreign  suppliers  were  allowed  to  provide,  
under   WTO,   Vietnam   committed   to   open   market   for   distribution   service   of   made-­‐in-­‐Vietnam  
products  and  legally  imported  products  since  January  11,  2007,  except  some  commodities   such   as  

 
Page  |  11    
 
  

cement,  paper  and  fertilizer  which  gradually  opened  until  2010.    

However,  Vietnam  completely  removed  from  the  list  07  commodities,  including  cigarettes  
and  cigars;  books,  newspapers  and  magazines;  precious  metals;  pharmaceuticals;  explosives;  crude  
and  processed  oil;  rice,  sugar  cane  and  sugar  beet.    

Relating  to  this  issue,  Vietnam  also  committed  not  to  limit  the  sources  of  goods  provided  by  
foreign   retailers.   Therefore,   they   can   make   their   own   decisions   of   products   provided   in   their   retail  
locations.    

Beside   WTO,   Vietnam   also   had   commitments   under   the   scenario   of   other   regional   free  
trade   agreements   (FTAs)   and   bilateral   FTAs   such   as   AFTA   with   ASEAN   countries,   FTAs   among  
ASEAN  and  China,  South  Korea,  India,  Australia  -­‐  New  Zealand,  FTA  between  Vietnam  and  Japan,  
FTA   between   Vietnam   and   Chile.   However,   the   main   contents   of   these   FTAs   were   in   commodity  
trade   and   there   were   rarely   any   new   points   in   services.   Therefore,   these   FTAs   hardly   had   any  
impacts  on  retail  sector.  This  is  even  true  for  establishing  ASEAN  Economic  Community  in  2015.    

Finally,  Vietnam  has  currently  been  in  negotiating  process  of  06  FTAs,  including  ones  with  
partners  who  are  particularly  strong  in  retail  such  as  the  US,  Canada  (under  TPP)  and  EU  (under  the  
FTA   between   Vietnam   and   EU).   However,   as   mentioned   above,   the   commitments   to   open  
Vietnamese  retail  market  under  WTO  have  been  wide,  almost  fully  open.  Therefore,  although  FTAs  
in   the   process   of   negotiation   are   forecast   to   have   high   levels   of   liberalization   in   services,  
commitments  to  open  retail  market  will  have  very  little  changes,  even  in  TPP  with  "negative  list"  
approach.    

To  sum  up,  Vietnam  has  committed  to  almost  fully  open  retail  market  for  foreign  suppliers.  
Vietnam  is  not  the  first  case  in  the  world  which  witnesses  the  domination  of  foreign  retailers  in  the  
domestical  market.  The  point  is  that  what  Vietnam  has  learnt  from  other  countries  in  intensifying  
its   competitive   capacity   in   the   retail   sector   as   well   as   in   using   legal   tools   like   ENT   to   protect  
consumers'  benefits  and  local  suppliers'  rights  and  the  existance  of  traditional  trade.    

 
Page  |  12    
 
  

Competition  pressure          
From  familiar  names  such  as  Lotte  and  Berli  Jucker  to  rookies  in  Vietnam  like  Aeon,  Central  
Group  and  Vingroup,  the  year  2014  witnessed  exciting  changes  in  the  retail  market.  
 
New  entrants   Expansions   Potential  entrants  

Shopping  centers   Aeon   Big  C   Carrefour  

SC  Vivo  City   Citimart   Tesco  Lotus  
Takashimaya   Co.opmart   Walmart  
Fivimart  
Lotte  Mart  
Maximark  

Retailers   Banana  Republic   Baskin  Robins   Auchan  

Central  Group   Mango   7-­‐Eleven  
Christian  Dior   Parkson  
Ermenegildo  Zegna  
Hermes  
Payless  ShoeSource  
Springfield  
Topshop  

    Recent  major  entrants,  expansions  and  potential  entrants  

With  a  population  of  over  90  million  and  the  majority  of  them  working  age,  Vietnam  has  
become   an   attractive   investment   location   for   the   retail   -­‐   distribution   sector.   The   door   for   the  
ASEAN   market   is   expected   to   open   wider   in   2015,   with   many   products   enjoying   an   import   tax   rate  
of   0%.   This   has   encouraged   foreign   investors   to   pour   money   into   Vietnam   to   catch   the  
opportunity.  Here  are  five  giants  in  the  retail  sector  which  joined  the  race  last  year.  

Aeon  (Japan)  

Founded   over   250   years   ago   as   a   shop   providing   materials   and   accessories   for   making  
kimonos,  Aeon  has  now  become  a  global  retail  giant,  appearing  in  14  countries  with  revenues  of  
nearly  $60  billion  in  2013.  

Aeon   began   operations   in   Vietnam   in   2009   in   the   form   of   a   representative   office   and   it  
became  a  company  in  2011,  with  registered  capital  investment  of  nearly  $205  million.  This  was  the  
first  step  for  Aeon  to  develop  its  activities  in  the  field  of  retail  in  Vietnam.  

In  early  2014,  the  company  opened  its  first  commercial  center  in  Vietnam,  located  in  Tan  
Phu  District  (HCM  City)  and  the  second  center  in  Binh  Duong  province  at  the  end  of  the  year.  

 
Page  |  13    
 
  

The   goal   of   Aeon   is   to   open   20   shopping   centers   and   supermarkets   across   Vietnam   and  
nearly  16,500  centers  across  the  globe  by  2020.  

Berli  Jucker  (Thailand)  

2014   was   a   busy   time   for   Thailand’s   third   richest   billionaire   -­‐   Mr.   Charoen  
Sirivadhanabhakdi.  After  acquiring  the  retail  chain  Family  Mart  (renamed  B's  Mart)  in  Vietnam,  in  
mid-­‐2014,   his   company   Berli   Jucker   shocked   the   market   when   it   acquired   Metro   Cash   &   Carry  
Vietnam  from  the  German  owners.  

Metro  Cash  &  Carry  Vietnam  (MCC  Vietnam)  consists  of  19  distribution  centers  and  related  
real  estate  portfolio,  acquired  for  Eur$655  million.  

After   the   deal,   Berli   Jucker   planned   to   increase   the   presence   of   Thai   products   in   these  
supermarkets.   Ms.   Metinee   Issarajinda,   assistant   to   BJC   Vice   President   in   charge   of   investment  
relations,  said  BJC  would  send  10  experts  to  Vietnam  to  help  adjust  goods  restructuring.  Also,  Berli  
Jucker  plans  to  open  205  convenience  stores  branded  B's  Mart  in  the  next  four  years.  

In   Thailand,   the   company   has   a   market   capitalization   on   the   stock   market   at   about   $2.8  
billion.  It  has  six  offices  in  Southeast  Asia  with  a  total  turnover  in  2013  of  about  $1.3  billion.  

Besides   expanding   the   distribution   system,   Charoen   Sirivadhanabhakdi   is   considering   to  

penetrate   the   beer   market   in   Vietnam,   which   is   the   potential   for   double-­‐digit   growth.   Thai  
Beverage   -­‐   a   subsidiary   of   this   billionaire   –   has   proposed   to   purchase   shares   of   SABECO   –  
Vietnam’s  largest  brewer.  ThaiBev  currently  owns  two  brands  Chang  Beer  and  Oishi  green  tea  in  
Thailand.  This  company  evaluates  SABECO  for  $2  billion.  

Central  Group  (Thailand)  

In   2014,   the   Central   Group   of   Thailand's   richest   family   Chirathivat   opened   the   Robins  
shopping  centers  in  Hanoi  and  Ho  Chi  Minh  City.  

Each   center   has   a   total   area   of   10,000   m2,   with   the   participation   of   200   suppliers   and  
10,000  groups  of  goods  from  household  to  fashion  products,  with  investment  capital  of  millions  of  
US  dollars.  

Central   Group   said   that   its   investment   in   the   two   shopping   centers   in   Vietnam   is   part   of   its  
plan  to  dominate  other  markets  in  Southeast  Asia.  A  budget  of  15  billion  baht  (about  $460  million)  
has  been  approved  to  open  shopping  centers  in  Indonesia,  Vietnam  and  Malaysia.  

 
Page  |  14    
 
  

Robins   is   the   first   retail   project   in   Vietnam   of   the   Central   Group.   The   stores   branded  
Supersports,   Crocs   and   New   Balance   are   present   in   Vietnam   through   the   distribution   system   of  
Central  Group’s  subsidiaries  and  franchises  of  Vietnamese  partners.  

Lotte  (South  Korea)  

Although  it  entered  Vietnam  in  2008,  in  the  first  five  years  Lotte  supermarkets  (Lotte  Mart)  
appeared   only   in   the   southern   provinces.   In   2014,   the   Korean   retail   giant   marched   to   Hanoi   to  
open  its  first  mall  on  an  area  of  20,000  m2  and  the  Lotte  Center  Hanoi,  the  second  highest  building  
in  the  city,  with  the  total  area  of  253,000  m2.  

Lotte  Mart  currently  has  10  department  stores  in  Vietnam.  It  aims  to  have  about  60  stores  
spread  throughout  the  provinces  of  Vietnam  by  2020.  

Lotte  is  the  5th  largest  group  of  South  Korea,  starting  from  a  confectionery  company  nearly  
50   years   ago.   Lotte   has   expanded   to   many   areas   such   as   distribution,   food,   petrochemical,  
construction,  entertainment,  and  tourism.  Lotte  Shopping  plays  a  crucial  role  and  runs  all  types  of  
business  in  the  distribution  sector,  including  commercial  centers,  supermarkets,  and  convenience  
shops  with  annual  sales  of  approximately  $14  billion,  accounting  for  35%  of  the  total  revenue  of  
the  group.  

In   Vietnam,   Lotte   has   60   Lotteria   stores,   10   Lotte   Mart   supermarkets,   a   confectionery  

factory  in  Binh  Duong,  a  5-­‐star  hotel  in  Ho  Chi  Minh  City  and  a  shopping  center  in  Hanoi.  

Auchan  (France)  

In  May  2013,  Auchan  announced  that  it  will  invest  US$500  million  in  Vietnam  over  the  next  
decade.      

Marks  &  Spencer  (UK)    

In   September   2014,   Marks   &   Spencer   opened   its   first   outlet   in   Ho   Chi   Minh   City.   It   plans   to  
open  20  stores  in  the  next  five  to  six  years.  

NTUC  Fairprice  (Singapore)    

Singapore’s   Fairprice   and   Vietnam’s   Saigon   Co.op   opened   their   first   joint   venture   store,  
Co.opXtra  Plus,  in  Thu  Duc  District,  half  an  hour  from  downtown  Ho  Chi  Minh  City,  in  May  2013.    

Parkson  (Malaysia)    

 
Page  |  15    
 
  

Parkson   plans   to   open   one   to   two   more   shopping   malls   a   year,   subject   to   the   market  
performance  and  the  retail  real  estate  outlook.  

E-­‐mart  (South  Korea)    

South   Korea’s   largest   retailer   is   expected   to   officially   enter   the   Vietnam   market   in   2015,  
and  is  likely  to  opt  for  a  joint  venture  agreement.  

Saigon  Co.opmart  

HCM  City-­‐owned  retailer  Sai  Gon  Co-­‐opMart  plans  to  hold  on  to  its  position  as  the  country’s  
premier  supermarket  chain  despite  the  fierce  competition  it  expects  in  the  future  including  from  
foreign   retailers.   Speaking   at   a   function   to   mark   the   10th   anniversary   of   its   establishment,   general  
director  Nguyen  Ngoc  Hoa  said  to  achieve  the  goal  it  had  mapped  out  a  fast-­‐growth  strategy  for  
the  next  decade.  

It   included   expanding   the   network   to   over   100   outlets   across   the   country   against   the  
current  14,  Hoa  said.  The  focus  would  be  on  the  central  coast  and  Central  Highlands  though  HCM  
City  would  remain  its  primary  market.  

Existing   outlets   would   also   be   upgraded   to   ensure   all   of   them   had   a   floor   area   of   500   to  
1,000sq.m  by  2015.  Hoa  admitted  the  domestic  retail  sector  was  less  competitive  than  its  foreign  
counterpart  and  listed  poor  distribution  networks,  substandard  equipment,  and  poor  management  
as   the   main   reasons.   He   also   admitted   Co-­‐opMart   had   the   same   shortcomings.   But   the   co-­‐
operative  planned  to  improve  its  distribution  network,  business  strategies,  and  quality  of  service,  
he   said.   It   would   earmark   a   big   budget   to   build   its   brand   name   and   enhance   its   prestige,   and  
develop  its  human  resources  by  focusing  on  its  staff’s  education  and  professional  skills.  

Deputy   general   director   Nguyen   Thi   Tranh   said   the   entry   of   major   overseas   retailers   into  
Viet   Nam   would   create   fierce   competition   in   the   market   but   also   opportunities   for   domestic  
retailers  to  access  new  equipment  and  technology  and  learn  business  strategies.  

Sai   Gon   Co-­‐op   would   be   ready   to   take   on   foreign   rivals   by   turning   into   an   international  
standard   retailer   but   would   remain   a   co-­‐operative   in   line   with   Government   policy,   Tranh   said.   It  
would   expand   its   network   by   tying   up   with   province-­‐based   co-­‐operatives   to   either   open   new  
outlets  or  franchises,  she  said.  

With  its  motto  of  "a  friend  of  every  family",  Sai  Gon  Co-­‐op  operated  14  outlets  in  almost  all  
major   cities   and   provinces   across   the   country   and   achieved   all-­‐round   growth   to   become   the  

 
Page  |  16    
 
  

biggest  distributor  in  Viet  Nam,  Hoa  said.  

In  2005  its  total  turnover  was  VND2,081  billion  (US$131  million),  or  77  times  its  turnover  in  
its   inaugural   year.   "Its   inventory   was   10   times   the   1996   figure   and   average   custom,   at   54,600   a  
day,   38   times,"   he   said.   It   employs   nearly   3,000   people,   most   of   whom   receive   professional  
training.   The   chain   owes   most   of   its   success   to   its   strategy   of   focusing   on   medium-­‐income   earners  
while  distributing  products  acknowledged  as  high-­‐quality  Vietnamese  goods.  

It  has  itself  acquired  ISO  9001:  2000  certification  and  generally  does  business  with  suppliers  
who   have   the   same   or   equivalent   quality   certification.   The   focus   on   quality   has   seen   this   retail  
chain  cope  with  competition,  including  from  the  foreign  chains  that  have  flooded  into  the  southern  
hub,  and  account  for  over  50%  of  the  city  market.  

Also   at   the   anniverary   function,   Sai   Gon   Co-­‐op’s   Executive   Council   chairwoman   Nguyen   Thi  
Nghia  was  conferred  the  Labour  Hero  award  by  the  State  in  recognition  of  her  great  contribution  
to  establishing  and  developing  the  country’s  first  and  biggest  suppermarket  chain.    

Citimart  and  Fivimart    

Southern   Citimart   and   Northern   Fivimart   chose   to   associate   with   Aeon.   As   for   Citimart,  
Citimart’s   30   supermarkets   were   renamed   as   Aeon-­‐Citimart.   In   return,   Citimart   would   have  
Japanese   goods   on   their   shelves.   More   importantly,   Citimart   would   have   chance   to   learn   more  
about  a  multinational  group’s  management  style.  

Vingroup  (Vietnam)  

Starting   as   a   real   estate   corporation   with   hundreds   of   thousands   of   square   meters   of  

commercial   centers   as   well   as   high-­‐end   apartments   in   Vietnam’s   biggest   cities,   Vingroup   has  
advantages  to  become  a  big  retailer.  In  2013,  the  group  opened  a  store  chain  for  children  and  a  
company  specializing  in  e-­‐commerce.  

In  late  2014,  Vingroup  officially  entered  the  market,  not  through  its  own  investments  but  
via   the   acquisition   of   the   Ocean   Mall   commercial   centers   and   Ocean   Mart   supermarkets   of   the  
Ocean  Group.  The  retailing  brands  of  Vinmart  and  Vinmart  +  are  also  used  for  its  retail  distribution  
network.  

Initially,  Vinmart  restructured  the  existing  13  Ocean  Mart  stores  across  the  country,  with  a  
total  area  of  40,000  m2.  In  the  next  three  years,  the  group  plans  to  expand  to  100  stores  and  1,000  
convenience  stores  across  Vietnam  through  new  investments  or  M&A  deals.  

 
Page  |  17    
 
  

In  the  last  days  of  2014,  Vinmart  marked  its  expansion  by  claiming  back  10,000  m2  of  the  
79   supermarkets,   which   belonged   to   Alphanam.   Vingroup   supermarkets   will   continue   to   expand  
into  many  highly  populated  areas  in  the  country.  

 
Page  |  18    
 
  

The  trend  to  develop  rural  markets            

In   the   context   of   fierce   competition   in   the   domestical   retail   market,   the   trend   in   the   future  
is  a  big  question  to  every  local  enterprise.    

Now  a  number  of  local  enterprises  tend  to  strengthen  and  develop  their  market  shares  in  
rural  areas.  Businesses  in  urban  areas  have  always  been  the  major  strategies  for  development  of  
enterprises.   However,   when   local   players   have   to   cope   with   cut-­‐throat   competition   and   saturation  
of  this  market,  investment  into  developing  rural  markets  will  be  proper.    

Mai   Thi   Tuyet   Hoa,   Quantitive   Research   Director   of   AC   Nielsen,   said   that   "in   my   opinion,  
rural   markets   are   potential   for   retailers,   even   may   have   bigger   influence   in   retailers   than   urban  
markets.  Recently,  a  number  of  retailers  such  as  Unilever,  P&G  have  come  to  my  company  to  ask  
about  characteristics  of  rural  markets  and  relevant  strategies  of  these  markets".    

According  to  a  research  by  AC  Nielsen,  consumers  in  rural  areas  are  easily  affected  much  by  
retailers'   introduction   and   advertisement.   On   the   other   hand,   retailers   here   tend   to   give  
consumers   introduction   and   advices,   accounting   for   90%.   There   are   approximately   477,000  
medium  and  big  stores  in  Vietnamese  rural  markets.  If  each  day  there  are  64  customers  coming  to  
a   store   on   average,   there   will   have   27.5   million   people   who   might   buy   based   on   advices   by  
retailers.   "This   figure   has   surprises   a   lot   of   enterprises,   leading   to   changes   in   their   strategies",   said  
Mai.    

Witnessing  the  trend  to  invest  and  develop  in  rural  markets,  Dinh  Thi  My  Loan,  chairwoman  
of   the   Association   of   Vietnam   Retailers   (AVR),   shared   the   same   opinion   that   rural   markets   were  
very  potential.  However,  in  order  to  compete  with  foreign  enterprises,  local  retailers  not  only  need  
to  expand  their  market  share  but  also  have  to  assure  goods  qualities  and  win  consumers'  loyalty.    

With  incidents  relating  to  products'  qualities  of  some  local  retailers,  consumers'  trust  has  
been   affected.   "The   quantity   of   products   on   the   market   is   huge,   thus   incidents   are   unavoidable.  
However,  the  point  is  retailers  must  draw  lessons  after  those.  We  hope  that  consumers  won't  lose  
trust  in  domestical  retail  system  due  to  those  incidents",  said  Loan.    

   

 
Page  |  19    
 
  

Contact   Information  
 
SEIKO   IDEAS  -­‐   9th   Anniversary  
Research  &  Consulting  Department  
 
Our  services   Training  (Languages  &  Soft  skills)  
Investment  Consulting    

Market  Research  –  Business  

Matching  
Translation  –  Interpretation  
 
Our  clients   Terumo,  FPT, Crossindex,  Toshiba,  
Showadenko,   Hello-­‐G,  AOTS,  Chiba  
Prefecture  
 
th  
Address   Floor  5 –  A  Chau  Building  

No.24  Linh  Lang  Str.,  Ba  D inh  Dist.,  H anoi,  Vietnam  

Telephone   +84-­‐4-­‐6275-­‐5246     ;   +84-­‐4-­‐6273-­‐6989  

Fax   +84-­‐4-­‐6273-­‐6988  
 
Email   news  l  ett  er@seiko-­‐ideas.com  
 
URL   www.seiko-­‐ideas.com  
 
 
 
 
 
 
 
 

 
Page  |  20