Vietnamese goods are "struggling" in the domestic market

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The proportion of Vietnamese products in modern retail distribution systems accounts for 70-90%. Photo: Nguyen Thanh

Vietnamese goods flooded with supermarkets

The project developing the domestic market associated with the "Vietnamese people uses Vietnamese goods" campaign for the period 2014 - 2020 has been implemented for sixyears, bringing many positive results.

Tran Duy Dong, Director of Domestic Market Department (Ministry of Industry and Trade),said before this project came into existence, the distribution system of Vietnamese goods had not covered the whole country, setting up a system of Vietnamese goods in sustainable selling points, especially densely populated areas, industrial parks, rural areas, remote areas, border areas, and islands had been still limited as well as bringing Vietnamese goods to the these regions lacked stability. Notably, thecompetitiveness of some Vietnamese products was still low and theconnection of enterprises in the value chain of production and consumption was not stable.

However, up to now, the "picture" of Vietnamese goods in the domestic market has seena remarkable "transformation". In the supermarket system of some domestic firms, domestically produced goods account for a large proportion from 80% to 90%. Specifically, Co.opmart (90-93%), Satra (90-95%), Vissan (95%), Vinmart (90%), BRG Retail (90%) andchain stores Bach HoaXanh (95%) . Besides, the proportion of Vietnamese goods in foreign supermarkets accounts for 60-96%. Specifically, Lotte (82% by revenue and 84% by goods), Big C (96% by revenue), Aeon (80% by product code) andMega Market (95% by product code). For traditional retail channels, the proportion of Vietnamese goods at markets and convenience stores accounts for 60% or more.

“According to local reports, the proportion of Vietnamese products in modern retail distribution systems still accounts for a high proportion (70-90%). This is an impressive number after many years of implementing the project, exceeding the set targets,”Tran Duy Dong emphasised.

Deputy Minister of Industry and Trade Do Thang Hai also assessed that Vietnam had established a distribution system of goods from the centre to remote areas. Through the domestic market development programme associated with the "Vietnamese people use Vietnamese goods” campaign, goods were consumed more strongly in Vietnam, helping Vietnamese manufactures consume. This could enhance competitiveness, especially in the context that enterprises had to face goods from developing countries in Vietnam today.

"Suffocating" with imported goods

Although it is increasingly asserting its position in the domestic market, Tran Duy Dong also pointed out Vietnamese products were facing fierce competition with imported goods in terms of quality, price, and model. Especially in the context of Vietnam's extensive international economic integration, participating in many FTAs anda series of large FTAs had been preparing to enter the implementation phase, posing many challenges for Vietnamese enterprises.

“Specific regulations on market opening and technical measures in some sectors will create opportunities for enterprises, products, goods and services of EU to access more conveniently than the market of nearly 100 million people of Vietnam, increasing the competitive pressure between Vietnamese enterprises, Vietnamese and large distribution and production enterprises from EU countries that already have very strong potential, and rich and abundant sources of goods. It is possible domestic distribution and manufacturing enterprises are easily acquired and dominated market share by foreign enterprises,”Tran Duy Dong analysed in depth when EVFTA has taken effect since August 1.

In addition to the pressure of foreign goods, some experts acknowledge the situation of counterfeit goods, poor quality goods, goods infringing intellectual property goods, goods of unknown origin andgoods that do not ensure food safety still appear in the market have not been controlled, so the unhealthy competition among domestic enterprises causes confusion, anxiety and leads to loss of consumer confidence inVietnamese goods.

Improving internal force for enterprises

From a positive perspective, according to Pham Ngoc Hung, Vice Chairman of Ho Chi Minh City Association of Enterprises, competitive pressure willalso help domestic enterprises and goods increase their competitiveness. At that time, consumers would benefit "double" from both sides. It is time for domestic manufacturing industries to restructure their markets, apply science and technology andimprove the quality of human resources to increase their competitiveness in the domestic market, and ensure that they can have enough strength into 500 million people market of them.

From the perspective of a distributor, Duong Thi Thanh Tam, Deputy General Director of Vincommerce said that when Vietnam participates in many FTAs, the "playground" in Vietnam is a flat "playground”. Improving competitiveness for enterprises is very important at this stage. Vietnamese enterprises need to focus on investing more in product research and development, creating outstanding differences and bringing benefits to consumers. Production business owners have to change their mindset from makers to professional production and commercial enterprises. That needs the support of training, management skills on strategy to the enforcement of associations, ministries and departments.

Tam also emphasised that production enterprises should focus more on communication strategies. When enterprises have different products, creating specific advantages, it is necessary to have the communication network, and incentives from communication channels to help Vietnamese enterprises show the difference in these products.