The Vietnamese retail market is expected to enjoy a high growth rate of up to 25 percent a year in the next five years, but local producers have left most of the home market share to contraband products and foreign manufacturers, VnMedia reported.

Associate Professor and Doctor Pham Tat Thang, superior researcher of the Ministry of Industry and Trade's vietnam Institute for Trade, said the poor distribution system is a largest disadvantage for locally-produced goods.

By the end of 2010, there were 450 supermarkets, 80 shopping centers, and 2,000 convenience stores around the country, Thang said, citing statistics from the Ministry of Industry and Trade.

Besides this modern distribution chain, there are also the presences of 8,591 traditional markets, Thang added.

Around 15 to 20 percent of total goods were circulated via the modern distribution channels, 40 percent via the traditional markets, and the rest came from more than 2 million retail households and street stores, he said.

Though certain major brand names such as May Muoi, Viet Tien, Nha Be, Trung Nguyen, Vinamilk, and Kinh Do have successfully established their own distribution chains countrywide, these retail channels still account a modest ratio of the large domestic market.

While a large proportion of Vietnamese products are available on shelves in certain major supermarket chains such as Big C, Metro, Hapro, and Saigon Co.op, few can be found in the traditional distribution systems, especially the large, famous markets which are capable of spreading the products to entire regions, or even the country as a whole, including Dong Xuan market in Hanoi, Dong Ba in Hue, and Ben Thanh in HCM City.

"These markets have become the "home domains" of cheap Chinese goods, which will later be distributed to small markets all around the country," Thang said.

"It is high time local manufacturers reorganised their distribution systems to bring their locally-made products closer to domestic consumers."

Thang also suggested that local manufacturers take advantage of the country's 22.8 million internet subscribers, and 120 million mobile phone subscribers, to open distribution channels to increase the consumption of Vietnamese products.

Pressure from smuggled products

Thang said that Vietnam has yet to formulate an adequate solution aimed at curbing the penetration of contraband products, especially tSTC from China, into the country.

"The relevant agencies have also failed to efficiently cooperate with each other to fight against such an invasion," he pressed.

The fact that Vietnam shares borders and territorial waters with China also exacerbates the pressure smuggled Chinese products place on domestic goods, he added.

However, he said that local consumers will not turn their back to Vietnamese-made products once local manufacturers improve their products quality, and ensure the goods' safety and hygiene standards.

By winning consumers' trust, Vietnamese businesses can gradually gain back their home market share, he assured.

"Local manufacturers should not rely too much on government assistance, and they have to pay closer attention to consumers' demands so that they can make suitable changes in their production," he advised.

"For their part, local consumers should also be more aware of the risks posed by products with dubious origins in order to protect themselves.

"Only when both manufacturers and consumers change their ways can Vietnamese products emerge with a strong presence in the home retail market."

Tuoi Tre - January 4, 2012