Berli Jucker’s decision to purchase Metro Cash & Carry Vietnam, the Vietnamese business of German retailer Metro AG, at 655 million euros ($879 million) earlier this month is among the notable deals signaling a potential ‘invasion’ of Vietnam’s retail market by Thai groups.

According to an agreement signed on August 7, the Thai firm will take over 19 Metro stores across the country after all relevant legal procedures are completed in the first half of next year.

Central Group, Thailand's largest retailer, has been licensed to inaugurate its Robins shopping center in Ho Chi Minh City.

The 12,000-square-meter venue, occupying around one-fourth of the Crescent Mall shopping center in District 7, is scheduled to open to shoppers in November. Robins targets the medium segment, with products available at reasonable prices to most Vietnamese consumers, according to the Thai retailer.

Robins made its Vietnam debut in Hanoi in April, and the Ho Chi Minh City venue is only the next step in its plan to open stores in other major cities including Hai Phong in the north, Da Nang in the central region, and Can Tho in the Mekong Delta.

A Robins representative said the stores will shelve thousands of high-quality products from local and foreign manufacturers, especially Thai goods.

Central Group is also slated to bring British retail chain Marks & Spencer to Vietnam, with the first franchise store set for inauguration in Ho Chi Minh City this summer.

Central Group chairman and CEO Tos Chirativat said Vietnam, with 60 percent of its 90 million people being young consumers, is the target for many retail investors, adding that there will be around 20 Marks & Spencer stores in the country by 2020.

Prior to the Metro Cash & Carry acquisition, Berli Jucker is not an unfamiliar name in Vietnam’s retail market.

The company holds a 75 percent stake in Thai Corp International, which operates 1,000 dealerships for 50,000 retail stores in Vietnam. Thai Corp International is also the exclusively authorized distributor of many well-known products such as Red Bull, Three Lady Cooks, Nestlé and Bear, and the B’sMart convenient store chain.

Tougher challenges for Vietnamese businesses

Thai Corp International acquired Japan’s FamilyMart chain and renamed the stores B’sMart in June 2013. Soon after the deal, more Thai products were seen on shelves at these corner stores.

Berli Jucker has also announced that purchasing the Metro stores will open the door for the company to help Thai manufacturers penetrate the Vietnamese market.

“Thai retailers do not simply intend to compete in the Vietnamese retail market; they want to dominate it,” Vu Kim Hanh, chairwoman of the Business Association of High Quality Vietnamese Products, warned.

Thai investors are entering Vietnam via different channels, from general merchandise chains to retail and convenient stores, which Hanh viewed as a “well-organized plan to approach Vietnamese consumers.”

Under the ASEAN Trade in Goods Agreement (ATIGA), tax barriers between the ASEAN countries will almost be zeroed in 2015, which Hanh said will make Thai retailers even stronger competitors.

“Thai products can currently compete with locally made goods easily, even though they are taxed,” Hanh said.

“When the taxes are lowered to zero, the challenge will grow tougher for Vietnamese businesses.”

Tuoi Tre News - August 21, 2014