Vietnam – magnet for top wholesalers, retailers< />
Vietnam has become a magnet for the world’s leading wholesalers and retailers, with some already present in the country, after opening up to foreign retail firms for more than a year.
In 2009, the country’s total retail sales and consumer services stood at 1,197 trillion VND.
However, according to experts, the flow of international retail groups into the market of 84 million does not exceed expectations.
Developing a modern retail market is a common trend in market economies, however, opening up the retail market will put pressure on producers and particularly domestic distributors, said a workshop within the framework of the multilateral trade assistance project (MUTRAP) held in Hanoi on June 29.
A review and evaluation of the distribution market after Vietnam joined the World Trade Organisation (WTO) is urgently needed as well as examining the issues that arose as the country carried out its WTO’s commitments, it added.
Hans Farnhammer from the European Union in Vietnam raised questions about what Vietnam’s competitive advantages are and said that policy makers need to raise the competitiveness of local businesses and companies need to win over domestic consumers.
Dinh Thi My Loan, vice chair and general secretary of the Vietnam Retailers’ Association, stressed the importance of the retail sector, saying that opening up the retail market requires domestic companies to be more competitive and be able to develop sustainably. The State and the business community need a long-term strategy for the distribution and retail sector and local businesses need to develop their distribution networks.
The workshop also discussed Vietnam ’s WTO commitments on the distribution sector and the lessons learnt from several other Asian countries.
Local steelmakers feel pressure from falling price
Steel retailers are suffering significant losses due to overstock and price cuts during the construction season.
Since the beginning of this month, the Vietnam Steel Association (VSA) has received two notices of steel price reductions from its member companies. The steel mills have cut prices by 300,000 VND – 600,000 VND per tonne in an attempt to clear their stockpiles.
With June’s cuts, the steel price is roughly 3 million VND per tonne less than its zenith in April.
In March, there was news that as the iron ore price increased by 40 percent compared to the same period of last year, steel prices would also increase, leading the steel price to rise to 630 USD per tonne.
There was also news that the Government would restrain the import of some goods, including construction steel, to curb the trade deficit. Big retailers used this information to forecast a sharp increase in the price of steel, so they scrambled to stock up large quantities. The result was a shortage in supply and an accompanying price rise.
However, as the steel price rose sharply in a very short time, the market reacted contrary to expectations. The potential buyers delayed their construction plans because they were unsure how high the price would eventually go.
Currently, the factory steel prices range from 11.7 million VND to 12.3 million VND per tonne for scrolled steel and 12.1 million VND to 13.1 million VND per tonne for steel bars.
Despite the price cut, surveys from building material stores show that buyers are sparse. The retail price recently dropped sharply but only a few buyers came forward as most consumers want to wait for further price cuts.
VSA said that steel producers had to cut the price due to low demand. Currently, steel products are selling slowly, steel mills are running at below capacity and the supply is abundant.
In March, VSA members reached a record sales volume of 568,000 tonnes, but by April, the sales volume had fallen to 299,000 tonnes, and continued to drop to 283,000 tonnes in May. Consumption in June is estimated to be even gloomier.
Nguyen Tien Nghi, vice chairman of VSA, said there are currently 371,000 tonnes of finished products and 560,000 tonnes of steel billet in stock.
According to experts, the excessive stock piles of steel products going into the rainy season (low season for construction) has led to reduced purchasing power in southern provinces.
The declining trend in the steel billet price in the world market indicated that the steel price could continue to fall.
Domestic steel producers also have to compete against cheaper imports, which priced roughly 100,000 VND – 150,000 cheaper than domestic steel.
Big retailers with large stockpiles are suffering significant losses as a result of the price cuts. Some steel makers have said they are losing more than 1 million VND per tonne at the current price level.
Nguyen Vinh, director of a steel firm in Cau Giay District, said that the fluctuation of steel prices has caused some big retailers to incur billions of dong in losses, while smaller stores are suffering from losses in the hundreds of millions of dong range.
Honda to raise motorbike output capacity in Vietnam to 2 mln
Honda Motor Co. said on June 29 that it will boost its annual motorcycle production capacity in Vietnam to 2 million units by the second half of 2011, from the current 1.5 million units, in light of robust sales growth in the Southeast Asian nation.
Honda Vietnam Co., near Hanoi , will invest some 70 million USD, or about 6.3 million JPY, in the production expansion, Kyodo news agency said, citing the company as its source.
Ever since Honda’s Vietnamese unit was founded in 1996, its motorbike sales have risen consistently and the company controlled 63 percent of the Vietnamese motorbike market last year, according to Honda.
In 2009, overall motorcycle sales in Vietnam jumped some 20 percent from a year earlier to 2.26 million as the world’s fourth largest motorbike market after China , India and Indonesia , the company added.
Vietnam Tourism Award winners honoured
Thirty hotels, 20 travel agencies and 15 tourism service enterprises were presented with the Vietnam Tourism Award 2010 at a ceremony in Hanoi on June 29.
Addressing the ceremony, Minister of Culture, Sports and Tourism Hoang Tuan Anh said the Vietnam Tourism Award has been given to businesses, which exerted best efforts in their operation and contributed to the success and trust of the country’s tourism sector. The award is a milestone for tourism businesses to work better to improve their service quality and professional skills.
Of the 2010 winners, Saigontourist travel company remained in the top of the list of domestic and international travel agencies.
On the occasion, 19 hotels, which won the title “Green Hotel” of the ASEAN Environment Organisation, were also honoured at the ceremony. These hotels have been praised for contributions not only to the country’s tourism development, but were to the environmental protection, energy saving and sustainable development in business.
Dragon Capital boosts investment ties with Sacomreal
Dragon Capital, the largest and most experienced foreign portfolio investor in Vietnam, will hold 7.5 percent of share capital in Sai Gon Thuong Tin Real Estate Joint Stock Co. (Sacomreal), helping the company in consultation during its operation.
Under a cooperation agreement signed on June 29 in Ho Chi Minh City, Dragon Capital will encourage strategic investors both in and outside the country to cooperate with Sacomreal in real estate projects.
According to Dang Hong Anh, chairman of the management board of Sacomreal, the cooperation will help the company improve its professional skills as well as better its business administration and management, contributing to strengthening the company’s capacity based on international standards.
Vu Huu Dien, head of portfolio management of Dragon Capital, spoke highly of his partner’s staff and the company’s effective management to record remarkable growth amid frequent changes of market caused by the global crisis.
Sacomreal’s turnover stood at over 415 billion VND in 2009, and is expected to climb to 1,780 billion VND in 2010.
VN requests EC to lift anti-dumping duty on its bike
Vietnam requests the European Commission (EC) to end its levy of anti-dumping duty on made-in-Vietnam bike immediately after the duty expires and not to make a final review of it.
The request comes in the wake that the EC’s anti-dumping duty on bikes imported from Vietnam will expire on July 15 and that the agency will decide on whether it will review the duty for extension or not.
According to the Vietnamese Foreign Ministry, the country’s representative offices in the European Union, especially in Belgium , Germany , the Netherlands , France and Italy , which have involved directly in the case, met with representatives from the EC Directorate General for Trade and the European Bicycle Manufacturers’ Association (EBMA) and relevant agencies to lobby on the issue.
The Vietnamese representative offices emphasised that the EC’s imposition of anti-dumping duty on imported Vietnamese bike was a wrong and unjust decision, reflecting its imposition that does not go with the World Trade Organisation’s regulations and the growing economic-trade ties between Vietnam and the EU.
The offices also voiced that the EC’s anti-dumping duty imposition has affected Vietnam ’s bike industry and its workers negatively and caused bad effects socially.
Since the EU levied the anti-dumping duty, Vietnam has suffered a drop of 50 folds in its bike export to the EU market, from 1,067,772 units in 2005, or 11.09 percent of the market share, to 21,421 units in 2009.
Accordingly, the Vietnam bike industry has been bogged down in serious difficulties with many manufacturers going to bankruptcy or changing to other forms of production.
Particularly, the number of workers in the industry was axed from 210,000 in 2005 to only 5,000 as reported at the beginning of this year.
After hearing technical reports presented by the Vietnamese representative offices in the EU, the EU counterparts noted the information and the situation of the Vietnamese bike industry and pledged to consider the issue regarding both sides’ interest and the entire EU-Vietnam economic-trade ties.
India keen to supply VN with garments materials
Indian producers of textile and garments materials and accessories want to supply Vietnam’s textiles and garments sector as Vietnam is emerging as one of the world’s leading exporters in this field, said the Chairman of the Indian Cotton Textiles Export Promotion Council (Texprocil), V.S Velayutham.
Speaking at a meeting between several Vietnamese and Indian businesses in Hanoi on June 29, Velayutham said that he was sure India would be a reliable supplier and a partner for Vietnamese exporters.
The Texprocil leader also said that he hoped Vietnamese businesses would take part in international textiles and garments exhibitions and fairs in his country early next year.
The head of the Vietnam National Textiles and Garments Group (Vinatex)’s Trade Promotion and Research Department, Nguyen Thi Hong Tin, highlighted the cooperation between Texprocil and Vinatex and said she hoped that Indian entrepreneurs would increase their investment in Vietnam and manufacture products to be exported to India and other markets.
To achieve this year’s export turnover of 10.5 billion USD, Tin suggested that Vietnamese businesses forge closer links with Indian cotton and fibre businesses to ensure a sustainable source of materials.
The delegation of Indian businesses to Vietnam from June 26 to July 2 includes 17 representatives from leading Indian cotton manufacturers and exporters.
According to the Indian Embassy in Hanoi , India ’s export of fibres, cloth and ready-made clothes to Vietnam has increased from 8.9 million USD in 2007 to more than 26 million USD in 2009.
VietNamNet/VNA
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