Vietnamese retailers fear Thai competition The retail sector in Vietnam has been garnering a lot of interest from foreign storekeepers over recent years- many of whom report better opportunities in Vietnam than in their own country. Thai shop owners, for example, have been expanding their presence in the Vietnamese retail markets, particularly in the major metropolitan areas where younger generations are more receptive to foreign products. Products produced in Thailand are gaining favour from younger consumers who perceive them as being of high quality, fashionable designs, making them more appealing than those locally produced. The consumer population in Vietnam is relatively young with the 15 to 64 age group accounting for more than 70% of the population over the past two years, according to official statistics. Economic growth in the country, particularly in the manufacturing sector, is helping push these younger workers’ disposable incomes upward, which in turn has driven the rate of the retail sector’s growth to eight percent for the last two years. Thai companies foray into the Vietnamese market has largely been by way of merger and acquisition with a prime example being that of Thailand giant Central Group’s 49% purchase of top electronics retailer Nguyen Kim Trading Joint Stock. Other examples include the acquisition of Metro Cash & Carry and supermarket chain Big C by Thai businesses. These Thai shop owners are savvy competitors and are making it harder for local Vietnamese vendors to get shelf space. For one, they are charging local companies higher commissions than they paid in the past. For another, they have extended the payment terms. Instead of suppliers receiving payment upon delivery or on a short turnaround basis as has been the customary practice in the country, many now report they have to wait 30-45 days or longer for payment. Local shopkeepers and suppliers, need to start taking lessons from Thai and other foreign rivals on how best to compete, said Vo Van Quyen of the Ministry of Industry and Trade, at a recent conference in Hanoi.  Quyen, who is head of the MoITs Domestic Market Department, said far too many local retailers are failing to recognize that the lowest price is not always the most important factor in a customer's purchasing decision. Even if this may be the case sometimes, many other factors play roles that are as important or even more so in a buyer's choice. Local proprietors need to change their core value from lowest price to that of- having great quality at a fair price. In addition, he said, they need to recognize the importance of forming alliances and of pooling their talents and finances to compete on an equal footing with competitors such as those from Thailand. The local competition simply doesn’t have a solid grip over the supply of goods. This is because they don’t fully understand the market, economic and management issues involved and how important it is to align themselves with their peers. Thai storekeepers are being furnished products by suppliers with more money and a strong chain. Consequently, products from Thailand are gaining ground in the Vietnam marketplace and putting fear in many local retailers. VOV