Vietnamese products give way to foreign rivals

By Le Tu   April 22, 2016 | 02:05 pm GMT+7

The country is importing even simple objects like toothpicks and chopsticks from neighboring countries.

While I was studying in Thailand, I often spent my spare time at Thai supermarkets or farmers’ markets to buy goods and observe local people's business habits.

You can see mini-marts and supermarkets all over, and well-known retail chains like BigC, Walmart and Robinson are everywhere. Convenience stores such as 108 and 7Eleven can even be found on school campuses and gas stations.

The point is that the majority of goods displayed on the shelves are homegrown products. I'm not sure whether this is a regulation set by the Thai Government or a decision made by investors, but it shows that Thailand’s production economy is very strong. Whenever I stepped into a Thai supermarket with a wide selection of goods at reasonable prices, I wish that someday Vietnam will have such an abundance of products as Thailand has.

My wish, to some extent, has come true. Though living in Vietnam, I’m able to buy everything made in Thailand from stores near my house. Thai giants are actively acquiring retail chains in Vietnam. They have completed their purchase of Metro and several other retail chains. Thai products will soon flood the Vietnamese market as the ASEAN Economic Community (AEC) facilitates trade flows with very few barriers.

I support Vietnam’s integration into global institutions such as the World Trade Organization (WTO), the Trans-Pacific Partnership (TPP) and AEC. When Vietnam has integrated into these organizations, Vietnamese customers will have more options with better quality products at better prices. However, I can’t help feeling sad looking back at the country’s production economy.

Vietnamese products are being replaced here and now. For years, the battle between Vietnam and China to retain market share has been very fierce. Vietnamese items have been overshadowed by Chinese products, which are generally inferior but much cheaper. Now the battle is tougher. Thai products are flowing into every corner of the market. They are fairly cheap, and the quality is pretty good. It is gloomy to think about the day Vietnam cannot compete with its rivals and local products are no longer on the shelves.

Lots of local produce, for example: lychees, watermelons and onions go unsold. Lots of campaigns have been launched to help Vietnamese farmers sell their products. However, I think the process of production and sales is governed by market rules. If Vietnamese products are competitive enough, then we don’t need these campaigns.

We have to import even seemingly simple objects from China like toothpicks and chopsticks. Only a few Vietnamese brands seem to make an impression on customers.

There are a number of reasons for this. Vietnam has focused on export markets while ignoring the domestic market, and favored foreign enterprises rather than small and medium local enterprises. For example, many export products are exempt from tax while products on the local market face a handful of taxes and fees. It is calculated that in Vietnam, fees and taxes account for 40.8 percent of total profit before tax. The average figure for enterprises from ASEAN is 17 percent.

Vietnam is an attractive retail market with more than 90 million people. In the future, if we don’t have clearer policies to promote our production economy, I am afraid our domestic market will fall into the hands of our dynamic and ambitious neighbors.

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