Fresh produce importers are looking forward to their vision of the Vietnamese market in five-to-ten years’ time, when they expect the economy to have recovered fully from recession, and a modern and well-organised retail sector to have taken root.
Some envisage the next decade will herald consumer prosperity in Vietnam and a new phase in its retail history, as wholly-owned foreign supermarkets are allowed to set up shop across the country.
This in turn will generate strong demand for imported fruits and vegetables, they believe, benefiting everyone in the global supply chain.
Until then, though, it could be tough going. Vietnam plunged into recession in 2009 when its real-estate market collapsed, and went from being a credit-free society to one that has a debt of somewhere between US$45bn-US$95bn.
Consumers curbed their spending, and imports of everything went into decline as the Vietnamese government tried to balance the budget.
The economy hit rock bottom in 2013, say some analysts, but is now showing signs of recovery.
Government measures are starting to take effect: the trade deficit is almost balanced. Inflation has been kept down: in 2013 it was at 6 per cent, whereas previously it was as high as 23 per cent.
Restrictions have been placed on borrowing; interest rates are under control. Corporate tax breaks to boost business have been introduced. And the authorities have gone after tax malingerers in an effort to boost government coffers.
As a result, consumer confidence is returning, and spending rose by 6 per cent during the 2014 Chinese New Year celebrations (the last week in January) compared to 2013.
“We’ve weathered the worst of the recession,” says Ralf Matthaes, Vietnam expert for market research giant tns Global. “We are seeing a bit of confidence coming back now, but I also believe it’s going to be a slow recovery.”
Pham Minh Nghia of leading fresh produce distributor NC Group Ltd agrees: “Economic recovery is slow, and import sales are slow,” he says.
Nevertheless, California grapes and Washington apples have sold particularly well in Vietnam, thanks to effective marketing by their respective grower associations, notes Nghia. And local demand has started to rise for grape varieties other than Red Globe, such as Autumn Royal, Midnight Beauty and Scarlet Royal, he says.
Chinese Fuji apples and pears still dominate the import market, but at the bottom end of the price spectrum.
“Import sales have been slow these last few years,” says Nghia. “But in five to 10 years’ time, there will be a huge jump in import growth when the economy improves and the modern retail market share, currently at around 20 per cent, grows.”
Some retail analysts predict that, with only months left of regulatory retail protection in Vietnam, foreign investment in the country’s retail sector is set to boom.
When Vietnam joined the World Trade Organisation, it limited direct foreign retail investment in the country to just one store. So foreign retailers entered the market via local partnerships.
This restriction was set to be lifted in late 2014, throwing Vietnam’s doors wide open to overseas chainstores eager to tap into the country’s 90m-strong consumer market.
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