International retail chains in Vietnam are benefitting as domestic retailers collapse under increasing operational costs.
'Domestic retailers are facing difficulties and a number of enterprises have gone bankrupt,' Ha Noi Supermarkets Association chairman Vu Vinh Phu told the Vietnam News. He predicted difficult operating conditions would persist for the duration of the year and more bankruptcies were inevitable.
Domestic retail operators accounted for some 20 per cent of the 12,000 dissolved business in Vietnam in the first half of the year, Phu told the newspaper. Meanwhile major domestic supermarket chains, such as FiviMart and Intimex, were being forced to reduce outlet numbers as profits fell by as much as 10 per cent on last year.
'About 70 per cent of shoppers come to supermarkets for food and food products, the prices of which have been seriously affected by rising fuel and energy costs,' Phu said. 'Inventories in the city's supermarkets have risen to over 20 per cent.'
International retailers, such as Metro and Big C, could continue to operate on reduced margins, he said, owing to scale and earnings from businesses in other countries.
Central Institute for Economic Management deputy head Vo Tri Thanh told the newspaper the country’s decision to join the World Trade Organisation in 2007 meant it was obliged to open its retail market to foreign investors in 2009.
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