(VOVworld)- The Vietnamese market has attracted more foreign retailers following the signing of new-generation Free Trade Agreements. The penetration of foreign retailers is posing challenges to Vietnamese enterprises.

According to the Economist, Vietnam’s retail market is expected to earn 100 billion USD in revenue this year. The market is attractive due to Vietnam’s young population and abundant purchasing power. In the past two months, big international corporations like Netflix and Chill in the US and Singha Asia in Thailand announced investment projects in Vietnam. Japan’s retailer 7Eleven plans to open its first shop in Vietnam next April. Thai businesses are accelerating their penetration the Vietnamese market which is reflected in their M&A deals with Metro and Big C. Foreign retailers have also considered cooperative deals to penetrate into the Vietnamese market. A number of Korean and Japanese enterprises have bought 20% to 40% shares of some of Vietnam’s leading retailers including Nguyen Kim, Tran Anh, Fivimart, and Citimart. The penetration of foreign retailers has posed great challenges to Vietnamese retailers who will now have to compete fiercely in their home market. Tran Anh Tuan is Deputy Director General of Ladoza Joint Stock Company: “We plan to reduce our prices. To this end, we need to reduce production costs, input expenses, and other costs. We are trying to reduce our expenses to make our prices more competitive”.

Vietnamese enterprises face numerous difficulties in competing in the home market including lack of market information and a clear strategy. Dinh Thi My Loan is President of the Vietnam Retail Association: “We need feasible legislation and a fair and competitive business environment. Policies on domestic markets need to address the new situation of Vietnamese enterprises to promote their development”.

The influx of foreign goods to Vietnam is posting challenges to Vietnamese enterprises and forcing them to upgrade their technology and reduce their prices to be more competitive.