A Big C supermarket in Vietnam. Photo: Quangninhnews
The move seemed to go against the group’s commitments to cooperate with suppliers when Central Group acquired Big C operations in Vietnam from France’s Casino Group a few years ago. In 2016, Central Group also committed that Vietnamese goods would account for 90%-95% of its products sold in its outlets in Vietnam.
Facing vendors’ protest, the Thai company agreed to resume buying products from 50 out of 200 domestic textile and garment suppliers with whom it had made contracts after a meeting with representatives from the Ministry of Industry and Trade (MOIT), Central Group and the Thai ambassador to Vietnam.
Inside a Big C supermarket in Vietnam. Illustrative photo
Central Group’s move has caught criticism from lawyers, official, and consumers in Vietnam who blamed the Thai group for infringing competition law.
Vu Vinh Phu, head of the Hanoi Supermarket Association, told VTC News that Big C has no rights to refuse vendors without proper reasons.
Big C has received lots of investment incentives from the government of Vietnam when operating in this country, but its owner, Central Group, is on the verge of breaking its promise to ensure 90% of Vietnamese products in its chain.
The move prompts an immediate intervention from the MOIT and the Vietnam Association of Retailers (AVR), Phu said, noting that Vietnam's policies are favorable to foreign retailers and not strong enough to protect domestic producers.
Meanwhile, foreign retailers violate the Law on Competition and trouble local vendors, Phu raised concerns.
Echoing Phu’s ideas, lawyer Truong Anh Tu from TAT Law Firm said that Central Group’s move signals unhealthy competition, causing damage to Vietnamese suppliers.
“Big C must give reasons for the refusal to Vietnamese garments while the Vietnam Textile & Apparel Association (VITAS) should raise voice to protect its members and vendors can file complaints to the MOIT’s Vietnam Competition Authority,” the lawyer said.
The move has also caused a boycott of Big C among netizens. The online Kien Thuc newspaper cited nickname Van Dong Tran saying that Central Group forgets that they are operating in Vietnam and serving Vietnamese customers and they should be treated equally in return.
Nickname Mai Ban and Hoang Tu Den called for a widespread boycott of Big C chain, saying that the Thai supermarket did not respect Vietnamese people right in Vietnam’s land.
The situation which Thai Central Group had done has been warned years ago when a number of large local retail chains were taken over by foreign retailers.
Voices from insiders and Vietnamese authorities
Following the protest, Central Group said in an explanation to the MOIT that they planned to halt the buying of Vietnamese garments in 15 days only to carry out arrangement at its supermarkets, saying that the suspension would be “temporary.”
Currently, Big C has about 4,000 Vietnamese suppliers, including 200 garment vendors.
A spokesperson from the MOIT said the authorities respect foreign-invested enterprises’ legitimate interests and protect domestic firms and customers also, saying that the case between Central Group and 200 Vietnamese firms should be settled basing on their contracts and in accordance with Vietnamese law.
Meanwhile, Le Viet Nga, deputy head of the Domestic Market Department under the MOIT, said in an interview with the Nguoi Lao Dong newspaper that Central Group has pledged to maintain the ratio of Vietnamese products at 90%, and the rate is higher for farm produce made locally.
Amid the mushrooming of foreign retailers, local experts have warned of the possibility that Vietnamese products could lose their market right at home due to the rapid decline in domestic retail chains and the stronger dominance of foreign players.
At the same time, the experts suggested that the government should have policies to support domestic retailers in terms of taxation, technology adoption, access to low-cost capital, and cut of administrative procedures to help reduce business costs.
In another move, Vietnam can put up technical barriers to protect domestic retailers, including the imposition of economic needs test (ENT). In theory, ENT is an instrument to control the foreign retail network expansion.
It gives authorities the right to refuse licences for foreign retailers to open second and subsequent outlets if ENT shows there is no need for more outlets in a certain locality.
However, under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the foreign retailers will be able to expand without any further government screening.
In terms of supply, only one in 10 Vietnamese businesses are capable of getting their goods on the shelves of foreign-owned supermarkets considering the squeeze on prices and discounts to be given.
The absence from the shelves of big supermarkets like Big C and MM Mega Market hurt both their revenue and brand value.
To have market share, local producers should cooperate to overcome factors like limited resources, poor management skills, and lack of experience in doing business in a market economy, according to experts in the industry.
For the government, experts said authorized agencies should participate in negotiations for international conventions to protect Vietnamese producers who aspire to improve the competitiveness of Vietnamese goods.