Foreign retailers rush in where locals fear to tread

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Customers at a cosmetics shop at Lotte supermarket in Ho Chi Minh City

While domestic retailers are struggling to pay rents at shopping malls amid plunging sales, their foreign counterparts are coming in with long-term plans.

News website VnExpress quoted the general director of an unidentified real estate consultancy as saying that it is scouting for space for a Japanese retail giant.

"They have entered Vietnam and been surveying the east and south of Ho Chi Minh City, preparing to make a splash in two or three years."

Japanese retailers do not insist on downtown spots, and prefer populated areas near new urban zones like District 7.

Another Japanese retailer and one of Asia's leading ones, AEON, has also announced plans to enter Vietnam in 2014 with the biggest shopping mall in western HCMC.

The 3.51-hectare mall will be located at Celadon City, an 82-hectare urban area in Tan Phu District.

Lotte, the fifth biggest retailer in South Korea, already has five supermarkets in Vietnam and is expected to open 30 more in the five largest cities -- Hanoi, HCMC, Hai Phong, Da Nang, and Can Tho.

The retailer has two outlets in HCMC and one each in neighboring Dong Nai Province, Hanoi, and Da Nang. It recently took over HCMC's famous Legend hotel.

Fast food brand like KFC, Burger King, and pizza chains have always been doing well in Vietnam. So is newcomer Starbucks.

Starbucks CEO Howard Schultz told the Wall Street Journal that its first and only Vietnamese outlet in HCMC is exceeding expectations.

The country, where more than eight million people are still hungry - a four-fold drop from a decade ago -- according to the UN's FAO, is also considered a promising market for wine.

There was a delegation of 11 wine producers from Australia in June. Yasmin Power, head of wine and beverages in the Victorian government's Department of State Development, Business and Innovation, said during the visit that the companies are willing to step in once they can find Vietnamese partners experienced in the market and having good distribution systems.

Johnathan Hanh Nguyen, chairman of Imex Pan Pacific, one of the largest conglomerates in Vietnam, told VnExpress that there is a wave of international retailers coming into Vietnam as the country is "becoming a retailing heaven.

"Its populations is young, and many young employed people in urban areas earn well, are well-informed, and love to show off their social status."

Pointing to shopping malls not being crowded, Le Quang Hanh, general director of property company Saigon Land, said retailing in Vietnam is not doing well at the moment, but this offers international giants an opportunity to take over.

"It is a long-term game for the big boys."

They would be prepared to take losses initially, but then they would have few local competitors left in such a promising market where three-fifths of the nearly 90 million people are under 35.

But foreign players, with their deep pockets, experience, and management capability, would help revive the market, he added.

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