Vietnam no longer a retail hotspot, new rankings show

TN News

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Vietnam has fallen out of the annually compiled list of top 30 most attractive retail markets, a result that belies great expectations raised when it officially opened to foreign retailers in 2009.

The country topped A.T. Kearney's list of developing countries that retailers should enter in 2008, only to fall to 6th, 14th and then 23rd in the following years. The global management consulting firm last year said the country remained attractive, thanks to its growing population.

But now, Vietnam is no longer ranked in the top 30.

According to A.T. Kearney, many developing countries have become more competitive this year, with smaller markets that deliver new growth opportunities rising in the rankings, including Georgia, Oman and Mongolia. The three markets cracked the top 10 this year.

Brazil is the number one market for the second year in a row, "driven by a growing middle class economy, high consumption rates, a large, urban population, and reduced political and financial risk," the company said. It is followed by Chile and China.

News website VnExpress cited local experts as saying the new result was not a surprise since market conditions have deteriorated in recent years, with consumption falling and business closures rising.

"Last year Vietnam's retail market posted a growth of only 5 percent, a very humble figure compared to the usual 20 percent in previous years," said economist Pham Chi Lan.

Vu Dinh Phu, chairman of a local supermarket association, said many retailers, both foreign and local, have complained about complicated investment procedures and high rentals.

There has to be a "large-scale overhaul" to revive the market, he said.

Even though the market has been open for more than three years and several foreign retailers have already made their presence felt in Vietnam, many foreign business groups continue to say that they are still being treated differently than locals.

In particular, they have called for elimination of the Economic Needs Test, which restricts the number of outlets that a foreign retailer can open in Vietnam.

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