Vietnamese firms complain about high commissions, stop supplying foreign retailers

By N.Tran Tam-Mai Phuong, Thanh Nien News

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Thai rice sold at Thai's wholesale store Metro in Ho Chi Minh City. Photo: Dao Ngoc Thach/Thanh Nien Thai rice sold at Thai's wholesale store Metro in Ho Chi Minh City. Photo: Dao Ngoc Thach/Thanh Nien


Many Vietnamese suppliers have accused foreign retailers of overcharging commissions and fees, with some already stopping supply of products.
In a recent letter to the now Thai-owned Big C, the Vietnam Association of Seafood Exporters and Producers (VASEP) asked the chain of 32 supermarkets and 10 convenience stores around the country not to increase its commissions this year.
With a 4.25-5-percentage point increase in commissions Big C is demanding, businesses will have to pay 17-25 percent of their prices, which is too high to secure profits, VASEP said.
"As the manufacturing sector is still struggling, a commission of 10 percent is already unsustainable," VASEP deputy general secretary Nguyen Hoai Nam told news website Dau Tu (Investment).
"No business can afford to pay a 25 percent commission."
Big C also charges businesses fees for all kinds of things like opening a new store and celebrating its anniversary, the website quoted VASEP as saying.
In fact, after Big C’s latest demand, several seafood businesses have stopped selling to it, according to Dau Tu.
A Big C spokesperson refused to comment about VASEP's complaint, saying the supermarket has yet to receive the letter, it said.
Thailand's Central Group acquired Big C from France's Casino Group for 1 billion euros (US$1.1 billion) last month.
Many suppliers of some other foreign retailers are considering an exit, citing similar reasons.
Le Thi Thanh Lam, deputy CEO of Ho Chi Minh City-based seafood products and pre-made food supplier Saigon Food JSC, told Thanh Nien that foreign supermarkets had raised commissions by 4-5.5 percentage points to nearly 20 percent this year, or nearly twice that charged by local retailers.
"Commissions higher than 10 percent already choke business," Lam said.
"If Saigon Food cannot negotiate with foreign retailers to reduce commissions, it will possibly have to pull out of their stores."
Commenting on local suppliers' struggle, Vu Vinh Phu, chairman of the Hanoi Association of Supermarkets, said when taking over outlets in Vietnam, foreign retailers "obviously" give priority to suppliers from their home countries.
With foreign retailers dominating Vietnam's market, not only are local retailers seeing their shares shrinking, but many local suppliers and producers are also struggling, he said.
After buying supermarkets like Big C and Metro and convenience stores chain B's mart, Thai businesses hold a more than 50 percent retail market share, he said.
Giants from other countries such as Japan and South Korea are fighting with local retailers for the remaining market share, he said.
However, Vo Van Quyen, chief of the Ministry of Industry and Trade’s department for local markets, dismissed Phu's estimates in an interview with news website CafeF.
Local businesses still control nearly 97 percent of Vietnam's retail market, he said, quoting the General Statistics Office of Vietnam.
Foreign businesses control around 13.7 percent of modern retail which accounts for 25 percent of total sales, and this should not have any major impact on Vietnamese businesses, he said.

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