Saturday, 3 October 2009

Vietnamese businesses gain traction in Cambodia

A woman carries a large load of goods from Vietnam to Cambodia via the Tinh Bien Border Gate.

Saturday, October 3, 2009
(Post by CAAI News Media)

Thai and Chinese enterprises lose Cambodian market shares to Vietnamese investors.

Le Hong Thuyen is home from Cambodia looking for new suppliers for her shopping mall in Phnom Penh.

The mall, named Vinamart, is the Cambodian capital city’s number-one outlet for Vietnamese products. When it opened in 2006, Vinamart only sold a limited product range supplied by 16 Vietnamese producers. But the outlet has grown larger, and now offers a vast array of both Vietnamese and Cambodian goods.

“It’s a surprise that Cambodian people like Vietnamese goods these days,” said Thuyen. “They especially like Vietnamese food products... they’ve gotten to know and trust Vietnamese brands.”

Lay Vannak, deputy major of Takeo Province, which borders Vietnam’s An Giang Province in the Mekong Delta, said Vietnamese products had expanded their market shares in Cambodia and “some products have defeated those from Thailand and China.”

He said Vietnamese businesses have improved their competitiveness in terms of both quality and packaging.

An Giang Province has a long border with Cambodia and accounted for 70 perct of bilateral trade between the two countries. Vietnam exported US$1.7 billion goods to Cambodia last year, an annual growth rate of 40-45 percent.

In August, the province officially opened the Tinh Bien Economic Border Gate Zone, where Cambodians, Vietnamese and international tourists can access duty free goods at the border.

Nguyen Minh Tri, head of the province’s Economic Border Gate Authorities, said the zone and its ten supermarkets were a strategic foundation upon which Vietnamese goods could penetrate the Cambodian market.

He also said the zone acted as a depot from which exports were launched to other markets around the globe.

Ho Chi Minh City’s Industry a Trade Service said it was difficult for Vietnamese businesses to store their products in Cambodia and it would be hard for them to boost their exports to the market where local production was underdeveloped.

Vu Kim Hanh, chairwoman of the Vietnamese High Quality Goods Club, said its members planned to build a warehouse at Tinh Bien as part of their export strategy to Cambodia.

Room for improvement

Local businesses were offering strong products at competitive prices in Cambodia, but their distribution and promotion networks remain weak, according to a survey conducted in September by the Business Support Assistance (BSA) in association with Vietnamese research firm Truong Doan.

The survey of consumers and retailers in Phnom Penh and Battambong cities showed that high-quality Vietnamese goods were recognized in Cambodia but that Vietnamese products in general were attached to less competitive labeling and promotions than those from Thailand, said Truong Cung Nghia, director of Truong Doan.

Nghia said Vietnamese businesses were strong in stationaries, bicycles and two and four-wheel accessories, footwear and garments, building materials, fertilizers, seeds, home appliances and plastic products.

Consumer and retailer satisfaction with high-quality Vietnamese goods was higher than with those from Thailand and China, said the survey, which added that retailers profited more from trading Vietnamese goods.

But still, Vietnamese businesses lacked the intense promotional campaigns of their Thai counterparts, which offered free products, cost cutting and television commercials.

In need

“We need the support of Vietnamese producers in terms of a distribution strategy,” said Thuyen from Vinamart.

Thuyen said her shopping mall dealt in Vietnamese products and she was finding it difficult to train Cambodian staff as well, due to the language barrier.

Local producers should understand the difficulties and give a hand to traders like her in the new market, she said

Vietnamese product prices were also less competitive than Thai rivals, which enjoyed lower import taxes in Cambodia and had the strategic support of the Thai government, said the BSA.

The firm said the Vietnamese government should increase dialogues on the issue with its Cambodian counterparts to help Vietnamese businesses like the Thais had done.

Reported by Minh Quang

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