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Foreign giants hunt for retail space in HCM City

Jul 13, 2013

VietNamNet Bridge – While Vietnamese traders flee from commercial centers because of losses, foreign investors have contrary moves. Giant retailers are eyeing shopping malls in new urban areas in preparation for a long-term war.

The boss of a real estate consulting firm revealed: “We’re looking retailing space for a Japanese retailer. They did enter Vietnam and are silently surveying the east and the west of HCM City to prepare for their big plans in the next 2-3 years.”

He added that the Japanese investor has not yet made a final decision, but their conditions are quite specific. They do not require a prime location in the center but particularly favor the densely populated areas and the new residential areas in HCM City.

Japanese retail conglomerate AEON chose Celadon City urban area (82 ha, located in Tan Phu district) to build a 3.51 ha shopping mall. This company is expected to complete the largest mall in the west of Ho Chi Minh City in 2014.

Sooner than Japanese investors–Korean retailers, typically Lotte Group, has been implementing its plan to penetrate into the Vietnam market. The fifth largest group in South Korea is expected to inaugurate an additional 30 commercial centers in five major cities: Hanoi, Ho Chi Minh City, Hai Phong, Da Nang and Can Tho from 2010 to 2018.

Lotte is also interested in the older residential areas in the urban fringe. Lotte Mart currently has five stores in Vietnam, including two in HCM City and one in Hanoi, Da Nang and Dong Nai.

Fast food groups do not want to be slow-paced. Most recently, in February 2013, Starbucks officially entered the Vietnam market, with a 2-storey shop in District 1, Ho Chi Minh City. This brand has quickly gained popularity in Saigon. CEO of Starbucks, Howard Schultz, told the Wall Street Journal in Bangkok, Thailand that revenue from its first store in Vietnam by May exceeded the expectations.

Before Starbucks and Burger King Worldwide, some pizza brands and KFC appeared in HCM City and big cities in Vietnam. In June, a trade delegation of 11 wine producers from Victoria, Australia visited Ho Chi Minh City. The delegation’s representative, Ms. Yasmin Power said Vietnam is the promised land for the wine market.

Chairman of the Inter-Pacific Corporation, Johnathan Nguyen Hanh said, there is the wave of international retail groups entering Vietnam to hunt opportunities. “The advantage of young population, workers in the urban areas with high income and desire to confirm their position make Vietnam a paradise for retailers,” he said.

He said branded cosmetics and fashion products, new style drinks, fast food … are developing quickly. For example, there are several pizza brands in Vietnam at present. The cafes with pastries are also quite popular. Branded goods are becoming the mainstay of most busy and luxury shopping areas in the heart of Saigon and Hanoi.

Whether commercial centers are quiet and struggling with slack in HCM City because of oversupply? General Director of Saigon Land, Mr. Le Quang Hang said: “This is the game of the giants.”

According to Hang, Vietnam has a population of nearly 90 million and three-quarters of them are under 35 years old so it is a potential market. The international retailers are showing their long-term vision. They go ahead to catch up opportunities and are ready to accept early losses for future profit.

He said that in the short term, the commercial premises in the new urban areas may lose ground compared with luxury shopping malls in the center of HCM City. However, the race will be based on the long-term durability. Foreign investors are showing the superiority of the capital, experience, management and operation of retail chains as well as quickly capturing the tastes of the emerging markets. “The entry of foreign retailers will create more motivation for the retail market in the country,” said Hang.

Nguyen Son

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