VietNamNet Bridge - The most popular retail brands in Vietnam are falling into the hands of Thai investors.

In early 2016, Thai tycoons are pushing the speed of acquisition of the wholesale and retail system of Vietnam.

Most recently, two Thai groups - Berli Jucker Corporation (BJC), owned by the second-richest billionaire of Thailand - Charoen Sirivadhanabhakdi – and the Central Group have declared their wish to acquire the Big C system. Earlier, Casino Group (France) mentioned the sale of the Big C supermarket chain in Vietnam, which Casino does not consider as its key market.

BJC has just announced that it will pay nearly $880 million to acquire 19 wholesale stores and the portfolio of real estate of Metro Cash & Carry Vietnam. If the latest deal is successful, BJC will be holding the two largest retailer systems with many years of business history in Vietnam. This group has also invested in the supermarket chain Family Mart (now renamed B's Mart).

Central Group - the largest retail groups in Thailand – has said that it wants to buy the operations of Casino in both Thailand and Vietnam.

Casino currently owns 58.6% of Big C Supercenter Thailand – thefirm with the total capitalization of $5.5 billion. Last week, Casino said itwanted to sell the shares in Thailand, after saying to sell its stake inVietnam in January.

The Central Group was founded by Tiang Chirathivat in 1927.In 1957, Samrit Chirathivat - his son - inherited the career and inauguratedthe first shopping center in Thailand - the Central Department Store in WangBurapha, Bangkok.

Currently, Tiang Chirathivat’s grandson - Tos Chirathivat –is the Central Group CEO. The greatest asset of this family is Central Retail -one of the largest retail groups in Thailand, which owns the shopping centerslike Central, Robinson, Zen, and La Rinascente (Italy).

Earlier, Power Buy, a subsidiary of the Central Group of Thai billionaire Chirathivat, bought 49% stake of NKT- the owner of Nguyen Kim electronic store chain. The Central Group is also the owner of the Robins supermarket chain in Vietnam, which distributed Thai goods in Hanoi and HCM City.

From the perspective of the brand, Le Quoc Vinh - Chairman of Le Group - said that Thai groups have made a pretty good move. By this way, they can reduce funding to build a new brand from the beginning, and save time, money and effort. To develop a new retail brand, in a market with many big brands, the competition will be very fierce. Getting a new business license in the retail sector is also complex and difficult for foreign investors.

The brands that Thai groups bought and want to own are huge and have a long history. For example, Metro has been in Vietnam since 2002 and Big C since 1998. These brands have distribution systems that stretch across the country, which have become very familiar to Vietnamese consumers.

"Thai investors choose the shortest way to success; they are investing large sums of money from the beginning. Not only Thais but many international investors do it that way," Vinh said.

President of the Hanoi Supermarkets Association - Vu Vinh Phu - worries about the reduction of the rate of Vietnamese goods in supermarkets with many retail and wholesale distribution channels owned by Thai investors.

"Certainly the rate of 80% of Vietnamese goods in the supermarkets will fall. Whey buying Metro the Thai billionaire announced it would sell 60% of Thai products in the supermarkets. Without the move of Thai investors, many supermarkets in Hanoi have imported Thai goods. In business, who holds the distribution channels will win," Phu said.

Previously when Big C and Metro were held by French and Germany investors, local businesses were not very worried about the flood of  goods from France and Germany because of the geographical distance, the different position of their goods compared to Vietnamese products, and the difference of the economic structure.

But when these distribution channels belong to Thai investors, Phu said that it was a risk for Vietnamese businesses because Thai products have good quality, competitive price and have gained the confidence of Vietnamese consumers. The near geographic distance and the open policies on tariffs of the ASEAN Economic Community (AEC) will enable the flood of Thai products in Vietnam in the coming years.

According to the General Department of Customs, Vietnam is importing from Thailand all kinds of goods from expensive cars to salt and spices. Import turnover from Thailand in Jan-Nov of 2015 reached $7.5 billion while exports from Vietnam to Thailand was about $2.9 billion.

Thailand has become the leading exporter to Vietnam for products such as automobiles and vegetable-agricultural products. In Jan-Nov 2015, Vietnam imported 23,516 cars of all kinds from Thailand.

According to economist Le Dang Doanh, Thais know how to take advantage of tax exemptions in AEC. Thai goods firstly help consumers access quality products at affordable prices. At the same time, the also create pressure on Vietnamese enterprises to reform and improve their competitiveness.

However, he said that this was also a real challenge for Vietnam's economy. Without comprehensive reform, Vietnamese enterprises will fall into trouble.

Vu Vinh Phu said to combat the encroachment of Thai goods, local firms must make comprehensive reforms to make quality products, improve productivity, and reduce costs.

"We cannot ask Vietnamese people to use Vietnamese goods if the products are not good and the price is unreasonable," he added.

Recently, Nikkei (Japan) news agency said that Thai products are gradually supplanting Chinese goods in Vietnam. The number of shops specializing in Thai products in Hanoi and Ho Chi Minh City is growing at a more competitive level. Realizing the situation, many retailers operating in Vietnam such as Aeon, Big C and Lotte Mart have raised the rate of Thai products.

For Thai businesses, business opportunities in Vietnam will increase rapidly in the future when the AEC tariff barriers are gradually removed.

S. Tung