South Korean companies are engaged in a fierce battle with Japanese rivals in the Vietnam retail market, which has emerged as a “post-China.”
According to the Korea Trade-Investment Promotion Agency, the Vietnam retail market has been growing rapidly, with an annual average growth rate of 10.9 per cent between 2013 and 2018.
Currently, South Korea and Japan lead the market in all areas, including convenience stores, department stores and online shopping.
Lotte Group has had a presence in the Vietnam retail market since 2008 and has invested US$390 million so far.
Currently, the company has 14 shopping malls, one department store, and two duty-free shops operating across the country.
Japanese rival Aeon entered Vietnam in 2011 with capital of $190 million. Since then, it has built and operated shopping malls in three centres: Ho Chi Minh City, Hanoi and Binh Dương.
Besides Aeon, Japanese companies such as 7-Eleven, Fuji Mart are also operating in Vietnam.
The channels that are growing rapidly in the local market are convenience stores and e-commerce.
In particular, the growth of the convenience-store market is steep due to rapid urbanisation, rising income levels and the expansion of the young consumer population.
IGD Research ranked Vietnam as the top country among the fastest growing convenience store markets in Asia by 2021.
The South Korean convenience store chain GS25 entered Vietnam in January last year when it opened a store in Ho Chi Minh through a joint venture with SonKim Group, a Korean company that has emerged in the region.
It currently operates about 50 stores, but plans to expand to 70 by next year and to 2000 over the next decade.
South Korea’s BGF Retail, which operates the convenience store chain CU, also recently signed a master franchise contract with Vietnam’s CUVN to start making inroads into the Vietnamese market.
Japan’s 7-Eleven entered Vietnam in 2017 and is currently operating 24 stores. It aims to build 1000 new stores, mostly focused for now on Ho Chi Minh City and Hanoi. It followed Circle K and FamilyMart which have gained considerable traction in Ho Chi Minh City.
South Korean conglomerates such as Lotte and CJ have also jumped into the e-commerce market, but they are still gaining traction.
- Based on original reporting by D M Park of Korea Bizwire.