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What if Chinese control the online retail market?

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Chinese online retailers are penetrating the Vietnamese market, putting pressure on domestically made products, analysts have warned.

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'E-commerce game' requires huge long-term capital

 

While Vietnamese retailers can compete with giant retail groups from Thailand, South Korea and Japan in modern retail, they are inferior in the online retail market because of limited financial capability and technology platforms.

A report found that the Vietnamese e-commerce market was valued at $0.4 billion in 2015. The figure soared to $4 billion in 2017 and is expected to reach $7.5 billion by 2025. Vietnam, with a high growth rate of 35 percent, is an attractive market for investors.

The three biggest Chinese players, Alibaba, Tencent and JD.com, all are present in Vietnam. 

The ‘earliest bird’ was Shopee, which joined the market in August 2016.

In June 2017, Alibaba, the conglomerate owned by Jack Ma, spent $1 billion to raise its ownership ratio in Lazada, the holding company of Lazada Vietnam, to 83 percent. With the move, it officially set foot in Southeast Asian online retail markets, including Vietnam.

Most recently, JD.com poured $44 million into Vietnam’s Tiki, an online retailer.

According to iPrice Group, the online searching engine, Lazada is nearly dominant in Thai, Vietnamese and Malaysian online retail markets. In Vietnam, Lazada attracts 19 percent of visitors, while Thegioididong.com and Sendo get 15 percent and 11 percent, respectively. Tiki ranks fourth with 8 percent.

The retailers have been spending big money on sale promotions, and offering price discounts in a bid to scramble for market share. 

An e-commerce expert in HCMC said in the immediate time, consumers can get big benefits from sale promotions, but in the long term, Vietnamese manufacturers will face difficulties.

“With the presence of big Chinese online retailers, Chinese goods will have better opportunities to penetrate the Vietnamese market. Once Chinese goods flood the market, the room for Vietnamese goods in online retail channels will shrink,” the expert said.

Some large Vietnamese businesses such as FPT and The Gioi Di Dong have joined the market and shown determination to compete with Chinese giants. Sendo.vn, 123mua.vn, Adayroi and vuivui.com, Vietnamese websites, have had a relatively high number of transactions and visitors.

However, analysts said it was still too early to predict the success of Vietnamese businesses, because the ‘e-commerce game’ requires huge long-term capital. 

According to the Vietnam E-commerce Association, in 2018, Vietnamese companies will spend more money on ad and media campaigns to attract more buyers. The budget for the campaigns is expected to increase by 60 percent compared with 2016.

 

 

Source: VietNamNet

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