Reality shows that Vietnamese industrial products, especially rural industrial products, are not attractive to domestic distributors.
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Reality shows that Vietnamese industrial products, especially rural industrial products, are not attractive to domestic distributors. This makes it difficult for domestic manufacturers to market their products. To resolve this problem, experts who attended a recent conference on building links between producers and distributors in the southern region shared the opinion that it was necessary to improve product quality.
A lack of points of sales
Data from the Ministry of Industry and Trade show that in the first 10 months of 2012, total retail sales of goods and services in the southern region were 18.9 percent higher compared with the same period last year (the whole country's index grew 17.1 percent). Leading localities include Hau Giang, An Giang, Binh Duong and Long An. Total export value of the region increased by 10.1 percent; total import value grew 2.7 percent, with Ho Chi Minh City taking the lead, followed by Ba Ria-Vung Tau and Dong Nai. These were satisfactory results. However, Do Thi Minh Tram, Deputy Director of the Agency for Industrial Promotion under the Ministry of Industry and Trade, said difficulties facing the entire Vietnamese economy have adversely affected industrial production in southern localities. Vietnam has opened its retail market as committed with the World Trade Organization (WTO), requiring domestic businesses to cope with fiercer competition with foreign rivals. Meanwhile, the southern region still lacks a complete network of trade centers and modern wholesale stores to promote distribution and regional trade. Producer limitations cannot be ignored. Nguyen Nguyen Phuong, Head of the Trade Management Division of the Ho Chi Minh City Industry and Trade Department, said industrial production in southern localities remains at a small scale and spontaneous. Moreover, the infrastructure and worker skills are still poor and cannot meet the requirements of large-scale, modern industrial production. Therefore, the quality of products remains limited. The distribution network in southern localities is still inadequate, leading to a very low purchasing power. Due to a supply-demand imbalance between producers and distributors, producers usually stand at a disadvantageous position in negotiations with retailers. Ho Chi Minh City for example has a population of nearly 10 million people but just 27 shopping centers, 163 supermarkets, about 500 convenience stores and 243 markets while it should have had 100 shopping centers, 1,000 supermarkets and 10,000 convenience stores. Therefore, small producers and craft villages with limited financial capacity can hardly have their products present in modern distribution channels.
Rural industrial producers admitted that the biggest difficulty they have encountered in selling their products is due to a lack of brands. Currently, rural industrial products are mostly distributed via traditional channels but are not yet present in big supermarkets.
Focusing on quality and brands
To deal with these problems and increase sales, in the opinion of Nguyen Nguyen Phuong, industry promotion activities must focus on building brands for products of traditional craft villages. Localities must intensify investment in production, ensure stable product quality and expand distribution network. In the time to come, Ho Chi Minh City will increase cooperation with other southern localities so that their products can be present in the city's distribution network.
The experience of Pham Thi Huan, Director of the Ba Huan Company Limited, one of the successful examples of links between producers and distributors, shows that the Industry and Trade Departments of localities must create opportunities for producers and distributors to find each other so as to prevent sale through too many intermediaries. This model has been well developed in Ho Chi Minh City while most other southern localities have revealed many limitations.
Agency for Industrial Promotion Director Do Xuan Ha said in the time to come, the agency would increase association with relevant departments and sectors to help rural industrial producers popularize their products and seek suitable distributors. The agency will also coordinate with departments under the Ministry of Industry and Trade to organize meetings with producers and distributors to create opportunities for the two sides to promote cooperation.
On their side, producers must promote technological innovation, expand production and create industrial products of higher quality, higher added value and more competitive advantages. Quality and brand are the key for products to be present in any distribution channel and quickly reach consumers.
(Source: VEN)
