Home appliance distribution chains in a rush to seek foreign partners

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Home appliance distribution chains in a rush to seek foreign partners

3/15/2016 5:23:00 PM

As the competition in the market has become ‘scorching hot’ in the last three years, many home appliance distributors have decided to join hands with foreigners to receive support from powerful partners.

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Tran Anh distribution chain, for example, has cooperated with Japanese Nojima Group. Nguyen Kim joined Thai Central Group when Power Buy, a subsidiary of Central Group bought 49 percent of stake of NKT, the owner of Nguyen Kim. The distributor plans to set up 50 supermarkets by 2019.

Other names such as HC, Pico and Media Mart are also considering cooperating with foreign partners to improve their capability. 

A representative of VHC Trade, which owns Home Center (HC) chain, told the press in 2015 that HC does not intend to sell its stake to foreign firms, but would consider cooperation if opportunities come.

As the competition in the market has become ‘scorching hot’ in the last three years, many home appliance distributors have decided to join hands with foreigners to receive support from powerful partners.
In late June 2015, rumor was spread that Pico and Nguyen Kim would become the ‘members of the same family’ as Pico planned to join hands with Thai Central Group. 

Most recently, sources said Media Mart is seeking opportunities to cooperate with foreign partners.

What will the marriage bring?

“At first, when we began cooperating with Nojima, we were warned about the risk of being swallowed and about the cultural differences,” said Ngo Thanh Dat, marketing director of Tran Anh, when asked how Tran Anh has been performing in the last 2.5 years since the day it partnered with Nojima.

“However, we know what we need to do to develop in a rapid and sustainable way in the context of the increasingly stiff competition in the market,” he said.

Also according to Dat, the most valuable things Tran Anh has received from the foreign partner is support in capital, experience and retail technology. The investor has given advice on the operation and management of the chain, problems for many Vietnamese enterprises, to ensure that the pace of network expansion goes in accordance with the chain’s growth rate.

In 2015, Tran Anh opened six new supermarkets just within one month, a goal that analysts believe would be unattainable without support from foreign partners.

Tran Anh is now leading enterprises in the north in terms of coverage of the network with its shops present in 14 out of 26 provinces and the total retail premises area of 75,000 square meters.

Meanwhile, unlike Tran Anh, Nguyen Kim still remains silent after it joined hands with Central Group. No new retail point has been set up.

While some analysts commented that Nguyen Kim was ‘too late’ in expanding its network, others say Nguyen Kim is still experiencing restructuring after the “century’s deal”.
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