Big C pushes Vietnamese products off shelves

photo source Tuoitre

Setting up its new empire, the Thai firm has requested unreasonable discounts from Vietnamese food processing enterprises, forcing them to withdraw from this retail system, according to newswire Tuoitre.

A director of a Vietnamese seafood processing enterprise said that among supermarkets in Vietnam, Big C has the highest discount of 17-20 per cent, 5 per cent higher than in the previous year. In addition, numerous products have discount rates up to 25 per cent.

Along with the unreasonably high discounts, Vietnamese enterprises are also made to shoulder massive fees for Big C, including fees for Big C’s promotion programmes, product testing, customer festivals, Big C’s birthdays, as well as other tiny fees.

According to Nguyen Hoai Nam, deputy general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), the average discount in the seafood processing sector that enterprises can maintain with profit is 15 per cent, thus the 17-20 per cent discount proposed by Big C is too high.

Increasing such discounts has forced numerous Vietnamese food enterprises to withdraw their products from Big C.

Nguyen Truong Chinh, director of Nam Thuy Company, said that small and medium-sized enterprises (SMEs) in general and Nam Thuy in particular had a few opportunities to become suppliers to Big C, due to high discount rates and numerous complex requirements. Nam Thuy has concentrated on distributing products through the traditional retail channels, instead of supermarkets, for numerous years.

According to sales training expert Ho Minh Chinh, increasing discount rates may be one of Central Group’s methods to dominate the retail market in Vietnam. Notably, the high discount will restrict Vietnamese enterprises from becoming suppliers to Big C, opening the road for Thai producers to gradually replace them.

In addition, increasing the discount will help Big C decrease product prices, creating a competitive advantage over other supermarkets and retailers. Once Vietnamese enterprises are exhausted in the price war with Thai enterprises, Thai products will dominate the retail market easily.

VASEP has recently sent a document to Big C’s management board, requesting Big C not to increase the discount rates this year for new contracts with Vietnamese enterprises, as well as to introduce a ceiling rate of 15 per cent.

Before the news of Big C’s high discount request hit the media, Big C’s external relations director Ho Quoc Nguyen said that it would be difficult to explain rate hikes as the takeover had not been officially finalised. According to Nguyen, if enterprises or associations have any questions or complaints, they can send documents or emails to Big C for specific explanations.

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