The internationalisation of Vietnam’s retail sector is in its early stages of development, with Vietnamese consumers only just beginning to turn towards the use of modern retailing outlets, as opposed to the traditional market-based approach to shopping. Consumer fashion is also changing markedly. The Ao Dai which was commonplace as recently as a dozen or so years ago, is being replaced by international styles and fashion. Currently, the modern retail format used in Vietnam reaches less than 20% of the general market.
Vietnam’s embryonic retail sector has some compelling characteristics, which virtually ensure that there is an extremely bright future ahead for investors who get their fundamentals right. Such factors include:
(i) high demand from a large potential market (population of approximately 90 million and growing); (ii) a young population with high demand for youth-oriented trends; (iii) steady growth in personal incomes and in the number of mid and high income households; and (iv) steady and increasing urban growth (giving rise to significant stimulation of demand across a wide range of consumer products.
It is possible to establish a 100% foreign-owned company licensed to engage in retailing activities. The opening of retail outlets, however, is subject to the “Economic Needs Test” (ENT), which is not clearly defined or consistently applied. Applications to establish foreign-owned retail distribution companies can take a long time to process, and the types of goods that will be sold by any proposed foreign-invested retail distribution company must be registered and approved on a specific code-by-code basis. We draw your attention to a legal update which we have previously prepared on the ENT. You will find the article beginning on page 5 of our January 2011 newsletter. Please click here if you would like to read this summary.
Acting for the real estate investment arm of one of Vietnam’s largest funds management organisations in respect of the development and implementation of its standard retail leasing documentation, to be rolled out across the full spectrum of its retail property development projects in Vietnam.
Acting for one of the leading distributors of high-end cosmetic and fashion products in the Asia-Pacific region on its establishment of a wholesale and retail distribution presence in Vietnam.
Acting for a major Singapore-based investment firm in respect of numerous of its investment activities in the retail sector in Vietnam, including the provision of on-going corporate and commercial law advice.
Advising a major multi-national distributor of a diverse range of fashion and other consumer products in respect of its establishment of a distribution and retail presence in Vietnam.