Premium products on display at a Vietnam International Premium Products Fair held in HCM City last month (Photo: VNA)HCM City (VNA) - Mollis organic towelsof Phong Phu Corporation have received “very good response” in the market afterbeing launched last year, a sign that premium productsare becoming more popular in Vietnam.
Doan Anh Dao, sales and marketing manager of thePhong Phu Corporation, said the towels, which are made from 100 percent importedcotton, are strictly inspected by the Control Union from all stages, from inputto output to sales and inventory.
They are priced 30-40 percent higher than thatof normal cotton towels.
“Sales of the products via Con Cung shops arevery good. At Co.opmart, Big C, Aeon and some Vinmart stores, more and morecustomers know about the products,” Dao said.
According to retailers, sales of Vinamilkorganic fresh milk have also been very good since its launch despite their muchhigher price compared to normal products.
Realising the potential of the Vietnamesemarket, many foreign companies via exhibitions and fairs want to seek businesspartners to distribute their products in Vietnam.
For instance, Shin Je Hwan from the Republic of Korea’sHap Chun Foods Co. Ltd, which participated in the VIPREMIUM 2018 held recentlyin Ho Chi Minh City, said this is the first time Hap Chun Foods hasparticipated in the fair. The company wants to look for agents or distributingand importing companies in Vietnam.
Dao said there is great potential for organicand premium products in Vietnamese market because consumers have increasingly paidattention to products that are good for their health.
A recent survey of Nielsen showed that withsignificantly improved income, Vietnamese consumers are not only buying moregoods, but also spending more money on premium products.
Premium products have selling prices at least 20percent higher than other products of the same kinds in the market, accordingto Nielsen.
Despite the potential of the premium productmarket segment, the market is mainly dominated by imports, accounting for about80 percent, according to Nguyen Phi Van, Chairwoman of the Saigon InnovationHub’s Board of Advisors.
Products are mostly from the Asia – Pacificregion such as Japan and the RoK, and from Western Europe and North America,according to Van, who is also founder and chairwoman of Retail & FranchiseAsia.
The premium market in Vietnam features mainlyhealthcare products, beauty care products, household appliances, consumerproducts, and electronic products as well as services.
In the high-end market segment, Vietnamese firmsfind it hard to compete with foreign firms because they have not caught up withmarket trends, while their foreign rivals have done this very well, Van said.
“Foreign firms are very knowledgeable aboutdesign and business model innovation to suit digital consumers as well asfuture consumers. Due to these difficulties, in the high-end consumer segment,Vietnamese goods cannot compete with products produced by foreignmanufacturers,” she said.
According to experts, Vietnamese producers ofboth premium and popular products do not understand world market trends andthus cannot take advantage of the trends. This is the biggest challenge forVietnamese firms.
Domestic businesspeople have accessed aninternational business mindset, but the application of these mindsets intoproduction and business operations is still slow compared to that in othercountries.
Their resources are also very limited, and theystruggle to protect their popular consumer products in the market. So they havenot had proper investment in exploiting higher consumer segments.
Vu Kim Hanh, Chairwoman of the High QualityVietnamese Goods Business Association, said: "Consumers like importedproducts from Thailand, Japan and the RoK. One of the reasons is that asincomes increase, consumers can pay more for products in general, but they alsopay more attention to the value that the products bring, especially foods andbeverages good for health.”
Van said: “I hope that more Vietnamesebusinesses will participate in the premium market segment, but it may take along time for them to build their position in the market.”
Many experts believe that with the currentsituation, imported premium goods in Vietnam will continue to increase in thecoming time.
Under free trade agreements, tariff duties willbe reduced, and imported goods will become more competitive, causingdifficulties for Vietnamese firms.
According to Van, in this situation, Vietnamesefirms need to make a big change in their managerial mindset and expandcooperation, including with foreign partners to develop the market together.
Businesses should also understand mega-trendsthat will lead the market not only now but also in coming years to developsuitable business innovation ideas as well as capitalise on market opportunities.-VNA
VNA
