The first 500 outlets are set to come on line late this month across the country and the number would go up to 10,000 by 2010.

G7 has designs on developing the biggest distribution network in Vietnam with a view to enhancing the competitiveness of local distributors.

The modern distribution system is just about 10 percent of the local market, meanwhile groceries and retail and wholesale shops in small-size account for 90 percent, according to the trade ministry.

An influx of world retail giants could drive domestic distribution into bankruptcy as Vietnam fully opens its distribution market under commitments to international integration, analysts forecast.

Developing a modern distribution network is a challenge for Vietnamese retailers, while international rivals are experienced in inventory management, marketing, and negotiating with retailers, said Dang Le Nguyen Vu, G7’s general director.

Local distributors and manufacturers should team up instead of operating individually if they want to survive the tumultuous entrance of international giants into the marketplace, he suggested.

Other distributors agreed, saying it would be easier to resolve difficulties if there was such cooperation.

Local response

The establishment of the G7 marts network is viewed as significant for both distributors and producers.

Lu Nguyen Huan, representative of the Kao Vietnam Company, said Kao consumption goods would be present in every corner of the country from the current 28 provinces and cities by participating with G7 Mart.

According to Duong Quang Thuy, general director of Vifon instant food company, many local producers can not afford expenditures to spread their products nationwide.

G7 Mart is a great opportunity and the most effective way for domestic enterprises to develop their brand names through cooperation, he said.

Expert opinion

Luong Van Tu, deputy trade minister said the local distributors should group together soon to set up a modern distribution network in face of incoming global giants during integration.

He said that despite its World Trade Organization (WTO) accession, Vietnam’s retail market would only open up step-by-step.

There would be time for local distributors to cooperate to prepare for the competition, but the local distribution network is weak compared international operators.

Pham Chi Lan, a member of the Prime Minister’s Research Commission said locally-made products would face difficulty in getting on the shelves of international supermarkets when global distributors set up shop in Vietnam.

The time for cooperation is now, she said.