Businesses trade and sign contracts at Vietnam International Sourcing 2023.

Suppliers come to Vietnam to buy goods

As one of the largest distribution chains in the world, Walmart Group always has a need to diversify the products for its distribution system. In recent years, Walmart has purchased many goods from Vietnam, from consumer goods to food such as frozen mango, tea, coffee, etc.

Vietnam is currently among the top 5 countries exporting the most goods to the global Walmart system and is rising to second place after China. Vietnamese goods not only penetrate the Walmart system in the United States but also in other major markets such as China, Canada, Mexico, etc. In 2023, Walmart will purchase 7 billion USD worth of Vietnamese goods, mainly electronics, textiles, and toys. In the coming time, Walmart Group's strategy is to focus on building Vietnam into a regional goods supply center in Asia.

Vietnam is currently among the top 5 countries exporting the most goods to the global Walmart system and is rising to second place after China.

Mr. Nguyen Duc Trong, Head of New Supplier Development at Walmart, shared: “Vietnam is becoming a top destination for Walmart to look for supply sources. Currently, the products in the Walmart system are increasingly diverse, from electronics, textiles, footwear, interior and exterior products, household goods, toys to frozen foods…”.

Another large distribution chain is also expanding its search for sources of goods in Vietnam. Mr. Paul Le, Vice President of Central Retail Group, said that every morning, 2 billion people in the world drink Espresso coffee, so the demand for Vietnamese coffee is still very large. In addition to coffee beans, coffee husks are also a great ingredient for making tea. This is one of the products that Central Retail Group wants to increase its purchases in Vietnam to sell at Central Retail Group's distribution chains abroad.

Or, Vietnamese labels are also very popular with Thai consumers and continuously in 2022 and 2023, Central Retail Vietnam has exported a relatively large amount of this product to the Tops supermarket chain of Central Retail Thailand. In Vietnam, in the Central supermarket system, up to 95% of products are Vietnamese goods such as: Ca Mau shrimp, basa fish, Hoa Loc sand mango... At Central Retail Thailand's supermarkets, many Vietnamese products are also popular such as dragon fruit, pho, vermicelli, coffee, tea... In 2024, the Group will continue to find more strong Vietnamese products to bring into the system and export abroad.

These are two of many major distribution channels that are in need of increasing imports of Vietnamese goods for sale in distribution channels. According to data from the General Department of Customs, in the first quarter of 2024, the total import-export turnover of goods reached 178.04 billion USD, an increase of 15.5% over the same period last year.

Import and export are a bright spot in the economy, but currently, most Vietnamese goods still have to go through intermediaries before being sold to distribution channels. Economist Vu Vinh Phu shared that in the past, manufacturing enterprises still sold goods to importers, then sold them to retailers, so they had to pay a discount. In addition, if goods were brought directly to foreign distribution channels, it would increase the opportunity for Vietnamese goods to be sold under Vietnamese brands.

Therefore, if businesses can contact large retail chains such as Aeon, Walmart, Amazon, Central Retail, etc., they will be able to cut out intermediaries in exports and increase the export value of Vietnamese goods to foreign markets. All of this reduces costs and increases the competitiveness of Vietnamese goods in terms of price as well as brand promotion.

Understanding this, in the past 2 years, the Ministry of Industry and Trade has organized a series of events "Connecting international supply chains" (Vietnam International Sourcing) to directly connect Vietnamese manufacturing enterprises with major distribution channels in the world. In the first organization in 2023, many Vietnamese enterprises had direct contact with distribution enterprises or large enterprises and corporations in the world, owning global production chains. Many contracts were signed after the fair, opening up great opportunities for goods consumption.

Ms. Nguyen Thi Hoang Thuy, Commercial Counselor, Vietnam Trade Office in Sweden, concurrently in charge of Northern Europe, said that through this event, Northern European businesses had the opportunity to learn more about the Vietnamese market and the potential for cooperation in various fields, from logistics to manufacturing.

“Large Nordic corporations signed a number of large contracts right after the fair. The group of intermediary brokerage businesses in the service sector also had some initial positive results, such as Nordic Apiary and Frends, which signed a Memorandum of Understanding on cooperation with Vietnam’s FPT Group,” Ms. Nguyen Hoang Thuy informed.

Vietnamese goods have many opportunities to appear in major distribution channels.

What should businesses do to seize opportunities?

With great efficiency from the first year of organization, the Ministry of Industry and Trade has determined to continue to organize Vietnam International Sourcing 2024) from June 6-8, 2024. This will continue to be an opportunity for manufacturing enterprises to connect with distribution chains and large enterprises to consume goods. The fair will have a scale of 10,000m2 for 500 enterprises in Vietnamese industries with strengths and international distributors and retailers with needs such as: Food, textiles, footwear, backpacks, handbags, sports and outdoor equipment, household appliances and furniture, supporting industries...

However, it is not easy for goods to enter the distribution chain of foreign enterprises after just one fair. Vietnamese enterprises are advised to have large enough production capacity, stable product quality, and competitive prices. At the same time, they must meet additional standards for green and clean products...

Mr. Yuichiro Shiotani, Director of Aeon Topvalu Vietnam, said that the company is focusing on and choosing suppliers who tend to develop green production. For example, with banana products, the company will choose suppliers who produce less emissions into the environment, or coffee products from businesses that ensure fair trade at the purchasing place.

Mr. Giafar Safaverdi, Managing Director of IKEA Services Vietnam Co., Ltd., Southeast Asia Supply Region Manager (IKEA Group) - one of the world's largest private furniture retailers, added that IKEA's suppliers and service providers must ensure that products are manufactured from sources that fully meet sustainable responsibility standards, with the ability to produce products promptly, fully, and ensure quality at the most optimal cost.

Products must also meet the IWAY Standard - IKEA's Code of Conduct for Responsible Sourcing to ensure business operations are always environmentally, socially, with workers' working conditions and animal welfare in the value chain.

In the US, distribution channels such as Walmart, Costco, and Amazon are consumer-centric and strict about product quality and price. Especially controlling input quality, ensuring green criteria, environmental responsibility, and labor.

After the Covid-19 pandemic and recent geopolitical and economic uncertainties, many corporations and retail/wholesale distribution channels are promoting diversification strategies, ensuring sustainable supply sources and have chosen Vietnam as a strategic location in their global supply chains. Vietnam has now become an important link in the global supply chain as more and more factories meet the world's clean and green standards. Therefore, businesses need to grasp opportunities from major events such as Viet Nam International Sourcing to bring goods deeper into distribution chains as well as be present in foreign retail channels.

Thuy Linh