The 17th WORKSHOP
22 October 2005 (Sat), GRIPS campus in Tokyo 14:00-17:00
“From Traditional to Modern Market: The Transition
in Vietnamese Transitional Bazaar System”
In this workshop, Mr. Trung presented his analysis on the traditional bazaar system in Vietnam and its transition to the modern distribution system, in which supermarkets and shopping malls play important roles. This analysis will be one part of his prospective PhD dissertation.
Reviewing the Vietnamese traditional bazaar system and its main characteristics, the presentation showed that the market information is so inadequate, unequally distributed and highly search cost (time-consuming and effort) that buyers can be locked in and, therefore, sellers can exploit by charging exorbitant prices. In addition, consumers are often unable to recognize the quality of products before they purchase, although they are aware that both high-quality and low-quality brands are sold in the market. The fears of buyers on goods without brand or origin, fake and substandard goods have caused traditional markets inefficient. Mr. Trung indicated that this problem could not be solved without supports from a set of rules, customs, and policy actions of the government.
To show the transition from the traditional system to the modern one, the presentation listed various underlying factors such as high economic growth which in turn increases per capita income, particularly the urban people, and the backwards of the traditional system itself. In the modern system, supermarkets, shopping malls and department stores will play crucial roles in distribution system in Vietnam since many Vietnamese are shifting from traditional markets to these shopping chains. Even though the modern distribution system has emerged, the statistic analysis indicated that it accounted for only 10 percent of the retail sales of goods; in other words, mainly 90 percent of retail sales has been in the traditional markets. The status could be explained by a number of reasons such as high proportion of low-income population, difficulty in changing the taken-root shopping habit of the Vietnamese in the traditional markets, the weaknesses of financial system and infrastructure, and some restrictions by law on the retail sector to the foreign retailers. Though, the author believed that there would be a significant increase in the modern retail distribution network in the near future since Vietnam has been actively committed to regional and global integration, in which AFTA and WTO would become important factors.
In the discussion session, the participants raised many interesting and insightful questions. In general, they agreed that this topic is interesting since Vietnam has been changing rapidly and dynamically from centrally-planned to market-oriented economy, and they also suggested that Mr. Trung narrow the topic by focusing deeply on some certain factors which might be important to the transitional process.
Prof. Kenichi Ohno pointed out many factors that could be considered in the analysis such as asymmetric information problem, institutional factors, market structure in which buyers and sellers interact with each other, and differences between various goods which require different distribution system. He also listed some research on the distribution mechanism of some certain industries in Vietnam, which could be useful reference for the author.
Agreeing with Prof. Ohno, Mr. Hoang (NEU & VDF) and Mr. Khai (both studying in Yokohama National University) shared common questions to Mr. Trung. They suggested that the author distinguish clearly between the traditional and modern market by examining their situations in Vietnam and other countries, and then compared advantages and drawbacks of both systems. Also from Yokohama National University, Ms. Chau recommended that the analysis should focus more deeply on market power of buyers and sellers so that it could compare traditional and modern system.
Based on the statistical data in Hanoi and HCMC, Mr. Dung (NEU & Researcher of Chuo University) raised the question of high prices in supermarkets and shopping malls, in which high rent might be significant factor. These high prices might become constraints to buyers.
Other participants also provide some information on the current situation of the distribution system in Vietnam, particularly in high-income centers like Hanoi and HCMC, and suggested that Mr. Trung collect more data on a number of aspects related to living standard of people in these regions so that he could estimate prospective growth and development of modern system.
Mr. Trung highly appreciated these comments and suggestions. He admitted that the presentation was just the initial step to have more comprehensive analysis on the issue.
(by Le Viet Trung & Giang Thanh Long)
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