Facing Huge Losses, Foreign Retailers Aggressively Expand in Vietnam

Diep Nguyen

15:49 23/05/2019

BizLIVE -

Lotte has rapidly expanded in terms of scale, but faces to accumulated loss of VND 800 billion by the end of 2017, according to auditing company PwC.

Facing Huge Losses, Foreign Retailers Aggressively Expand in Vietnam

Photo: VOV

Apart from the domestic retail companies, the 90 million people market of Vietnam over the past few years witnesses the fierce competition of 5 huge supermarket operators including: BigC, MM Mega Market, Lotte Mart and Aeon Mall.
April 15th, Auchan declared the withdrawal from Vietnam, selling all 18 stores to domestic competitors. According to Auchan, consecutive loss led the company to this sad end and heightening pressure created difficult business environment for Auchan. 
Though started operating in Vietnam since 2009 but it was only until 5 years later that Aeon started operating the two big malls including Aeon Mall Celadon in Tan Phu – Ho Chi Minh City and Aeon Mall Canary in Binh Duong province. During the first year of busines, Aeon Vietnam got the revenue of more than VND 1,300 billion and suffered from loss of VND 112 billion.
In 2015 and 2016, Aeon opened Aeon Long Bien in Hanoi and Aeon Binh Tan - Ho Chi Minh City. The business performance got better. The revenue in 2016 was VND 3,883 billion, pretax profit was VND 54 billion.
In 2017, Aeon Vietnam got the revenue of VND 5.136 billion, pretax profit surged to VND 234 billion – four times higher than the previous year.
One of Aeon executive used to share that in 2018, Aeon Vietnam got the revenue of USD 800 million, creating jobs for more than 6,000 people and get in the supply chain of more than 2,500 Vietnam companies. 
This executive also said that Aeon placed high emphasis on South East Asian markest and has the plan to expand to more than 30 trade centers throughout Vietnam, total investment capital is estimated to be about USD 5 billion. 
Lotte is no step behind Aeon in the expansion plan in the Vietnam’s retail market. Lotte announced revenue of VND 5.793 billion in 2018, an increase of 7.9% year on year, with 11 supermarkets and 3 mega supermarkets. The operation scales of Lotte now is 10 times bigger than 10 years ago.
Lotte has rapidly expanded in terms of scale, but faces to accumulated loss of VND 800 billion by the end of 2017, according to auditing company PwC.

DIEP NGUYEN

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