Japan’s Itochu Corporation and FamilyMart are planning to expand the FamilyMart retail chain to hundreds of stores in Vietnam via a joint venture established early this month with domestic outfit Phu Thai Group.
Vietnam’s expanding middle class is exciting retailers
The joint venture, Vina FamilyMart, will see Phu Thai Group hold a 51 per cent stake and FamilyMart-Itochu 49 per cent. FamilyMart will grant a master licence to the joint venture for its future operations within the country, and conclude area franchise agreements.
In a recent meeting with the Ministry of Planning and Investment, an Itochu representative said the corporation planned to open 300 stores in Ho Chi Minh City and 100 stores in Hanoi by 2013.
FamilyMart opened the first Japanese-style convenience store in Ho Chi Minh City in December 2009, with seven stores operating today. Those stores are run by Family Company, a wholly-owned subsidiary of Phu Thai Group.
Itochu said it expected the new joint venture would thrive on the strengths of the three partners - Phu Thai’s strong infrastructure with its extensive distribution network in Vietnam, the convenience store operating know-how of FamilyMart and Itochu’s strengths in procurement.
“These three strengths will not only accelerate store openings and build up the FamilyMart franchisee base in Vietnam, but also contribute to the general development of retailing in Vietnam and its overall modernisation, by proposing new modes of consumption and enjoyment to local consumers,” FamilyMart said in an announcement.
Despite the Vietnamese economy’s obvious battles with inflation and declining consumer confidence, Itochu believes Vietnam has one of the highest economic growth rates in Asia and a very young population, with the market to see rapid growth.
In line with its World Trade Organisation commitments, Vietnam opened its retail market to international entrants with 100 per cent foreign capital in early 2009, at the height of the global economic crisis when many multinational companies were taking a more conservative approach to expansion.
Vietnam is considered one of the most attractive retail markets among developing countries. United States-based AT Kearney in June downgraded Vietnam’s ranking from 14th to 23rd place in its annual Global Retail Development Index 2011, but said that Vietnam “is still attractive with an expected market size of $113 billion by 2012 and a growing population of 88.9 million.”