The jury is out on whether a recalibrated product distribution strategy will boost Nokia’s business efficiency in Vietnam.
From August 5, the global technology company will stop cooperation in cell phones distribution with PetroVietnam General Distribution Services (PSD), that once grabbed 40 per cent of Nokia’s product distribution market in Vietnam.
The Finland-based firm will only retain two distributors in Vietnam-FPT Distribution and Lucky Technology Equipment Import Export. FPT will take care of Nokia products distribution in northern and north central regions, while Lucky is responsible for southern and south-central regions.
The move would help Nokia further focus on its business strategy parallel to innovating operation, according to Nokia Indochina vice chairman William Hamilton-Whyte.
In early 2011, Nokia modified its distribution strategy in Vietnam through zoning distribution areas for Vietnamese distributors. Accordingly, each Vietnamese distributor got the right to distribute Nokia products in a specific area, instead of extending distribution across the country.
By that time, FPT was in charge of product distribution from Danang spreading to northern areas, while Lucky and PSD took care of areas from Danang to southern locations. IDC market analyst Vo Le Tam Thanh said the change of contracts to one or several distributors was nothing abnormal.
There is a fierce competition among diverse market players in respect to low-cost and smart phone lines, but Nokia holds a big slice in Vietnam’s cell phone market pie.
“Hence, Nokia will be the top target when other phone companies want to expand their market shares,” Thanh said. IDC’s latest statistics show that Nokia continues to be the top player in Vietnam’s cell phone market as the firm still seized over 50 per cent market share in 2012’s first quarter. According to a FPT executive, the move came as Nokia faced tremendous competition pressures from other market players.
Like other companies, Nokia faces sagging sales revenue in the face of sinking consumption. Retail sales figures by Thegioididong.com show that in the first half of 2012 there was a decline of 23.72 per cent on-year in the number of imported cell phones into Vietnam, equivalent to 6.26 million units.