Foreign investors acquire home appliance distribution centers

VietNamNet Bridge – Home appliance centers have become the “deadly ground” of many investors. However, domestic investors still have poured money into the sector, while foreigners have spent big money to acquire unprofitable chains.

Vietnam, home appliance centers, Pico, chains, unprofitable, loss

Explaining this, market surveyors said that the home appliance market remains very large with enough room for everyone, since every enterprises in the field can only hold no more than five percent of the market share.

The owners of many home appliance distribution centers have offered to sell their chains after a long period of taking loss due to the low demand in the economic crisis. And it’s now the right time for foreign investors to acquire the chains, at very reasonable prices.

CDH Electric Bee Limited has bought 19.88 percent of stakes of The Gioi Di Dong from Mekong Capital and founding shareholders. The former CEO of Best Buy, Robert Willett, has also invested in the chain as an individual investor.

Meanwhile, Aureos, an investment fund, has spent $4.2 million to obtain 18.5 percent of the stakes of Tran Anh Digital World.

Existing distribution chains including Nguyen Kim, Thien Hoa, FPT and Pico, all plan to expand their networks in 2013. Some of them cherish the plan of looking for foreign partners, which would allow them to open more supermarkets at favorable moments.

An analyst said that investors now can see the golden opportunities to enlarge their networks, because the retail premises have become cheaper than ever. In fact, no one would sell his distribution network just because of the loss.

If they can find the financial support at this moment, they would rather try to survive the current difficulties and hope for a brighter future, when the national economy recovers.

The analyst also said that that foreign investors, who target long term investment plans, would need sometime to prepare their business and get ready for the market recovery. Therefore, they need to begin their investments right now, or it would be too late.

Though the Vietnamese market is large enough for everyone, distributors still have to compete fiercely with each other in the current crisis to lure customers.

However, only the enterprises with the strong financial support can block the others’ way by selling products at low prices, running big sales promotion programs. With the business strategy, they have incurred loss or just can break even. However, in return for this, they can step by step, eliminating the rivals to dominate the market.

Home appliance centers still mushrooming, especially in big cities. Tran Anh in May 2013 alone opened three centers in Hanoi, and plans to open four more by the end of the year. This does not include the VND30 billion in investment to open two centers in HCM City; the first ones in the southern city.

Nguyen Kim has opened 2 more in Hanoi and 3 in HCM City so far this year. In Hanoi, Top Care is going to set up the second center so far this year, while VHC plans to set up sales points in Thanh Hoa and Thai Binh provinces.

A report said that the sales by home appliance centers have decreased by 40 percent so far this year.

Nam Phong – Tran Thuy

Vietnam, home appliance centers, Pico, chains, unprofitable, loss