Domestic businesses will face big challenges as they have to compete with multi-national groups that outweigh them in finance and management experience.

"Without hook-up, local enterprises will face many difficulties because just after penetrating into the Vietnamese market, foreign groups will set up modern distribution networks and then control the retail market," said Vu Vinh Phu, President of the Ha Noi Supermarket Association.

Being aware of these challenges, many Vietnamese enterprises have actively banded together to build large-sized and competitive distribution systems.

The establishment of the Vietnam Distribution Association Network Development and Investment Joint Stock Co. (VDA) was seen as the start of an industry trend geared towards greater cooperation between retailers.

The association was formed after the Ha Noi Trading Corporation (Hapro), the Ho Chi Minh City Union of Trading Cooperatives (Saigon Co-op), the Saigon Trading Corporation (Satra) and the Phu Thai Trading Company had earlier agreed to link up on the deal.

The Trung Nguyen ( Central Highlands ) Coffee Company was also a pioneer in expanding retail network. By late 2006, the company's G7 Mart system increased to 5,500 retail outlets across the country.

The enterprise is pursuing a mammoth target of opening an additional 10,000 outlets and building 18 wholesale points and seven trade centres in the next five years. The total investment for these projects is estimated at nearly 400 million USD.

"Our objective is to gather Vietnamese producers to form a strong distribution system that is competitive with foreign distributors," said the company's General Director Dang Le Nguyen Vu.

In addition, the company plans to branch out and build medium and large-sized supermarkets named " Viet Town " abroad.

Many other enterprises have been in a hurry to implement projects to develop their retail systems nationwide. The FPT Information Technology Group has poured 40 billion VND (2.5 million USD) into a company that specialises in health, educational, scientific and technological products.

The enterprise has launched on-line service which combines the provision of goods by nearly 500 producers nationwide.

The Vietnam Garment and Textile Group (Vinatex) has come off well with a chain of 40 supermarkets in almost all big cities in the country. The group hopes to double the number by 2010.

Vietnam is a ideal destination for multi-national distributors when eyeing the recent growth rate of the domestic retail market. A recent survey of US leading consultancy group, AT Kearney, showed that Vietnam is now the world's third attractive retail market, after India and Russia .

The fact was proven by the successes of groups that have been present in Vietnam for a long time and make up a large market share in Vietnam such as Metro, Big C, Parkson and Unilever.

Unilever Vietnam recently opened a goods distribution centre in southern Binh Duong province , which is expected to be the most modern of its kind in Vietnam , to serve the domestic market as well as export goods to 18 countries and territories.

Together with challenges in competition, Vietnam 's commitment to open its retail market is offering Vietnamese enterprises many opportunities to become stronger. The increased investment of domestic and foreign investors has helped develop the Vietnamese retail market in a more diversified and professional manner, creating more distribution channels for customers.