Walmart wants to turn Vietnam into goods supply center of Asia

A few weeks ago, Andrea Albright, executive vice president of Sourcing for Walmart Group, attended the Asia-Pacific Economic Cooperation (APEC) 2023 Summit Week.

One interesting fact is that Walmart buys billions of dollars worth of goods from Vietnam every year. The group's plan for the future is to make Vietnam a center for supplying goods in Asia.

$2-billion order
 
Walmart has had a representative office in Vietnam since 2013. This office has hundreds of employees whose job is to find suppliers and build and organize the production of Walmart products and services in the future.

Setting the goal of increasing bulk orders from Vietnam shows the problem of Walmart as well as many global sales chains in the context of facing the risk of supply chain disruption, which has increased the complexity of forecasting. Report sales and business capacity.
 
With this trend, not only Walmart but many large retailers in the world are also finding their way into Vietnam, such as Walmart, Amazon, Carrefour, Decathlon, AEON, IKEA, LuLu, and Central Group. A recent trade event in Ho Chi Minh City welcomed representatives of most of these brands with the goal of finding goods suppliers from Vietnam.

For example, AEON has nearly 2,700 suppliers in Vietnam, serving sales in Vietnam as well as sending goods to the group's retail system in Japan.

According to AEON, the stability of the group's supply chain globally in recent years has been contributed by suppliers in Vietnam. Mr. Yuichiro Shiotani, General Director of AEON TOPVALU Vietnam JSC, said that AEON is looking for manufacturing businesses in Vietnam to become sustainable supply partners not only in Vietnam but also in the system of AEON TOPVALU worldwide.
 
This is a great opportunity for Vietnam to become a destination in the global commodity supply chain, increasing production and export capacity. In fact, Walmart is not only the world's largest retailer but is now also among the world's largest business groups, with an estimated market capitalization of about $442.81 billion, ranking 15th in the world.

Walmart currently owns a total of 10,500 stores, carrying 46 different brands in 24 countries and serving more than 230 million customers every week. Revenue from importing goods made in Vietnam for sale throughout Walmart's system in 2022 will reach over $2 billion.

Andrea Albright said that the upcoming six fields in which Walmart wants to find partners include clothing and accessories, footwear, textiles and accessories, consumer electronics, furniture, food, and consumer goods.
 
Challenging market 
 
Although it is a great opportunity to enter this market, Walmart is not easy for Vietnamese businesses. Because over 95% of Vietnamese exporters to Walmart are currently FDI enterprises investing in Vietnam. For example, the textile and garment sector is the product most purchased by American retailers from Vietnam, but only 3-4 Vietnamese businesses can enter Walmart, all through indirect channels.

Walmart's Executive Vice President, Mr. Avineesh Gupta, advised Vietnamese enterprises to focus on long-term strategies, supply chain, and logistics solutions, and improving design and product development capacity. He also highlighted the importance of capacity, supply capacity, financial stability, sustainable development, and environmental compliance when evaluating suppliers in Vietnam.

Cuu Long An Giang Seafood Joint Stock Company, a Chinese company, must pass over 250 strict standards to sell its products at Walmart. These include inspections of factories, finances, supply chain security, and social responsibility. The company must also meet transportation security, employee policies, and food safety standards.

Like Walmart, despite assessing that Vietnam can become a major supplier of goods, international retailers such as AEON, Uniqlo, IKEA... all affirm that, in addition to ensuring quality, and competitive prices competition, products must also meet green production processes, be environmentally friendly, save input fuel...
 
In addition, experience from businesses supplying goods to Walmart also shows that, with a very strict pricing strategy and high requirements for distributors, Walmart has and will change the way it does business in Vietnam. any market that the Group targets. This requires Vietnamese suppliers to solve the problem of reducing production costs to have more competitive prices compared to other competitors.

Vietnam Textile and Garment Group Chairman, Mr. Le Tien Truong, has highlighted the country's biggest weakness in exporting textiles and garments, namely its ability to compete in product prices.

Despite export success, Vietnam's wooden furniture industry still faces low labor and production costs, and heavily relies on imported raw materials, compared to regional competitors. 

Despite difficulties, many Vietnamese businesses still make efforts because they believe that entering Walmart can open many other doors when building a brand in the US market to go global.