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Tag: Vietnam

  • Ho Chi Minh City may tax online sales next month

    Ho Chi Minh City may tax online sales next month

    The city is making serious steps to collect sales taxes from small and home-based online business owners. Ho Chi Minh City’s tax department has said it will work with related departments to impose sales taxes on businesses running on Facebook and other online shopping sites.

    The department would submit the taxing plan to the city’s government for approval early next month, an unnamed official from the department told.

    The department said it would coordinate with information and trade departments, internet providers, banks and post offices to collect the tax.

    Last month, the trade department proposed the city work with Facebook on measures to collect tax from businesses running on the site.

    The General Department of Taxation later agreed with the proposal, saying it is working on measures to tax the businesses operating on Facebook, YouTube and Vietnamese messaging app Zalo.

    Tightening tax collection from online businesses is part of a plan to enhance state budget revenue collection.

    The city’s intent on taxing online sales has stirred up different opinions.

    Many said the tax collection is not an easy job for the authorities as many online retailers use anonymous accounts for transactions, not to mention that most purchase or sales transaction are cash-based.

    Vietnam’s e-commerce market, which has one of the world’s fastest growth rates, jumped 37 percent to around US$4 billion in 2015, data from the Ministry of Industry and Trade show.

    The growth rate is about 2.5 times faster than that in Japan, according to Tran Duc Tam, an industry expert.

    The government has projected revenue by Vietnam’s online retail to hit $10 billion by 2020, accounting for 5 percent of the country’s retail market.

    Retail sales in the first quarter of 2017 rose an estimated 9.2 percent from a year ago to $40.5 billion, the government said Wednesday, after an annual rise of 10.2 percent last year to $118 billion.

    Up to 60 percent Vietnam’s population is online.

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  • Vietnam confectionery booming

    Vietnam confectionery booming

    Market observers see a positive outlook in the long term for Vietnamese confectionery exports.

    Their optimism is based on a steady double-digit growth in export value for several years and an upward tick in investment and production expansion by local firms.

    According to the Business Monitor International (BMI), the nation’s confectionery sector has experienced a relatively high and stable growth rate and it is forecast to earn revenues of VNĐ40 trillion (US$1.8 billion) in 2018.

    China, the United States and Cambodia were the top three importers of Vietnamese confectionery last year, followed by Japan and South Korea. China is set to maintain its leading position this year, with import growth estimated at over 40 per cent.

    Confectionery exports went up 15 per cent year-on-year in 2016 with an export value of $532 million, the Ministry of Industry and Trade (MoIT) estimates. The export value in 2015 was $463 million.

    The growth in exports and better prospects seen have spurred investment in the industry, the MoIT has said.

    To promote co-operation between Vietnamese enterprises and experienced international confectioners, the German Bakers’ Confederation and the organising committee of the international trade fair for bakery, confectionery and snacks (IBA 2018) are treating Vietnamese enterprises as significant partners, according to the Đầu Tư (Investment) newspaper.

    The IBA has been a rendezvous for experts in the bakery, pastries, and snack industries since 1949. It is a platform for innovation and provides a complete overview of all novelties in the market. IBA 2018 will take place from September 15-20 in Munich, Germany.

    Nguyễn Trung Chính, representative of the GHM Company in Việt Nam, an affiliate of Munich-based GHM Gesellschaft für Handwerksmessen mbH, said Vietnamese confectionery products are capturing the attention of foreign investors.

    “In early April, GHM General Director Diether Dohr will come to Việt Nam to meet with local confectionery companies, and introduce them to German manufacturers and importers,” Chính said.

    Foreign rivals

    With improved quality, modern packaging and a more diverse range of products, the Vietnamese confectionery industry is developing strongly, especially in the premium segment.

    Statistics compiled by the MoIT show that imported confectionery now accounts for 30 per cent of the market share. In 2016, Việt Nam’s confectionery imports reached over $250 million, up 20 per cent year-on-year.

    A representative of the Phú Hưng Securities Corporation told Đầu Tư that the confectionery industry is not just looking at huge export potential, but also a surge in import earnings.

    “With a large and young population, Việt Nam’s average confectionery consumption is currently about 2 kilogrammes per person per year (lower than the world average of 3 kilogrammes per person per year). Confectionery consumption among the 65 per cent of the population that live in rural areas, which means that that there are plenty of market opportunities for both confectionery makers and traders, ” he said.

    Confectioners like Bibica Corporation, which has popular brands like Hura, Choco Bella, Orienko, Zoo, are trying to maintain and strengthen their market position.

    Besides building a new plant in Hưng Yên province, Bibica is preparing to operate its $12 million cupcake production line.

    The company has also implemented a $3.3 million project to produce the Hifat soft candy and has another project worth over $670,000 to produce round cakes.

    The Hải Hà Confectionery Joint Stock Company, another well-known firm, is building a new factory with a daily capacity of about 62 tonnes a day in Bắc Ninh Province.

    Vũ Quốc Tuấn, deputy manager of external relations and internal communications department with confectioner Mondelez Kinh Đô Việt Nam, said that imported candy has triggered fierce competition in the country’s confectionery market.

    He said: “This is the necessary motivation for local manufacturers to invest more in new production technology, improve product variety and enhance product quality, serving the diverse demands of demand of domestic and international consumers.”

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  • Noodle firm earnings plunge

    Noodle firm earnings plunge

    Colusa-Miliket Foodstuff Joint Stock Company’s (Miliket) audited financial report for 2016 showed a 40 per cent drop in pre-tax earnings compared with the previous year, indicating a loss of market share.

    The report showed revenue of VNĐ461 billion (US$20.7 million) and pre-tax earnings of VNĐ25 billion ($1.12 million), declining by 3.5 per cent and 39 per cent, respectively, from 2015, and currently the lowest since 2012.

    The noodle company’s market share reduced to only 2-4 per cent in total.

    In 2016, despite the company’s effort to introduce a new line of products with better packaging and another line with flavour diversity, it failed to attract customers and accumulated 15 per cent more inactive stock compared with 2015.

    The stock of VNĐ23.3 billion ($1.04 million) caused the company’s liabilities to increase from VNĐ61.1 billion ($2.74 million) to VNĐ72.8 billion ($3.27 million).

    In total, Miliket’s total capital in 2016 was VNĐ196 billion ($8.8 million), with cash flow of VNĐ122.3 billion ($5.5 million).

    According to financial experts, the company will soon be depleted of cash if it fails to increase quantity consumed.

    At present, Miliket’s instant noodles is in the lowest price bracket on the market, at VNĐ3,000 ($0.13) per package. This allows the company to focus on low income customers and cheap restaurant chains, both market segments neglected by larger companies.

    Miliket is one among several large noodle producers on the scene in Việt Nam today facing challenges. Other brands such as Acecook, Masan and Asia Food are also facing problems generating revenue.

    Although Acecook holds nearly 50 per cent of domestic market share, it experienced continuous drop in earnings between 2013 and 2015, whereas Masan’s 2016 revenue dropped by 20 per cent from the previous year.

    According to the World Instant Noodles Association, the amount of instant noodles consumed annually in Việt Nam has gradually declined since 2013, from 5.2 billion packages to 4.8 billion in 2015. The country has the fourth largest quantity of instant noodles consumed per annum.
    Read more at https://vietnamnews.vn/economy/373605/noodle-firm-earnings-plunge.html#ZMULl4oFsddSQVRI.99

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  • South Korea becomes Vietnam’s biggest foreign investor in Q1

    South Korea becomes Vietnam’s biggest foreign investor in Q1

    South Korea has taken over Singapore to become Vietnam’s biggest foreign investor in the first quarter, with investment totaling $3.74 billion, or 48.6 percent of the total foreign direct investment (FDI) pledged for the period, the Vietnamese government said Friday.

    Singapore, which held the top position in January and February, came second with $911 million, followed by China with $823.6 million, the Foreign Investment Agency under the Planning and Investment Ministry said in a monthly report.

    Actual FDI inflow in the first three months rose 3.4 percent from a year ago to $3.62 billion, while new pledges rose 6.5 percent to $2.92 billion, the report said.

    FDI is a major source of foreign exchange, which along with overseas remittances, helps Vietnam improve its trade balance.

    During the period, foreign firms from 71 countries and territories have new pledges and additional funds in 18 sectors, with the manufacturing and processing industry attracting $6.54 billion, or 84.9 percent of the total.

    The real estate sector comes second, while the wholesale and retail sector has the third position.

    Foreign investments have been poured into 52 cities and provinces in the three-month period, with the northern province of Bac Ninh, 30 kilometers (18 miles) northeast of Hanoi, attracting $2.61 billion, or 33.86 percent of the total.

    Binh Duong Province, about 40 km north of Ho Chi Minh City, ranks second with 18 percent and Ho Chi Minh City comes third with 7.78 percent.

    As of March 20, Vietnam has had more than 23,000 FDI projects in operation, with a combined registered capital of $300.7 billion.

    Most of them are in the manufacturing and processing industry, making up 59.3 percent of the total investment.

    Overall, South Korea also led the foreign investor list, with investment totaling $54 billion, followed by Japan with $42.49 billion.

    Large-scale FDI projects in the first quarter include a $2.5 billion expansion project of Samsung Display Vietnam, a subsidiary of Samsung Display South Korea, in Bac Ninh Province.

    Taiwan’s Polytex Far Eastern Ltd, which manufactures polyester fiber and cotton spinning in Binh Duong Province, got the green-light to increase its registered capital by $485.8 million to $760 million.

  • Vietnam grocer Saigon Co.op plans nearly 600 new stores

    Vietnam grocer Saigon Co.op plans nearly 600 new stores

    Vietnam grocer Saigon Co.op has revealed an ambitious store rollout program for 2017, adding nearly 600 stores by the year’s end.

    The company will open 500 convenience stores, most of them in Ho Chi Minh City and the southern provinces of Vietnam.

    It will also open 10 Co.op supermarkets, one Co.op Xtra hypermarket, one Sense City mall and 65 Co.op Food stores.

    Saigon Co.op cashier

    The company also appears to be broadening its focus to serve middle-class and high-earning consumers with plans to strengthen its organic product distribution. Chairman Diep Dung said the retailer will improve the quality of its goods and boost customer service.

    The expansion is expected to add 13 per cent sales growth for Co.op this year.

    Last year, Saigon Co.op opened 42 new Co.opmart supermarkets, Co.op Food stores, Sense City and Co.opSmile convenience stores. As a result, the retailer saw 11 per cent growth in revenue.

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  • Casinos still off-limits to Vietnamese

    Casinos still off-limits to Vietnamese

    Seven businesses have been licensed to operate casinos in Vietnam. Pham Ngoc Nam, deputy general director of Royal International Corp – the owner of a five-star hotel complex with a casino in Halong City, told the paper that the firm has been waiting for a guiding circular on the implementation of Government Decree 03/2017/ND-CP which allows Vietnamese passport holders to enter casinos.

    He said the decree allows Vietnamese people in casinos for a three-year period, but the Government has yet to issue official guidelines. The requirements for casino entry, especially income, are unclear.

    He said other casinos in Quang Ninh Province and other localities are in wait-and-see mode as well.

    That gamblers must prove their monthly income of at least VND10 million (around US$439) seems to be a tough challenge, said a representative of another casino.

    “Many casino goers are self-employed and wealthy but unwilling to apply for income certificates,” he explained.

    A representative of the Ministry of Finance said the Department of Banking and Financial Institutions is finalizing draft guidelines for the implementation of the decree on casino business. However, he refused to say when it comes out.

    The representative said the delay in issuing the guidance circular is unavoidable, as this is the first time Vietnamese gamblers have got the green light for entering casinos in the country.

    Many issues should be taken into careful consideration. Economist Nguyen Minh Phong shared the same view, saying that technically, the guidance circular should be available upon the promulgation of the decree.

    However, there is no precedent for this, thereby requiring careful preparation.

    The decree specifies Vietnamese citizens admitted to casinos must be at least 21 years old with regular monthly income of at least VND10 million or being subject to the third range of taxable income which is VND10-18 million a month under the Law on Personal Income Tax.

    The Ministry of Finance is responsible for providing them with application forms for these conditions.

    Gamblers will not be allowed in if their family members like parents, parents-in-law, spouses and children submit formal requests for preventing them from casinos.

    Besides, those who have violated national security rules or committed other crimes abroad resulting in more than three years of imprisonment will not be allowed in casinos.

    This includes those serving jail terms, with or without bail, or any other form of legal punishment.

  • Airlines to increase airfares

    Airlines to increase airfares

    The national flag carrier Vietnam Airlines increased tickets for business class on for domestic flights by 100,000 – 500,000 VND per leg; and economy class 40,000 – 300,000 VND.

    The airfare adjustment will be applied from April 1 for specific flights.

    However, Vietnam Airlines will maintain around 10 low-cost prices for each domestic flight, and keep unchanged prices for some specific routes.

    Vietjet Air also increased service fees from 100,000 VND to 140,000 VND per domestic leg and from 120,000 VND to 160,000 VND per international leg from March 22.

    Meanwhile, Jetstar Pacific announced to increase management fees from 100,000 VND to 130,000 VND per leg from March 15.

    The adjustment of airfare is based on the market demand and regulations of the Civil Aviation Authority of Vietnam and Ministry of Transport, a representative from Vietnam Airlines said.

    It also aims to ensure healthy competition in the aviation sector, a representative from Vietjet Air said.

    The Civil Aviation Authority of Vietnam in early this month sent a proposal to the Ministry of Transport to raise several aviation service charges in order to reduce peak-hour overloads and raise money for infrastructure development.

    Under the proposal, take-off and landing service charges at major airports, including Noi Bai and Tan Son Nhat, would be raised by 15 percent during rush hours and reduced by 15 percent during off-peak hours.

    The Civil Aviation Authority is also proposing a hike in security charges of 0.5 USD per passenger for international flights, and 18,181 VND (0.9 cents) per passenger for domestic flights – double the current charge.

    A hike of 40,000 VND in passenger service charges is also being proposed, raising them to 90,909 VND for arrivals and departures at type A airports, and 72,727 VND at type B airports.

    The increase is explained by the upgrading of many airports and passenger service quality.

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  • Vietnam plans to send more skilled workers abroad to curb unemployment

    Vietnam plans to send more skilled workers abroad to curb unemployment

    Vietnam’s labor ministry is outlining a new plan to send more skilled workers abroad in the next few years as the number of unemployed Vietnamese has surpassed the million mark.

    According to Deputy Minister Doan Mau Nghiep, the plan will focus on sending engineers to South Korea and health workers to Japan and Germany and also exploring new markets like Slovakia, the Czech Republic and Israel.

    “The ministry wants to find solutions for well-trained workers, who have graduated from universities or colleges but can’t find jobs,” he said. “But we have to assess whether the quality of our labor force meet the requirements of recipient countries.”

    According to official data, Vietnam had around 1.1 million unemployed workers, 2.3 percent of the workforce. Around one third were college graduates.

    Experts have said that the quality of Vietnamese labor force is generally low compared to Asian peers such as South Korea, India and Malaysia.

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  • Vietnam tables Brazilian meat imports

    Vietnam tables Brazilian meat imports

    Vietnam is considering whether to ban imports of livestock and poultry products from Brazil as the Latin American country investigates the quality of its meat exports.

    The animal health department said on Wednesday meat imports from Brazil have been low so far this year, but it has asked the agriculture ministry to halt imports if any low-quality products are found.

    Following a two-year investigation, Brazil’s federal police last week accused more than 100 people, mostly health inspectors, of taking bribes and allowing the sale of rancid products, falsifying export documents and failing to inspect meat packing plants, as reported. Brazil is the world’s top producer of beef and poultry.

    BRF and JBS, the world’s biggest meat producers, are among dozens of firms targeted in the police investigation into what would be the biggest scandal to hit Brazil’s agricultural sector. Both companies have denied any wrongdoing.

    The trade office at the Vietnamese Embassy in Brazil has called on agencies in Vietnam to tighten inspections of livestock and poultry products from Brazil.

    Hong Kong, Japan, Canada, Mexico and Switzerland all announced partial or all-out bans on Brazilian meat imports on Tuesday, following steps taken a day earlier by China, the European Union, South Korea and Chile, Reuters reported.

    But South Korea said on Tuesday it will lift the ban on poultry imports from BRF, the world’s largest exporter of the meat.

    Vietnam has imported around 3,000 tons of meat and meat products from Brazil so far this year, the animal health department said.

    “The amount is very small compared to the 6 million tons that Brazil exports every year to countries around the world,” said an official from the department.

    Brazil, recognized by the World Organization for Animal Health for doing a good job in controlling animal diseases, exports livestock and poultry products to 150 markets around the world.

    Last year, it took the lead in beef and chicken exports with outbound sales of the two products hitting 1.8 million tons and 4 million tons, respectively. Its major buyers are the E.U., Russia, Japan, China and Singapore.

    Two-way trade between Vietnam and Brazil stood at $2.29 billion in the first nine months of last year, down 15.7 percent against the same period in 2015, with Vietnam’s imports totaling $1.35 billion, Vietnam Customs data showed.

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  • Route to success

    Route to success

    CEO Nguyen Thi Phuong Thao, who created the concept of bikini-clad flight attendants, told local media that she wants to make Vietjet become the “Emirates of Asia”.

    Such goals are admirable, and insiders believe the IPO will bring further success to the “bikini airline”.

    Taking off

    After five years of operations, Vietjet has had a level success that other airlines would envy.

    Vietnam’s only private airline ordered 100 new jets from Boeing in May last year, worth $11.3 billion, and signed a contract in September to purchase 20 A321 aircraft from Airbus, witnessed by State President Tran Dai Quang and French President François Hollande.

    With the two contracts, it continues to drive towards its goal of having a “Red Revolution” in Vietnam’s aviation sector and becoming a global airline.

    The five-year-old Vietjet surpassed national flag carrier Vietnam Airlines in domestic passenger transport during the recent Tet holidays, according to the Civil Aviation Authority of Vietnam (CAAV).

    Over the six-day holiday, Vietnam Airlines carried 175,146 passengers and Vietjet 209,179, for market shares of 35 per cent and 42 per cent, respectively.

    The only competitor of Vietjet Air is low-cost carrier Jetstar Pacific, a subsidiary of Vietnam Airlines. But Vietjet Air far outstrips Jetstar Pacific in revenue and market share.

    While Vietnam Airlines, in which the State owns more 90 per cent, found it quite difficult to find strategic partners, Vietjet attracted 26 foreign investors after announcing its plan to conduct an IPO.

    Vietjet has also closed the gap with Vietnam Airlines in terms of profit.

    While Vietjet’s pre-tax profit increased 91.6 per cent in 2016 to VND2.3 trillion ($101.9 million), Vietnam Airlines’ pre-tax profit was VND2.5 trillion ($110 million), up 140 per cent and 7 per cent higher than the annual plan.

    And its share price is much more attractive than Vietnam Airlines’.

    According to the Hanoi Stock Exchange (HNX), Vietnam Airlines’ shares trade on the UPCoM Market with a reference price of VND28,000 ($1.2) and are expected to reach VND40,000 ($1.7).

    Vietjet’s reference price, meanwhile, has been predicted to stand at VND90,000 ($4).

    “The capital raised by Vietjet in the offering will help support the expansion of its international routes and the enlargement of its fleet, which are critical for it to compete in the Asian aviation market – one of the fastest growing and most dynamic aviation markets in the world,” said Mr. James Grandolfo, a Partner in the Hong Kong office of Milbank, which is the advisor in Vietjet’s IPO.

    The appeal of Vietjet is its low cost, as budget airlines have become the key driver of Vietnam’s fast-growing aviation market and transported 55 per cent of domestic passengers in 2016.

    Budget airlines are rapidly increasing their market share, with an annual growth rate of 15-20 per cent, according to Mr. Lai Xuan Thanh, Head of CAAV.

    Given the strong development of low-cost airlines, Vietjet, the dominant player in Vietnam’s low-cost market, quickly captured a 40 per cent share of the local market and will likely surpass Vietnam Airlines within the next few years as Vietnam’s largest domestic carrier.

    So who will benefit from Vietjet’s IPO? Obviously, it’s a win-win for Vietjet and its partners.

    The economy, according to many economic experts, will also be a winner from the deal.

    “A sizable capital source will be mobilized, in particular funds from foreign financial institutions,” said Mr. Nguyen Hoang Hai, Deputy Chairman of the Vietnam Association of Financial Investors.

    “The IPO will be a test of how much foreign capital Vietjet can rally by promising continued expansion and rising profits, banking on the past few years of impressive growth that have turned it from a startup to a major carrier that is expected to soon hold the largest market share in Vietnam.”

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  • E-commerce firms struggle to gain profits

    E-commerce firms struggle to gain profits

    Large international e-commerce firms such as Amazon and Alibaba only began making profits after 10 first years of operation. The big losses of Vietnam’s e-commerce firms were foreseeable.

    Before it was taken over by Alibaba in 2016, Lazada Group reported loss of $334 million in 2015, twice as much as the loss the year before. VNG’s latest financial report showed the company has incurred a VND100 billion loss since it began injecting money into Tiki.vn in 2016.

    Analysts pointed out that orders from clients must be dealt with through tens of different stages before goods can reach clients, and each stage can gobble up one part of investors’ earnings.

    Investors, for example, have to spend big money on storehouses. It is estimated that Lazada and Tiki have to spend no less than VND1 billion just to run one storehouse in HCMC. As such, with three operational storehouses, they have to spend no less than VND48 billion a year.

    With tens of thousands of orders each day, e-commerce firms will need high numbers of deliverymen, thus bearing high financial cost. Both Lazada and Tiki have to employ deliverymen and outsource the service.

    Lazada Vietnam has 200 workers in Lazada Express, but it still has to join forces with Giaohangnhanh, VNPost and Viettel Post to fulfill orders.

    Besides, the expenses on marketing are also enormous which eat up investors’ profits. Lazada Vietnam had to spend big money on ads in the first years of operation to lure more customers. Some sources said the firm once spent up to $2 million a month on ad campaigns.

    Chotot.vn also reportedly spent billions of dong on the ad clips with the play of comic actors. Meanwhile, Shopee.vn offers free delivery to clients nationwide applied to orders with bills of VND150,000 and higher. With more than 10,000 orders a day, Shopee.vn had to pay nearly VND1 billion on the program.

    E-commerce firms not only have to pay high for input costs and marketing campaigns, but also have to cut selling prices to compete with others. A branding expert who asked to be anonymous said some firms accept to sell goods at a loss of 10-20 percent in order to lure customers. In peak promotion season, the figure could be up to 50 percent.

    The highest risk for e-commerce firms is that they may lose orders because of the COD (cash on delivery) payment method. Customers can cancel orders at the last minute, though firms have to pay expenses to deal with the orders.

  • Emerging markets like Vietnam help Inditex outpace H&M

    Emerging markets like Vietnam help Inditex outpace H&M

    Fashion retailer H&M’s sales fell unexpectedly in February while Inditex, which owns Zara, pulled further ahead of its Swedish rival, helped by its expansion online and a bigger emerging market presence.

    Inditex, the world’s biggest clothing retailer, has consistently outperformed H&M in the past few years as a result of online growth and its push into new markets. The Spanish company has also diversified more quickly into higher-priced brands, reducing exposure to the rise of discount chains like Primark.

    H&M has embarked on plans to roll out ecommerce in more markets this year and speed up expansion of newer brands such as the mid-market COS and & Other Stories.

    But on Wednesday H&M revealed that local-currency sales fell in February for the first time in four years, slipping 1 percent year-on-year, against a forecast in a poll of analysts for a 6 percent rise. H&M’s shares fell 5 percent.

    In contrast, Inditex’s local currency sales rose 13 percent from February 1 to March 12, as customers snapped up items from spring collections like double-breasted jackets, palazzo trousers and embroidered tulle tops.

    This was adjusted for an extra trading day in February 2016. H&M sales were up 3 percent in February, taking that calendar effect into account.

    Inditex results highlight the success of its strategy, with like-for-like sales up 10 percent in the year to end-January, helped by a shift towards opening bigger stores in prime locations that are then integrated with online operations.

    emerging-markets-like-vietnam-help-zara-owner-inditex-outpace-hm

    Inditex opened stores in 56 countries during the year, including its first opening in Ho Chi Minh City, Vietnam.

    Forex pressure

    Inditex’s gross profit margin missed analyst expectations, falling to 57.0 percent in its 2016 financial year from 57.8 percent in 2015. This weighed on the company’s shares which were down 1.4 percent by 1014 GMT.

    Inditex, known for speeding the latest trends from runway to stores in a matter of days, reports in euros but makes more than half its sales in other currencies, exposing it to falls in the likes of the Mexican peso and the Russian rouble.

    Chairman and Chief Executive Pablo Isla said this margin metric would have increased on the year had it not been for the negative currency effects.

    Analysts expect this effect to swing in Inditex’s favor over the next 12 months with a consequent boost to profit margins.

    “We are very keen buyers of Inditex for 2017,” Anne Critchlow, analyst at Societe Generale, said. She said Inditex trades on 26 times forward earnings, compared to H&M on 21 times.

    Inditex opened stores in 56 countries during the year, including first openings in New Zealand, Vietnam and Paraguay, bringing its total store count to over 7,200. It launched online sales across its stable of brands in Turkey and said on Wednesday it would start online sales in India in 2017.

    H&M is more reliant on Europe than Inditex. In Germany, for example, which is H&M’s biggest market, apparel sales fell 9 percent in February, according to trade journal Textilwirtschaft.

    “Market conditions are the main driver of the weak February number,” UBS analyst Adam Cochrane said. “There’s a fear that they are losing market share on a like-for-like basis.” UBS has a “buy” recommendation on H&M.

    H&M reported that sales in local currencies rose 4 percent in its fiscal first quarter to February 28. That compares with a new target for annual sales growth of 10-15 percent. H&M is due to publish its full fiscal first-quarter report on March 30

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  • Vietnam driven to protect domestic automobile industry

    Vietnam driven to protect domestic automobile industry

    Vietnamese policymakers are looking at ways to safeguard the domestic automobile industry against foreign rivals, based on an official document released by the government office.

    Vietnam’s automobile industry is expected to face more hurdles in the years to come as the local market opens up to foreign competitors.

    Locally-assembled cars could cost 20 percent more than those imported from neighboring countries such as Thailand and Indonesia in 2018, when tariffs on car imports into Vietnam from other ASEAN countries will be cut to zero from the current 50 percent, the trade ministry said.

    The government has asked trade officials to look at ways to prevent a surge in car imports.

    Meanwhile, the finance ministry will review import tariffs on cars and monitor their origin to prevent tax dodging.

    Vietnamese policymakers also plan to adjust import tariffs on automotive parts that are not available in the domestic market.

    The Southeast Asian country has targeted car manufacturing as a “spearhead industry” that could help it move up the global chain.

    However, the fact that it still heavily relies on imported cars to meet local demand has exerted tremendous pressure on local manufacturers.

    Vietnam imported 15,270 units in the first two months this year, a 35 percent jump from a year ago, customs data showed.

    The import surge comes as Vietnamese people switch from motorbikes to cars, with more than half of the imported cars classed as midsize sedans, based on official statistics.

  • Harvest rain takes the flavor out of Vietnamese coffee crop

    Harvest rain takes the flavor out of Vietnamese coffee crop

    Heavy rain that hit swamped Vietnam’s 2016/2017 coffee harvest has raised the ratio of low-quality beans and defects, traders said on Wednesday, with one major exporter saying quality is at its worst in nine years.

    Unseasonal rain that fell from October-December last year in Vietnam’s Central Highlands coffee belt delayed the 2016/2017 crop harvest, resulting in more black and broken beans. The rainy season normally ends in early October.

    The harvest was completed in January as usual, but a higher ratio of black and broken beans – counted as defects in export standards – has emerged.

    These defects, coupled with India’s ban on Vietnamese coffee imports from March 7, have made it more difficult for the world’s top robusta exporter to find buyers for the low-quality commodity this year.

    “The ratio of defects this year has risen by 50 percent from 2016,” said Le Duc Huy, deputy general director of Simexco, a major export firm based in the Central Highlands province of Dak Lak. “The quality is the worst since 2008.”

    Downpours cut Vietnam’s 2007/2008 coffee output by 15 percent to 1.08 million tons.

    Traders say India often buys Vietnam’s low-quality robusta grade 3, with 25 percent black and broken beans and 3 percent foreign matter, to produce instant coffee. Vietnam’s benchmark coffee for export is robusta grade 2 (5 percent black and broken), which is priced at a premium of $120-$180 a ton compared to the grade 3 beans.

    The harvest usually starts in late October and ends in January. Rain during the blossoming period reduces yields, while the wet weather disrupts the outdoor drying process, necessitating the use of electric dryers that turn the beans black and worsen the taste. The exportable volume is therefore lowered.

    Two traders at foreign firms in Ho Chi Minh City, Vietnam’s largest coffee trading market, estimated that low-quality beans made up 10-20 percent of the country’s output this year, which is projected to ease 8 percent from last year to 26.7 million bags, or 1.6 million tons, the U.S. Department of Agriculture has said.

    Vietnamese trade experts say India’s ban is a tit-for-tat action after Hanoi announced it was going to suspend the import of five Indian commodities from late April to prevent peanut beetle from spreading.

    Officials at the Indian Embassy in Hanoi did not immediately comment on the matter.

    The impact of the ban on Vietnam’s overall coffee exports is minimal, Vietnam Coffee and Cocoa Association Chairman Luong Van Tu said.

    India imported 6,900 tons of Vietnamese coffee from January-February this year, down 17 percent from the same period in 2016, based on Vietnam Customs data.

    Last year it spent $79.4 million to import 46,000 tons of coffee from Vietnam, a tiny fraction of the Southeast Asian nation’s total shipments of 1.78 million tons.

    India has the world’s third fastest growing retail coffee market behind Indonesia and Turkey, global market intelligence agency Mintel said in its latest report earlier this month.

    Robusta with high ratios of black and broken beans has also been sold to Vietnamese firms to produce instant coffee, traders said.

    But the ban has affected Indian roasters who had been sourcing their raw material from Vietnam, traders said.

    “Since the ban has been in place, several shipments have been held up and importers do not know how to solve the situation,” said a Vietnamese dealer at a Ho Chi Minh City-based firm which ships coffee to India.

    The ban has also made it difficult for Indian roasters after back-to-back droughts in the past two years damaged various crops, including coffee.

    “Indian roasters may have to switch to other sources, such as the Ivory Coast and other African nations,” a second trader at a European firm in Ho Chi Minh City said.

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  • Saigon cab firm takes on Uber with unexpected weapon: grapefruit

    Saigon cab firm takes on Uber with unexpected weapon: grapefruit

    With Uber and other app-based car-hailing services becoming increasingly popular in Vietnam, one local taxi firm has decided to improvise in order to give its drivers a competitive edge.

    Vinasun, the country’s second biggest taxi firm, has found a way to boost its drivers’ incomes by turning 800 cabs in Ho Chi Minh City into mobile grapefruit stalls.

    A kilogram of pomelo, a green-skin grapefruit, sells for VND64,000 ($2.81)

    “Drivers receive a bonus for selling large quantities of fruit,” a driver said.

    The taxi operator typically keeps 80 percent of the revenue from its grapefruit business and awards the remaining 20 percent to the drivers, said executive officer Ta Long Hy.

    Vinasun drivers are making on average between $2 and $4 a day from selling grapefruit, he estimated, adding that the best sellers can add up to $17 to their daily incomes.

    Since ride-hailing companies like Uber and Grab appeared on the scene, traditional taxi drivers have seen their incomes rapidly plunging.

    Traditional taxi companies have been lobbying the government for a lower VAT levy to allow them to compete with cab-hailing apps. The government has, however, turned down the request saying there’s no grounding to claim traditional taxi companies have to pay higher taxes and fees than their ride-hailing competitors.

    Uber and Grab cut into at least 10 percent taxi operators’ revenue last year in Ho Chi Minh City, the local association of taxi companies estimated.

    The number of private minicabs, mostly offering transportation services via car-hailing apps, has reached 20,000 in Ho Chi Minh City, twice as many as the number of traditional taxis.

    Last year Vinasun, which has around 6,000 cabs and operates chiefly in Ho Chi Minh City, launched a counteroffensive against the ride-hailing menace: its own app.

    Passengers using Vinasun’s ride-hailing app can easily recognize their minicabs with a ‘Vcar’ logo, Vinasun’s luxury version. They will be offered the option to fix the price at the beginning of a journey rather than rely on the taxi meter, according to Vinasun.

    Vinasun Group, which has been listed on the Ho Chi Minh City Stock Exchange since 2008, made VND4.3 trillion in revenue ($189 million) last year, down 6 percent from 2015.