FairPrice to expand in Vietnam
Singapore retailing giant NTUC FairPrice Cooperative Ltd has signed a joint-venture agreement with Saigon Union of Trading Co-operatives Ltd to establish a chain of hypermarkets in Vietnam, with the first store likely to launch by 2012.
Under the agreement, the hypermarkets will leverage on a network of 40 Co-op Mart supermarkets of Saigon Co-op for economies of scale, as well as its current loyalty programmes and customer base.
"FairPrice has been moderating the high cost of living in Singapore for the past 37 years and we are keen to share our experience with our friends in Vietnam," said Ng Ser Miang, chairman of NTUC. "Saigon Co-op already has a strong customer following and is deeply rooted in the hearts of consumers in Vietnam."
Saigon Co-op chairman Nguyen Ngoc Hoa said FairPrice was the right fit for its hypermart joint venture as both retailers are "the people's retailer" and both "uphold the social mission for our people".
FairPrice will contribute its expertise in the hypermarket retail format to build and expand the hypermarket chain across Vietnam. Both firms will also conduct training programmes for their employees.
Some analysts said the new joint venture may help make up for the failed venture of FairPrice in China.
NTUC had earlier explored overseas ventures in Myanmar and China but these did not succeed due to several market conditions, said Tan Kian Chew, Group CEO of NTUC FairPrice and chairman of FairPrice International.
Nextmall, the first hypermarket venture of FairPrice, closed in 2005 after incurring about $80 million in debts and over $40 million in loses over the three years since it was established.
"But with the thriving economy in Vietnam and Saigon Co-op's positive track record, we are confident of our business venture in Vietnam," said Mr. Tan. "Specific details on the joint venture are still being worked out."
Through the diversification of its business, FairPrice expects to create a new income stream through the Vietnam venture.
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