Metro Cash & Carry’s business performance questioned
Metro Cash & Carry’s business performance questioned
VietNamNet Bridge – Though revenue has increased by 24 times over the last 12 years and its network expanded to many areas, Metro Cash & Carry (MCC) has not paid any corporate income tax since the day it entered Vietnam in 2002.
In March 2002, MCC officially joined the Vietnamese distribution market with the opening of its first wholesale center in HCM City, capitalized at $78 million.
Since the day it set foot in Vietnam, MCC has been positioning itself as a wholesale brand, targeting restaurants, hotels, canteens, retailers, sale agents and groceries as its major clients.
The well-known brand offered new shopping model that lured Vietnamese consumers to the supermarket chain. At that time, “going to the supermarket”, in the Vietnamese mind, meant “going to Metro”.
Many Vietnamese individuals, who were not among Metro’s targeted clients, also tried to register for membership cards to buy goods at Metro when they wanted.
In July 2003, MCC opened its second shopping wholesale center, in Hanoi. And since then, MCC has inaugurated one or two centers every year. In 2010, 2011 and 2012, it opened four supermarkets every year. The rapid expansion of the German-invested distribution network surprised many people, including analysts.
With such rapid expansion, MCC has had 19 wholesale centers located in 14 cities and provinces in Vietnam, five transit storehouses, employing 3,600 workers. The network expansion helped improve business performance and had steadily increasing revenue.
The 2002 finance report showed that MCC earned 38 million euros in that year, or VND600 billion. The figure soared to 516 million euros in 2013, or VND14.734 trillion, which was 24 times higher than the 2002’s revenue. Vietnam brought the second biggest revenue to Metro, just after China.
By contrast to the stable increase in revenue, the profit made by Metro reportedly has been unsatisfactory. A report of the General Taxation Department (GDT) released in 2013 showed that MCC topped the list of foreign-invested enterprises which have repeatedly declared losses.
Of the last 12 years of operation in Vietnam, 2010 was the only year when Metro reportedly made a profit, of VND116 billion. MCC only paid value-added tax (VAT), excise tax, land rents and contractor withholding tax. It did not pay any corporate income tax in Vietnamese dong, and therefore, was added onto the black list of enterprises suspected of conducting transfer pricing.
However, MCC denied the denouncement related to transfer pricing, saying that though its revenue had increased rapidly, it did not make a profit because it had to make heavy investments to open new wholesale centers.
Meanwhile, observers noted that MCC has always been prosperous, which was the main reason why it decided to expand its network. At the opening ceremony of a center in Hanoi one year ago, the managing director of MCC Vietnam revealed that Metro had planned to set up 30-35 centers in Vietnam.
A GDT’s senior official said a lot of questions have been raised about Metro’s business activities and efficiency.
vieynamnet
