Vietnamese suppliers forced to leave Big C over commissions
Vietnamese suppliers forced to leave Big C over commissions
Many Vietnamese food and seafood suppliers are on the verge of pulling their products from supermarket chain Big C’s shelves as the retailer demands exorbitant commissions and numerous fees, destroying suppliers' profits.
The cost to have their products distributed in 32 Big C outlets across Vietnam continues to rise and will soon become unprofitable, according to the affected suppliers.
The move is seen by some as an attempt to indirectly drive Vietnamese goods out of Big C altogether in order to make room for foreign products, especially those from Thailand, given that the chain is now under Thai ownership.
On April 29, Thai conglomerate Central Group announced it had acquired Big C’s operations in Vietnam from France's Casino Group at a cost of 1 billion euros ($1.14 billion).
“Demanding high commissions kills two birds with one stone,” Ho Minh Chinh, a sales training expert said.
“It means Vietnamese companies will withdraw from Big C and Thai goods will fill in the vacancy.”
25 percent commission
According to businesses under the Vietnam Association of Seafood Exporters and Producers (VASEP), Big C is demanding higher commissions as part of all new contracts for 2016.
The commissions, featuring increases of up to five percent, range in total from 17 to 20 percent, and even 25 percent for some products, according to the director of one seafood firm.
“We can hardly survive with such commissions let alone make a profit for reinvestment,” he said.
Nguyen Hoai Nam, deputy general secretary of VASEP, said seafood suppliers can accept a 15 percent commission at most.
“Businesses will incur losses for sure at 17-20 percent commissions,” he said.
On top of the commissions, suppliers also have to pay myriad fees demanded by the supermarket operator.
One business says there are as many as 15 different fees to pay, such as whenever the supermarket organizes promotional campaigns or launch ceremonies.
Many other food suppliers have also said they have experienced the same hardship as the seafood businesses when selling goods to Big C.
For several smaller businesses, they must agree to sell goods at no profit if they want their commodities to be ranged on Big C’s shelves, with high commissions eating up their earnings.
The media director of a dairy firm also confirmed that Big C commands the highest commission amongst retailers in Vietnam.
Many suppliers have already decided to stop distributing to Big C, and even turned down the supermarket operator’s invitation to return.
Nam, the VASEP deputy general secretary, said his association has filed a request to Big C, asking that commissions be lowered to below 15 percent, so that seafood suppliers can continue their cooperation with the supermarket chain.
