Vietnam is gold mine for int’l express delivery firms

As Vietnamese favor foreign-made products and are willing to pay more for products they like, international express delivery firms see Vietnam as a fertile land for their business.



The rapid increase in imports/exports has also helped the development of logistics companies. A GDC (General Department of Customs) report shows that import/export turnover in the first eight months of the year reached $270.91 billion, an increase of 20.9 percent over the same period last year.

After Vietnam joined WTO and fully opened its market, foreign express delivery firms flocked to the country. These include DHL from Germany, TNT from the Netherlands, FedEx and UPS from the US.

The firms all follow a two-step strategy. At first, they cooperate with Vietnamese companies to set up joint ventures. With strong financial capability and international brands, they can easily conquer the market.

Later, they quit the joint venture model and became 100 percent foreign invested enterprises.

TNT, for example, joined the Vietnamese market by teaming up with Viettrans to set up a joint venture. Meanwhile, DHL set up a joint venture with VNPT in which it held 51 percent of capital.

As the firms had good business performances, FedEx and UPS, the two giants, also headed for Vietnam. UPS terminated the joint venture model and established UPS Vietnam, a 100 percent foreign owned company.

The big players have poured big money into Vietnam and investments have been increasing rapidly.

Experts believed at the time that the presence of international delivery firms in Vietnam will not be a threat to domestic service providers, because the firms would focus on international services, which was not the advantage of Vietnamese enterprises. Vietnamese enterprises mostly targeted the domestic market.

However, the recent moves by foreign delivery firms show they are taking strong action to conquer the domestic market.

Several days ago, UPS announced it would increase services in 10 provinces/cities in the central and southern regions. The cut-off time has been extended by three hours.

Meanwhile, the time for shipping imports/exports to and from Asia has been shortened from two to one day, while time for the shipping for goods to and from Europe has been cut from three to two days.

A senior executive of UPS Vietnam said delivery service providers have been put under increasing pressure. They need to provide products and services in larger quantities, with higher quality, and they need to deliver more quickly and offer lower service fees.

With the shortening of shipping times and extending the cut-off time, clients will have more time for production, while UPS Vietnam can deal with more orders.

Kim Chi / vietnamnet