Explaining the move in the announcement, the group said that “There are changes in the development strategy of garment industry model to suit guidance by the group in Thailand.
We decide to pause the purchase of garment products from suppliers in Vietnam from July 2019. Problems arising before July 2, 2019 will be solved according to regulations in the trade cooperation contracts signed between the two sides.”
Ms. Do Thi Thuy Dung, director of An Tuong Viet Company that has supplied garment products for BigC system for the last 13 years, said that goods supply contract was traditionally resigned in February and July annually, this year her company waited until June 30 seeing no announcement from BigC until 8p.m. on July 2 when BigC suddenly informed the company of the halt.
“We don’t know how to talk to about 100 workers of the company and how to handle the large amount of goods comprising cloths and ready-made clothes specifically designed for BigC in the warehouse,” she said.
An unnamed business representative commented that BigC’s move was sudden and incomprehensible, adding that the group committed to continue cooperation with suppliers when receiving BigC system from French Casino Group before.
“We are in passive position and don’t know how to talk to workers as their wages and welfare completely depend on production for BigC. The group should carefully consider the matter and have a satisfactory answer to hundreds of garment firms including us,” said the representative.
On the same day, some businesses said that a number of BigC supermarkets did not receive their goods delivery on July 3.
Mr. Pham Xuan Hong, deputy chairman of Vietnam Textile and Apparel Association and chairman of Association Garment Textile Embroidery Knitting of HCMC (Agtek), said that BigC’s order halt of products from many businesses without announcing that in a reasonable period of time in advance will cause huge damage for businesses. If the halt does not accord terms in their contracts with BigC, businesses can take BigC to the economic court, do damage statistics to demand BigC’s compensation.
The Association Garment Textile Embroidery Knitting of HCMC (Agtek) is determining its members’ losses to provide them legal consultancy.
Mr. Pham Xuan Hong added that BigC’s action is abnormal and the supermarket chain is in Vietnam so they should give priority to Vietnamese products in the domestic market.
Market expert Vu Vinh Phu said that BigC has been enjoying a lot of incentives investing in Vietnam. The country had paved the red carpet for BigC to do business there. In positive side, the company has contributed in stimulating production in the country. Still it also has negative side.
Mr. Phu said that under the angle of business moral, BigC is doing business in Vietnam so its abrupt order halt is unacceptable.
Replying to Sai Gon Giai Phong Newspaper’s query about the halt, BigC’s representative affirmed that Vietnamese suppliers are always the top priority in the supermarket chain’s search for goods supply source and development plan.
“Currently, BigC Vietnam is under a consideration process with over 200 garment suppliers to develop good quality products for not only domestic market but also export to potential markets.
The halt of orders is just temporary and BigC Vietnam affirms not to stop trading of garment industry in Vietnam,” said the representative.
According to businesses, they must accept high discounts to take their goods to BigC supermarkets. For the last several years, many big businesses in Vietnam must leave BigC including The Gioi Di Dong. Lots of businesses producing goods for BigC’s private label have stopped operation since 2017.
Economic expert Huynh Thanh Dien from University of Economics HCMC said that retail system is one of significantly important outputs of businesses. It is not random that many nations always buy distribution systems before investing abroad and gradually taking their goods in. Hence, Vietnam must be cautious about the retail market because it is the output of locally made goods.
It is unclear how “BigC case” will be solved but the case is a lesson for managers. The state should provide legal assistances for Vietnamese goods selling systems to make sure that locally made products will not lose their market share right in the domestic market. In addition, Vietnamese firms must gradually improve their goods quality to stand firm not only in the domestic but also overseas market.
Ms. Nguyen Huynh Trang, deputy director of the Department of Industry and Trade in HCMC, said that the agency is requiring Central Group to report about its halt of buying Vietnamese garment products.
Furthermore the agency will work with businesses and the Apparel and Textile Association to grasp the entire problem and find out specific reasons for the halt. This will be a basis to have suitable solutions and ensure legal benefits for Vietnamese firms.