Following the protest, Thai-backed Central Group, the owner of supermarket chain Big C, met up with the Ministry of Industry and Trade (MoIT) on July 4 to enlighten its suspension of soft-line orders made on June 2.
Accordingly, Philippe Broianigo, CEO of Central Group in Vietnam, has reaffirmed Big C’s commitment to continue order local-made products, including soft-line ones.
Big C, however, will be reviewing its business model, including purchasing activities, to target products of higher quality. The company will thus be working with local suppliers to ensure upcoming orders will better meet the market demand in Vietnam as well as of Thai exporters.
Broianigo has also confirmed that its notice to stop its purchases in 15 days made earlier on was to help the company review and evaluate the capacity of 200 suppliers in Vietnam. Big C thus did not intend to discontinue ordering local-made products.
Big C will now restore its orders of soft-line products from 50 local suppliers starting July 4. In two weeks time, the supermarket will reopen its purchasing activities to other 100 suppliers. The company may need some time to review the capacity of remaining 50 suppliers, as well as their products’ quality and costs, to find out whether they have met the group’s actual requirements
In a letter dated July 2 sent to Central Group Vietnam’s partners, the company stated that in order to prepare for its project of restructuring soft-line department in Vietnam, it has decided to suspend all purchasing activities regarding soft-line products from all soft-line suppliers in Vietnam, effective from July 2019.
The suspension of the ordering temporarily is owning to a change in strategy of development of Central Group’s soft-line concept in line with direction from Central Group in Thailand, Central Group Vietnam explained further in the letter.
Deputy minister of Industry and Trade Do Thang Hai, meanwhile, said that while MoIT welcomes foreign invested enterprises doing business in Vietnam, they must respect the agreements signed with local producers or suppliers, as well as local regulations.
Based on the terms and conditions of the agreements that Big C has signed with local suppliers, should their products not meet the specific requirements of Big C, the firm may have the right to turn down the purchases. Yet when it comes to changing business strategy, Big C ought to notify its suppliers and provide an appropriate timeline for the suppliers to adjust their operation accordingly.
Big C currently has around 4,000 suppliers in the country, in which 200 are in the line of garment manufacturing.
Some suppliers have expressed their concerns over Big C’s commitment as they are afraid even with the agreement signed, they would not be certain on whether Big C will adhere to the terms, in terms of the order volume.
These suppliers could understand the changes in Big C’s new business strategy that reshuffles its product structures, but they would definitely need time to resolve their inventory and reduce the number of employees accordingly.