Suppliers have become more cautious when doing business
with retailers after WonderBuy has filed for bankruptcy. Meanwhile, analysts
have every reason to believe that after WonderBuy, some more names would also
disappear from the market.

Manufacturers and suppliers are now following the principle of “holding the
handle of a knife” in making transactions with retailers, especially small or
new retailers, after WonderBuy filed for bankruptcy on June 10.

Saigon Tiep Thi has quoted its sources as saying that “suppliers now require
retailers to pay money first and then get deliveries, or they only deliver
products to retailers with the guarantee of banks.”

A supplier who asked to be anonymous, said that in fact, the policy has been
applied for a long time, but he needs to tighten the distribution more strictly
after the WonderBuy’s case.

“I would rather not to sell products than seeing retailers repudiating their
debts,” said Nguyen Quoc Bao, Director of Thanh Cong Mobile.

Vo Ngoc Tai, Director of Tam Nhin So, the distributor of audio digital products,
said that the company applies different policies to different clients.

“We do not set up requirements on payment deadline on some loyal clients, even
though they are small retailers,” he said. “Meanwhile, we would ask others to
pay money before getting deliveries, even though they are big distribution
chains”.

“The big clients, though having big working capital of hundreds of billions
dong, are usually late in making payment,” he added. “I would rather not to sell
products than accepting high risks, because retailers may refuse to pay their
debts”.

Doan Hong Viet, Chair of DigiWorld, a distribution company, also said that it is
now necessary to tighten the financial policies applied to retailers in order to
“play safe”. He revealed that big retail chains are not always credible.

Meanwhile, retailers have confirmed that distributors have been applying
tightened policies, which have put big difficulties for them, especially when it
is now the low sale season.

A distributor has revealed that 35 percent of the clients, who buy wholesale
from the company fore retailing have sent emails, informing that they have to
shut down business temporarily for a certain period, because they do not have
products to sell and do not have clients.

Tai from Tam Nhin So has admitted that the policy on tightening the payment
method and the low demand on the market both have made the sales of Tam Nhin So,
a decrease by 30 percent in comparison with the same period of the last year.

Thoi bao Kinh te Saigon has quoted its source as saying that the home appliance
market would see some more retailers disappear from the market.

The source said that home appliance centers are experiencing the most ever
difficult time, when the demand has decreased by 60 percent. In general, 30
percent of products are sold to projects, while 70 percent to individual
clients. Meanwhile, in the context of the high inflation, both the subjects of
clients have fasten their belt and cut down expenses on home appliances.

Importers and suppliers previously thought that Vietnamese consumers would still
spend money on new products despite the economic difficulties – the thing that
once occurred in 2008. Besides, the prediction that the earth is growing warmer
made them believe that the demand would be increasing. Therefore, they tried to
import refrigerators and air conditioners.

However, in fact, it is not too hot, while the economic difficulties are really
serious.

The source has also predicted that in the current circumstances, small shops and
companies would be the biggest sufferers. Since the small companies have small
turnover, they do not have close relations with trade companies and cannot get
support from the companies with sale promotion programs.

“The programs would prioritize the sales agents with big turnover,” he
explained.

Bui Tan Cuong, a senior executive of Thien Hoa Home Appliance Center also said
that small shops and the retailers with bad services would be eliminated from
the market.

C. V