Re‐Regulation in the Post‐WTO Period? A Case Study of Vietnam's Food Retailing Sector

Abstract

Academic interest on domestic regulatory (and re-regulatory) impacts of retail foreign direct investment remains surprisingly under-researched, despite high-profile campaigns, particularly in Southeast Asia, to rein in the expansion of retail transnational corporations. This paper focuses on the trends of re-regulation of foreign retailers, particularly in the food sector, in Vietnam before and after the accession to the World Trade Organization (WTO) in 2007. The findings reveal a complex layering of regulation, some of it a holdover from the pre-2007 period and some of it occurring since WTO accession, in the form of the controversial Economic Needs Test.

A tactical retreat? Conceptualising the dynamics of European grocery retail divestment from East Asia

“…During the second 'resistance and market consolidation' phase of divestment, which involved more established businesses usually several years old, both direct and institutionally embedded forms of resistance to European grocery retailers generated barriers to expansion. After a period of deregulation, primarily to allow FDI and attract inward investment -although often stimulated by the "bigger prize" of WTO membershipre-regulation (Nguyen et al, 2014) became a constant theme across East Asia. This typically involved restrictions upon large store operators and modern forms of retailing under the rhetoric of maintaining "fair" competition and protecting indigenous businesses.…”

Retail transitions in Southeast Asia

“…Contra popular assumptions that the liberalization of investment environments post-1997 has enabled the unfettered expansion of foreign retail activity, it has become increasingly clear that the removal of trade barriers has been Nguyen et al (2014) use the term 're-regulation' to denote such developments, emphasizing the contingency of regulatory implementations that aim to control the ongoing market and operational costs of retail TNCs in a bid to manage the host regulatory environment to meet specific aims. 'Re-regulation' therefore allows governments to shape regulatory mechanisms and regimes such that they 'differentially impact on the operational costs of the multinational retailers and therefore become restrictive in terms of trade and investment' (2) even after retail TNCs have satisfied the initial conditions for entry into particular markets.…”

“…This then points to ways whereby governments continue to manage regulatory environments in a necessarily evolutionary manner that shape the operations of retail TNCs as they become territorially embedded in these localities (Wrigley, Coe, and Currah 2005). Using the case of Vietnam before and after its accession Nguyen et al (2014) find that Vietnam has in fact been actively re-regulating post-WTO accession with the aim of controlling the entry of foreign retailers in distribution sectors and protecting domestic retailers. Such forms of re-regulation highlight the changing role of the state in reconfiguring the terms by which foreign retailers may enter and continue operating in particular markets, as well as the increasingly complex interpenetrations of regulatory and institutional responses to the influx of retail FDI.…”

“…Vietnam is particularly renowned for its economic needs test (ENT) -which poses one of the greatest market barriers to foreign retailers who wish to set up outlets beyond their first store -because of its high degree of opacity and ambiguity. As such, the ENT is commonly perceived as a way to shield domestic retailers from foreign competition (Alejandro et al 2012), especially considering how local officials are often not provided with enough guidance on how to address applications from foreign retailers (Nguyen et al 2014). Most foreign retailers in Vietnam have consequently entered the market through joint ventures or franchising (Nguyen, Wood, and Wrigley 2013).…”