Vietnam is joining the WTO: Will Vietnamese tourism companies be able to compete?

Opportunities

What has been discussed by many Vietnamese companies in the field of tourism is what will happen to the tourism market after Vietnam does what it has committed to its trade partners to do: open the market for 100% foreign invested companies to provide traveling services.

It could be that international travel agents will find ways to settle down and quickly provide services to their customers. If this happens, numerous contracts between Vietnamese travel agents who have cooperated with international travel agents will be terminated.

With large amounts of capital, well-known brand names, global networks and professional services, these international “invaders” will definitely attract more customers. It is imaginable that many Vietnamese travel agents will then have big problems with business or even go bankrupt.

State-owned travel agents will be the ones who face the most risks as they have not been dynamic enough and they will lose good workers to their new competitors.

It is predicted that Vietnamese companies then will only be able to hold some parts of the market, such as to take Vietnamese tourists to other countries (outbound) and to provide services locally to domestic customers. The inbound tours will mostly be organised by foreign travel agents.

It is reported that many Vietnamese travel agents have not been professional enough in providing such services. Therefore, when having to compete with international companies, it is very likely that they will lose.

Mr Nguyen Duc Tri, HCM University of Economics’ professor of tourism economics, said that after Vietnam joined the WTO a large number of small travel agents would not be able to survive and they would become agents for bigger companies.

However, because the industry is developing fast, small travel agents will find it profitable to involve themselves in the business of railway, air ticket and hotel room bookings in the future.

Vo Anh Tai, director of Saigontourist Holdings, argued that it was not as simple as that. His company and many other travel agents in Vietnam have been working with foreign partners for a long time and they are certain that investing in Vietnam through opening branches here would not be a wise decision for all international travel agents. International tourism companies do not have as wide of networks as their Vietnamese competitors have. Also, the number of customers they have from other countries sometimes would not be large enough to warrant investment.

According to Mr Tai, another thing foreign tourism companies should take into account is the roadmap of opening the tourism market Vietnam has signed with international partners.

Proactive

Saigontourist has expanded its business across all three above-mentioned areas of tourism. Learning a good lesson from the SARS epidemic, which drove the company into difficulty as they used to only pay attention to outbound and inbound tours, nowadays Saigontourist has become one of the leading travel agents in all three fields.

The company is full of hope that after Vietnam joins the WTO its brand name will be valued in any negotiation with international business partners.

In preparation for the forecast harder competition, Fiditourist have made reviews of all of its services. “We have standardised our own tours as well as other services to increase the competitiveness of the company. This is the way we chose to compete in the new situation,” said Nguyen Viet Hung, Fiditourist director. The company is planning to expand its business through cooperation with other travel agents in the near future.

Seeking opportunities in new markets has also been an alternative for many other travel agents in Vietnam. Bui Viet Thuy Tien, manager of Asian Trail, said that Western Europe used to be a good market for her company, but as the market had become more competitive her company had switched to other markets like Nothern Europe, Russia or America.

Meanwhile, Ben Thanh Tourist Company has focused more on improving its hospitality services like restaurants, hotels, entertainment and transportation than its tours. The company has identified its business priorities to develop in the WTO “time”.

Source: VNECONOMY