Quality Incentives and Dependence in Vegetable Supply Chains to Ho Chi Minh City

A growing number of studies in the transition economics have pinpointed the asymmetrical power existing in business-to-business (B2B) relationships between small suppliers and traders. The dependence of suppliers on their customers for inputs, access to credit and sales has been documented in both traditional and modern supply chains. In the Vietnamese vegetable market, which is characterised by extremely volatile prices, the abusive use of power by traders over uninformed smallholders is most likely. This paper highlights the contrasting case of a tomato supply chain co-ordinated by a trader supplying a modern distribution outlet. A case study approach with in-depth interviews of supply chain stakeholders (farmers, collectors, wholesalers, supermarket managers) reveals how one trader's response to customer incentives through commitment to quality and investment in selected growers has improved the terms of trade for upstream stakeholders in this tomato supply chain to Ho Chi Minh City. The case study reveals insights into B2B relationships and competitive strategy that may be adapted by other sectors for the benefit of those stakeholders at greatest risk from downstream concentration and the growing presence of modern wholesale and retail businesses in South East Asian countries.