Korean com­pa­nies rush to Viet­namese mar­ket

The Korea Times - - FRONT PAGE - By Yoon Sung-won yoonsw@ktimes.com

Korean con­glom­er­ates, in­clud­ing Lotte, Mi­rae As­set and CJ, are proac­tively tap­ping into Viet­nam, at­tracted by the coun­try’s ris­ing spend­ing power and prop­erty de­vel­op­ment projects, ac­cord­ing to in­dus­try sources, Friday.

Ex­pec­ta­tions are that Korean en­ter­prises will con­tinue boost­ing their pres­ence in the coun­try thanks to its at­trac­tive­ness as a promis­ing but less risky mar­ket com­pared to China.

Dis­il­lu­sioned with China, which came up with pro­longed re­tal­ia­tory mea­sures against Korean firms af­ter Seoul agreed to the de­ploy­ment of a U.S. mis­sile shield, they are turn­ing to al­ter­na­tive des­ti­na­tions and Viet­nam has emerged as a top place, ac­cord­ing to ob­servers.

Lotte Group Chair­man Shin Dong-bin went to Hanoi and Ho Chi Minh City this week and looked around the com­pany’s depart­ment store, ho­tel, re­tail and fast food busi­nesses. Lotte plans to in­vest 330 bil­lion won in the com­mer­cial district of Tay Ho in the Viet­namese cap­i­tal city to build a shop­ping cen­ter. The mall will in­clude a depart­ment store and cin­ema and is sched­uled to be com­pleted by 2020.

Un­der Shin’s drive, Lotte is also push­ing to pour in 2 tril­lion won to build a com­plex in­clud­ing a depart­ment store, shop­ping mall, ho­tel and of­fice build­ings in the Thu Thiem new ur­ban area of Ho Chi Minh City by 2021. To this end, the con­glom­er­ate will es­tab­lish a Viet­namese sub­sidiary in the lat­ter half of the year to fi­nal­ize its “eco smart city” de­vel­op­ment plan.

Lotte started op­er­at­ing food, re­tail and ser­vices busi­nesses in Viet­nam in 1996. The group launched its fast food chain Lot­te­ria in the coun­try in 1998 and has ex­panded its port­fo­lio to have about 10 Lotte af­fil­i­ates run busi­nesses there. In Septem­ber 2014, Lotte opened Lotte Cen­ter Hanoi.

Lotte was hit hard­est by China’s re­tal­ia­tory moves. As it pro­vided land for the anti-mis­sile sys­tem, China has sus­pended op­er­a­tions of most of Lotte Mart stores in the world’s most pop­u­lous coun­try.

Mi­rae As­set Group has also ag­gres­sively pushed in­vest­ments in Viet­nam’s prop­erty mar­ket un­der the stew­ard­ship of Chair­man Park Hyeon-joo since last year.

In April 2016, Mi­rae As­set in­vested 400 bil­lion won ($359.38 mil­lion) in global in­vest­ment com­pany AON BGN’s ac­qui­si­tion deal of Keang­nam Hanoi Land­mark Tower in Viet­nam, which is a 72-story sky­scraper also known as Keang­nam Land­mark 72.

The in­vest­ment comes in re­sponse to the chair­man’s di­rec­tion to ex­pand the group’s busi­ness in Viet­nam. The en­tre­pre­neur’s strong de­ter­mi­na­tion played a key role in mak­ing the de­ci­sion, ac­cord­ing to his aides.

The Korean fi­nan­cial con­glom­er­ate is also ex­pand­ing the scale of its Viet­namese sub­sidiary.

In June this year, Mi­rae As­set Dae­woo an­nounced that it had com­pleted a cap­i­tal in­crease for its lo­cal sub­sidiary in Viet­nam by 65 bil­lion won to make its gross cap­i­tal about 100 bil­lion won.

Ex­pec­ta­tions are that the com­pany is seek­ing to di­ver­sify its busi­ness port­fo­lio from stock bro­ker­age to the in­vest­ment bank­ing sec­tor.

Ear­lier in 2016, the chair­man pledged to in­crease cap­i­tal of over­seas sub­sidiaries of Mi­rae As­set Dae­woo. In line with his prom­ise, the se­cu­ri­ties en­ter­prise in­creased the cap­i­tal of its New York and London units by 200 bil­lion won and 60 bil­lion won, re­spec­tively.

CJ Group, which re­cently saw its Chair­man Lee Jae-hyun re­turn af­ter an ab­sence of four years, is also speed­ing up ex­pan­sion of its Viet­namese busi­ness.

CJ Cheil­jedang re­cently said it will in­vest 70 bil­lion won to build a food pro­cess­ing plant near Ho Chi Minh. It also plans to es­tab­lish a re­search cen­ter by next year. The com­pany said the new plan will pro­duce kim­chi and frozen food prod­ucts de­signed for the Viet­namese and South­east Asian con­sumers.

CJ Cheil­jedang ac­quired kim­chi man­u­fac­tur­ing com­pany Kim&Kim and frozen food maker Cau Tre last year. It also took over fish and poul­try pro­ces­sor Minh Dat Food in March this year.

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