Korean companies rush to Vietnamese market
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.