Japanese, South Koreans take new move to advance towards Vietnam

The moves taken by Japanese and South Korean investors show that they are planning to make heavier investments in Vietnam, both through direct investment projects and merger and acquisition (M&A) deals.

Japanese making a new investment wave

Yoshida Sakae, Managing Director of the Japan External Trade Organization (JETRO) in HCM City, told Thoi bao Kinh te Saigon that Japanese Mizuho Bank has raised the capital of its two branches in Hanoi and HCM City by 200 million dollars. Sumitomo Mitsui Bank has also increased its chartered capital in Vietnam by 400 million dollars.

The banks decided to increase capital in Vietnam in order to improve their capacity to provide services to the Japanese operational companies, and the companies which are to arrive in Vietnam in the time to come.

Representatives of Japanese banks have confirmed that a lot of Japanese enterprises come to Vietnam to seek business opportunities.

In late April 2011, the Vietnamese Saigon Paper Company signed a strategic investment agreement with two Japanese investors – Daio Paper and BridgeHead investment fund, under which, the two investors will hold more than 48 percent of stakes in the Vietnamese company.

MiniStop, a Japanese convenience store brand, is conducting negotiation with Vietnamese Trung Nguyen Café on the opening of convenience stores. According to Mr Sakae, the negotiation, which began in 2010, is nearly completing.

Unicharm, the Japanese company specializing in healthcare products, has announced the deal of purchasing nearly all the stakes of Vietnamese Diana Company. Diana declined to reveal the deal’s value, just saying that Unicharm will hold 34.2 million shares, or 95 percent of stakes. Meanwhile, Nikkei newspaper on August 25 said that Unicharm has swallowed Diana with 128 million dollars.

Also, a Japanese investor has reportedly purchased stakes at Vietnamese Nutifood, while Japanese investors are reportedly interested in the shares of Vinaconex, a big construction corporation in Vietnam. All the moves, which have been taken in rapid-fire recently, have made people think of a new Japanese investment wave in Vietnam.

Mr Sakae has also mentioned the M&A deals between Japanese and Vietnamese companies. In general, Japanese would make M&A deals in the fields of trade and services, while they would set up factories in Vietnam themselves if they want to carry out the manufacturing. More than 100 Japanese enterprises have shown their interests in opening retail networks in HCM City.

In Dong Nai province in Vietnam, five Japanese investors have come to set up factories in mechanical engineering, electronics and hi-tech fields. They are all small enterprises, but their presence has kicked off the new Japanese investment tendency in Vietnam. Japanese enterprises are paying much attention to garment, cables, car parts, engineering components, food and seafood, oil and gas, and heavy industries.

2/3 of South Korean invested projects are in manufacturing

Experts also talk about the second South Korean investment wave in Vietnam these days. Han Jae Jin from South Korean Chamber of Commerce and Industry in Vietnam (KoCham), said that the wave arose last year and has become stronger since July 2011.

In 2008, South Korean investors focused on real estate projects, but they now seem to have other plans. “Nowadays they feel easier to make M&A deals in securities, banking, or even purchase stakes in the state invested enterprises,” Han Jae Jin said.

He went on to say that the deal between CJ CGV and Megastar really can be a good idea for other enterprises. Under the deal, CJ CGV purchased 92 percent of the stakes of Envoy Media Partners which is holding 80 percent of shares of Megastar media company, while Vietnamese Phuong Nam company is still holding the remaining shares.

Prior to that, the Vietnam National Oil and Gas Group (PetroVietnam) reported that the group reached the agreements with South Korean partners, under which South Korean Hanshin purchases 10 percent of stakes of PetroVietnam at PVX, while Shinhan Investment Group purchases 15 percent of stakes of PSI, a securities company.

Source: TBKTSG

Tags: invest in Vietnam, Vietnam FDI, Vietnam FDI 2011, Vietnam investment