Woes make local smes easy prey for foreign firms

Cash-strapped small and medium enterprises (SMEs) in the country are becoming the targets of other local and foreign companies that want to take them over.

Local economist Huynh Buu Son said at a recent seminar that the already-low competitiveness of local SMEs was in decline as a result of the slight Vietnamese dong rise and high interest rates.

“The Vietnamese dong has appreciated against the U.S. dollar, and Chinese yuan, making Chinese goods cheaper,” he said, adding imports from China were overwhelming the local market.

If bank interest rates remain high, domestic companies will become weaker and fall prey to foreign firms, Son said.

Now is seen as a good time for foreign investors to take over assets in the country, such as securities companies and property projects.

Vo Quoc Thang, chairman of the Vietnam Young Business Association, said the current woes might led foreign companies to acquire Vietnamese SMEs at low prices.

“Many enterprises have told me they have to gradually sell their shares because they are under pressure from high loan rates. Some have offered small volumes of shares but others have completed their sell-off plans.”

Nguyen Trong Huy, chairman of Huy Thuan Aquatic Investment Co. Ltd. and chairman of the Ben Tre Young Business Association, said his company had earned big from rising food prices and bought a number of businesses in the food sector.

“The companies we’ve acquired racked up losses from investments in property and stock markets.”

Early this year, some SMEs sold certain shares to foreign corporations to expand their operations amid the credit crunch. Vietnam Fan Joint Stock Company (Asia Vina) is now 65% owned by French home appliance group SEB following an acquisition done in May. In April, Saigon Paper Corporation sold a 38% stake to two Japanese firms – Daio Paper Corp. and Development Bank of Japan’s Bridgehead fund. – SGT

Tags: Vietnam companies, Vietnam enterprises, Vietnam SMEs