Japan kicks off “non-factory investment wave”, heading for Vietnam

Japanese businesses have recently carried out the working visits to Vietnam, to learn about the investment opportunities in the country as part of their strategies to relocate manufacturing bases to avoid natural calamities.

In the previous years, only hardware manufacturing enterprises set their production bases in Vietnam, such as Canon, Toshiba or Fujitsu. Meanwhile, Vietnam now can attract the businesses in the fields of digital content, e-commerce and electronics retailing as well. Experts have predicted about the “non-factory Japanese investment wave in Vietnam.”

Expanding the market

In August 2011, Japanese NTT Docomo of NTT Telecom Group, announced the investment deal worth 1.4 billion yen, or 370 billion dong in VMG, a Vietnamese provider of content services on mobile phones. With the deal, NTT Docomo now owns 25 percent of VMG’s stakes, while the Vietnam Post and Telecommunication Group VNPT now holds 29 percent of stakes instead of 36 percent as previously, and other shareholders now hold 46 percent instead of 64 percent.

NTT Docomo said that the deal is a jumping-off place for the group to expand its operation in the Asia Pacific market.

Another subsidiary of NTT – NTT Data – has also announced the investment in VietUnion, in its plan to jump into the online payment service market of Vietnam. NTT Data is now holding 40 percent of stakes of VietUnion, the second biggest shareholder in VietUnion, after the Saigon Investment Group

Japanese investors are also seeking investment opportunities in the digital content sector. In mid November, DeNA joined hands with VNG to export social network games to Japan. In the immediate time, two games developed by VNG for personal computers would be introduced by DeNA in Japan for Yahoo! Mobage service.

Meanwhile, Japanese TD Mobile has purchased 30 percent of stakes of Vien Thong A, a leading mobile equipment retailer in Vietnam. TD Mobile was established in 2009, when two retail networks of Toyota and Denso merged into each other. Currently, TD Mobile has over 300 retail shops in Japan.

Long term investment strategies

The representative of the Japan External Trade Organization Jetro said at a recent workshop that Japanese foreign direct investment flow is heading for Vietnam. IN the past, Japanese enterprises chose China as the destination, but the production cost in China has become more expensive. Therefore, Chinese businesses now tend to choose Vietnam as the new destination, especially when they have to face the yen appreciation, the higher labor cost in Japan and natural calamities.

Economists have predicted that once Japanese hi-tech producers come to Vietnam, they would bring with themselves software, telecom and digital content firms to Vietnam as well.

Tetsuya Mori, Managing Director of DeNA Asia, admitted that Vietnamese digital content market is really attractive to DeNa because of the good labor force and the cultural similarities. Vietnamese engineers have become more capable and they can absolutely satisfy the requirements set by the Japanese partner.

He went on to say that VNG and DeNa met each other in July 2011 and decided to cooperate just after one month. Meanwhile, Le Hong Minh, general Director of VNG said he hopes VNG can provide eight new games to DeNA which can bring the turnover of 10 million dollars.

Commenting about the deal with NTT Data, Nguyen Hoang Ly, General Director of VietUnion, said that the e-payment market in Vietnam has not as developed as the Japanese market, but it will serve as an important business channel in the near future, when Vietnam develops the projects on developing non-cash payment.

Meanwhile, Hoang Ngoc Vy, Director of Vien Thong A, also keeps optimistic about the sale of stakes to TD Mobile, saying that the purchase of 30 percent of stakes shows the commitment to make long term investment in Vietnam.

Source: TBKTSG

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