VietNamNet Bridge - Expanding the scale of their business and jumping into new business fields is the path being followed by conglomerates with powerful financial capability.


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Some large conglomerates now invest in agriculture projects




On November 28, Vinamilk, the nation’s dairy producer, presented Vietsugar before the public, officially joining the sugar market. 

Vingroup, a real estate conglomerate, has decided to manufacture automobiles, Sun Group, also a real estate developer, is developing an airport, while The Gioi Di Dong, a smartphone distributor, has begun distributing medicine.

The Van Don International Airport in Quang Ninh province, capitalized at VND7.5 trillion, will be put into operation by the second quarter of 2018 and serve 500,000 passengers in the first year.

Investing in many different business fields was once a hot trend in Vietnam and was criticized as ‘adventurous’. 

State-owned corporations rushed to pour money into banking and finance and real estate sectors. 

However, the situation was so serious that the government demanded that corporations divest from non-core business fields immediately.

As for Vingroup’s decision to invest in many fields, the conglomerate’s president Pham Nhat Vuong said Vingroup did not do this just to follow the crowd. 

Expanding the scale of their business and jumping into new business fields is the path being followed by conglomerates with powerful financial capability.

Vingroup will stop investments if it realizes they don’t bring profits. 

“Investing in many different fields is a way to reduce risks and help enterprises develop in a sustainable way,” Vuong said.

Vingroup, Vinamilk and The Gioi Di Dong are among the top 10 enterprises in Vietnam Report’s VNR500 2017 (the 500 largest private businesses) ranking.

A senior executive of The Gioi Di Dong said the chain is still looking for M&A opportunities to take over retailers and non-retail businesses. 

After taking over Tran Anh, a home appliance distribution chain, The Gioi Di Dong is now targeting the drug sector. 

Sources said The Gioi Di Dong is negotiating to buy Phuc An Khang, a drug retail chain established in 2006 which now has 20 stores in HCMC. 

If the deal succeeds, The Gioi Di Dong would be able to raise the number of retail selling points to 500-800.

Vietnam Report said most conglomerates have had satisfactory business performance this year. As many as 75 percent of businesses say their turnover will increase sharply. 

A survey by Nielsen also found that domestic brands have seen strong growth this year together with multinationals.

In FMCG (fast-moving consumer goods), multinationals only obtained a modest 2 percent growth rate, while domestic companies had a 7 percent growth rate and made up 42 percent of the industry’s revenue.

Domestic companies are dominant in the food and drink market with 69 percent of market share, while foreign companies have 45 percent. 


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