VietNamNet Bridge – Building workshops and warehouses to lease to foreign investors proves to be a good way for Vietnamese logistics firms to “obtain some pieces of the logistics cake”.

After six months of surveying the industrial zones in Dong Nai, Binh Duong and some neighboring provinces, Tabuchi Corporation, specializing in making equipments for water valves, has decided to set up its production base at a ready-made workshop in Tan Kim Industrial Zone in Long An Province.

Massaki Demura, a senior executive of the company, said the workshop leasing allows the company to save 20-30 percent of costs and minimize risks.

Masayoshi Mishima, Director of Mesh Japan Company, also said he feels satisfactory with the decision on leasing a workshop in the industrial zone, adding that the company just needs to install machines and equipments to begin the production.

Vietnam has officially opened its logistics market since January 11, 2014, under the commitments when joining the World Trade Organization (WTO).

Prior to that, Vietnamese logistics firms had been warned that they would be defeated by international logistics groups which are powerful in technologies, financial capability and the global large networks.

However, in fact, domestic firms still can find their ways to make money in the market where there are so many redoubtable rivals.

Do Xuan Quang, Chair of the Vietnam Logistics Association (VLA), commented: “The possessing of most of workshops and warehouses is a great advantage for domestic firms to compete with foreign firms”.

Having realized that foreign investors tend to lease ready-made workshops to cut costs, many Vietnamese investors have offered to lease such facilities.

Most recently, HTM, a construction and mechanical engineering company, has put the $25 million Hai Thanh workshop complex for lease.

One of the big clients of Hai Thanh is Damco, a transport and warehousing service company targeting the clients in the retail and garment sectors which have the supply sources mostly located in neighboring areas.

Besides Damco, a subsidiary of Maersk, HTM has got the other four clients, including Platinum Vietnam Inter World, Yoshino Vietnam, Jika Jika and Caitac-Nisshin Vietnam.

Analysts commented that they can see a growing tendency of domestic logistics firms cooperating with foreign ones to make money in the domestic market. This is the cooperation between the firms with advantages in land fund and warehouses and the firms with powerful financial capabilities and experiences.

Marco Civardi, Vietnam & Cambodia Managing Director of Damco, said Damco and HTM are considering developing their cooperation to develop the projects to serve the clients in the north.

Doan Hung Dung, Chair of Kizuna JSC, the developer of the first ready-made workshop zone in Long An province, affirmed that the ready-made workshop market is very large thanks to the increasingly high number of foreign investors in Vietnam.

However, Dung said the investment rate in the field is very high, while it’ll take a long time (no less than 10 years) to recover the investment capital

“We had to spend VND180 billion to build 30 workshops (500-1,500 square meters for each workshop),” he said.

However, he affirmed that he would continue pouring money into the sector, revealing that the company plans to provide 100,000 square meters of ready-made workshops to the market by 2017.

NCDT