VietNamNet Bridge – South Koreans have been flocking to Vietnam to invest in the real estate, retail, logistics, consumer goods and electronics projects, the business fields that they have great advantages.

Lotte and E-Mart, two of the biggest South Korean investors, have made their presence in Vietnam.

In July 2011, E-Mart, the biggest South East retail brand belonging to Shinsegae, signed a contract with Vietnamese U&I to set up a retail joint venture. The E-Mart Vietnam joint venture, which has 80 percent of investment capital from the South Korean partner, plans to open the first supermarket in mid 2013.

The group plans to have 17 supermarkets in Vietnam by 2017.

According to Ja Young Heo, Sale Director of E-Mart, Vietnam is the ideal destination for South Korean retailers, logistics service providers and consumer goods manufacturers. E-Mart alone imported $7.88 million worth of products from Vietnam to sell at its 135 supermarkets in South Korea and 27 supermarkets in China in 2012. Meanwhile, E-Mart’s online turnover in Vietnam in 2012 reached $89 million.

The third-generation investors

Analysts have noted that the South Korean investors in this period are the big groups with powerful financial capability, who keep long term vision and make long term investments.

Samsung is a typical example. On March 25, Samsung kicked off the construction of the $2 billion factory that makes mobile phone and tablet parts in Thai Nguyen province.

The electronics group plans to develop its second production complex in Vietnam in the province, after the first one in Bac Ninh where there are 30,000 workers.

Samsung Thai Nguyen, which plans to recruit 10,000 workers, would specialize in making mobile phones and digital cameras. It is expected that it would churn out 100 million mobile phones and 1.5 million cameras a year. Both of the factories are believed to make 250 million products a year.

As for CJ, the group has decided to develop Vietnam into one of the 3 its biggest markets, together with Korean and Japanese markets. It is moving ahead with a series of investment projects, planning to obtain the turnover of $5 billion by 2020 for both CJ Vietnam and CJ Indochina (Laos and Cambodia).

The investment waves from Korea

The first wave began in 1995-2005. At that time, South Korean, like many other investors in the world, flocked to Vietnam after the US lifted its embargo against Vietnam.

Lotte was one of the first South Korean investors in Vietnam when it joined forces with Vietnamese Thien Nhan Company to set up a joint venture in 1996. At that time, Lotte brought Lotteria, the fast food brand, to Vietnam.

The second wave occurred in 2006-2007, when Vietnam officially joined WTO. South Korea became the biggest foreign direct investor in Vietnam during that period with $4.58 billion worth of registered investment capital in 2007 and $2.7 billion in 2006.

Most of the capital was funneled into the infrastructure projects and the stock market. A series of big projects developed by the big real estate names such as Posco, Doosan, Kumho, GS E&C were kicked off at that time.

Analysts have noted that there is a big difference between the first and the second investment waves and the third one. Previously, South Korean investors put their money into short term projects, while they now tend to inject money in consumer goods manufacturing, technology and tourism sectors.

Cao Thanh Hoang, General Director of KHM Capital, has noted that South Koreans have decided to invest in the fields because they have realized the considerable improvement in the Vietnamese living standards and the increase in the number of middle class income earners.

Hoang also said that the fund previously mainly invested in real estate projects. However, it has changed the investment strategies, planning to invest in healthcare, food and consumer goods enterprises.

NCDT