VietNamNet Bridge – In many cases, foreign partners, when signing cooperation agreements with Vietnamese enterprises, have a long term plan to conquer the Vietnamese market, and their ambition is bigger than just making financial investments.
Partners turn out to be “sharks”, businesses turn out “enemies” (Part 1)

TPC, which is thought to hold the controlling stakes in NTP and BMP, for example, operates in the same production field with the two Vietnamese plastics companies and has similar products. It is also one of the material suppliers to NTP and BMP. This clearly shows that TPC does not simply intend to pour money into the two companies as financial investment deals, but it strives to dominate the Vietnamese plastics market which is now being controlled by NTP and BMP.

The former company, NTP is holding more than 70 percent of the northern market, while BMP is accounting for more than 50 percent of the southern market.

Another well-known deal is the plan to purchase Vietnamese Huong Thuy Trade and Production Services Company by the two Japanese trade groups Sojitz and Kokubu.

It is expected that Sojitz would join forces with Kobuku to buy 25.99 percent of Huong Thuy more to raise the foreign ownership ratio in the company to 51 percent and turn Huong Thuy into a foreign owned subsidiary in Vietnam.

Huong Thuy, which is headquartered in HCM City, is well known as a big food retailer in Vietnam with the distribution network all over the country and the 12 bases specializing in providing food, drinks to 40,000 shops throughout the country.

It is expected that Sojitz would take full advantage of the existing network of Huong Thuy and use the goods distribution know-how of Kokubu to exploit the domestic market. It may also consider the plan to build up a network to provide food to Myanmar, Cambodia and other South East Asian countries.

There are many other affairs in which experts believe that the foreign partners are striving to take over the Vietnamese companies.

Kirin Holdings bought Interfoods, Daio Paper bought Saigon Paper Company, Ezaki Glico bought 10.5 percent of Kinh Do Group, DI Aisan Industrial Fund bought 31 percent of JVC healthcare equipment company’s shares, Nichirei Foods bought 19 percent of stakes of Cholimex Food. Meanwhile, Cotec-Coteccons would issue 10.43 million shares, or 24.7 percent of its chartered capital, to the foreign strategic partner Kusto Group.

Domestic market would be controlled by foreigners?

The fact that more and more foreign strategic partners are attempting to take over domestic companies has raised a worry that once they possess the businesses, they would strive to dominate the potential production and distribution sectors in Vietnam.

If succeeding in the take over Bibica, South Korean Group Lotte would certainly strive to obtain a big market share in sweets manufacturing and distribution in Vietnam. Its plan may turn realistic, because Bibica is considered the second biggest sweets producer in Vietnam, just after Kinh Do Group, in terms of the output and the popularity of the brand. Meanwhile, Bibica’s distribution network is also large with 20,000 shops all over the country.

Meanwhile, if TPC successfully controls NTP and BMP, it would certainly control the Vietnamese market of plastic products used in construction, because NTP and BMP are leading the market.

Analysts have commented that TPC has penetrated the Vietnamese market too easily. If it had spent money to make a direct investment project in Vietnam, it would have to spend much time and much money (hundreds of millions of dollars) to build up the large distribution networks like the ones of BMP or NTP. Meanwhile, by purchasing NTP and BMP shares, TPC would fulfill its plan at the much lower cost of just 50 million dollars.

Analysts have also warned that in a bad scenario, once foreigners successfully swallow Vietnamese enterprises, they would hold the control over the potential production sectors of the country and control the market prices.

Manh Ha