VietNamNet Bridge - E-Mart, South Korea’s top discount store chain, on Thursday signed an agreement with local partner U&I Investment Corporation to form a distribution joint venture, indicating the potential of the domestic retail market.

E-Mart Vietnam will have initial investment capital of US$80 million, of which 80% is provided by E-Mart and the remaining 20% by U&I, and open the first outlet in Hanoi.

Mai Huu Tin, chairman and CEO of U&I Investment Corporation, told the Daily on the phone on Thursday that the joint venture would open the first E-Mart in Hanoi late next year.

The two companies are expected to expand its retail stores in Vietnam to 52 by 2020 at a total cost of US$1 billion.

The two companies are looking for store locations in major cities, he said, and depending on each area, the joint venture will consider setting up a convenience store, supermarket or distribution outlet.

Local and foreign retailers said the cost for renting a new location accounts for 60% of total investment capital, so this is the biggest challenge for retailers.

E-Mart Vietnam will focus on food and fresh food products including agricultural and aquatic products in which Vietnam has strengths. E-Mart is well-known for its provision of fresh farm products, foods and foodstuffs.

Tin said his corporation owns a 500-hectare farm, Vietnam’s first high-tech farm to be awarded a Global GAP certificate, in the southern province of Binh Duong. This farm supplies agricultural products for some local supermarkets.

The joint venture will supply local agricultural and aquatic products for overseas stores of E-Mart that owns 136 outlets in South Korea and 27 in China.

Vietnam will become E-Mart’s second foreign market after mainland China. However, the two partners must wait for regulatory approval from the Government to set up the joint venture. This is the second retailer from South Korea to enter the local market after Lotte Mart.

Vietnam’s General Statistics Office (GSO) has put first-half retail sales at VND912 trillion, up 22.6% year-on-year.

U&I is the common brand of a group of 36 companies operating in nine areas – consumer products, logistics, construction, real estate development, retail, financial services, communications, agriculture, and hospitality. Its parent company, U&I Investment JSC, has total chartered capital of VND500 billion.

Source: SGT