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Thai billionaires experiencing tough days in Vietnam

The completion of M&A deals with Thai investors has been followed by a succession of tough days in Vietnam, reported Nhip Cau Dau Tu.

Big C Mien Dong Supermarket in HCM City, one of the oldest branches of the retail chain in Vietnam, has announced closure after failure in negotiating the rent with the landlord. Sabeco, the largest brewer in Vietnam, is in a period of record decline.

 

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Spending big money in M&A deals to turn Vietnam into a new ‘growth axis’ outside the Thai border is what many Thai investors have been doing. Within several years, billions of dollars have been spent to acquire Vietnamese enterprises.

In 2016 alone, a series of well-known retail brands in Vietnam, including Metro Cash & Carry, Phu Thai Group, Family Mart, Big C and Nguyen Kim, fell into the hands of Thailand’s Central Group and TCC Holdings.

Many other ‘blockbuster’ deals were made a short time later, including the acquisition of 53 percent of Sabeco shares, worth nearly $5 billion, and the share purchase to become a big shareholder of Vinamilk. At the time when billionaire Charoen Sirivadhanabhakdi spent billions of dollars on the deals, the two target companies were having the largest capitalization value in the Vietnamese stock market.

Thai billionaires have also reached their hands into many other business fields, including building materials manufacturing and e-commerce through a series of smaller deals. In one way or another, the Thai proportion in the Vietnamese market has been increasing steadily.

Thai billionaires have also reached their hands into many other business fields, including building materials manufacturing and e-commerce through a series of smaller deals. In one way or another, the Thai proportion in the Vietnamese market has been increasing steadily.

Still cannot reap fruit

Thoi Bao Kinh Te Sai Gon quoted experts as saying that the large companies, after changing hands, still cannot escape their growth traps.

In April 2016, Central Group divested all shares in Big C Thailand to buy Big C Vietnam from Casino in a deal worth 920 million euros ($1.05 billion). However, Big C's business has not been satisfactory.

The major units of Big C chains, including Big C Thang Long (which runs Big C supermarkets in Hanoi), Big C An Lac (which runs some supermarkets in HCM City), Big C Hai Phong (which runs Big C Bac Giang, Da Nang, Ninh Binh, Phu Tho and Ha Long), Big C Binh Duong and Big C Dong Nai, all reported revenue decreasing or going flat for the last few years. Big C An Lac reported a 50 percent decrease in revenue, while Big C Thang Long reported a 30 percent decrease.

The financial report of ThaiBev showed that its revenue from markets outside Thailand decreased by 38 percent to $383 million. While revenue from liquor products decreased by 3 percent only, revenue from beer dropped by 46 percent, which was attributed to the sales decreases of Sabeco in Vietnam. 

Kim Chi

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