Efforts to build Vietnamese brands
In 2017, a large foreign corporation almost completed the acquisition of a Vietnamese brand, Sunhouse at a price of 250 million USD. However, at the last minute, the owner of Sunhouse canceled the deal.
Nguyen Xuan Phu, Chairman of Sunhouse, was confused when Vietnam imported everything, even the simplest things, which are not difficult to produce. “That motivated me to invest in 'Made in Vietnam' products and that's why I set up my factory,” said Phu.
But production alone is not enough. Products must have a brand, because the value of the brand is greater than the parts that are simply assembled.
“Why does the price for a foreign-branded shirt is 1.5 times higher that a similar shirt with a Vietnamese brand and the buyer is Vietnamese? At that time, I also saw a series of famous Vietnamese brands acquired by foreign investors. Because of my ego, I wanted to keep the Sunhouse brand," Phu said.
Tran Uyen Phuong, representative of Tan Hiep Phat corporation, once told a seminar on Vietnamese brands that her corporation refused a $2.5 billion acquisition deal from a foreign firm.
This happened in 2012 when the American corporation offered a large amount of money to buy shares of Tan Hiep Phap. It took nearly a year for negotiation but finally, Tan Hiep Phat refused a $2.5 billion offer from this corporation.
According to Phuong, the partner asked Tan Hiep Phat to only sell its products in Vietnam, Laos and Cambodia and not to release new products. “We wanted to bring Asian products to the world, that's why we continued to invest in new plants and turned down this offer."
In fact, for many years, for many reasons, Vietnamese entrepreneurs have sold their businesses to foreign partners. Famous brands like X-men, Diana, P/S, Kinh Do, Nguyen Kim, etc., used to belong to Vietnamese people. Through joint ventures, associations, and share transfers, these brands are now owned by companies from India, the US, Thailand and Japan.
Some said that if these brands are not owned by foreign companies, many of them could have hardly been as famous as they are today. However, many "foreign" investors acquire Vietnamese businesses just to reducebthe number of competitors, so they can gain the upper hand in the domestic market.
Waiting for the rise of domestic businesses
Although "Made in Vietnam" goods are exported throughout the world, even picky markets such as Europe and the US, most Vietnamese goods are still "processed and assembled". However, in the past 10 years, Vietnam has had strong private enterprises in many fields such as aviation, real estate, food, retail, etc., which can compete with foreign rivals.
The merger and acquisition is no longer a unique "playground" for foreign investors. Many domestic businesses are still sold, but many are sold to domestic partners.
According to a report by MAF Research and the CMAC Institute, the most prominent mergers and acquisitions in 2019-2020 involved private Vietnamese corporations such as Masan, Thaco, Gelex, and Vinamilk. Masan Consumer acquired VinCommerce & VinEco while Vinamilk bought the parent company of Moc Chau Milk and Thaco participated in restructuring Hoang Anh Gia Lai International Agriculture Joint Stock Company.
It is sometimes a difficult decision to make for many Vietnamese entrepreneurs, but it is the harshness of the market and the market economy. It is important to build a strong and steady team of Vietnamese enterprises in the domestic market, which are famous in the global market. Also, it is necessary to create a business environment for Vietnamese enterprises to grow, so that if a business is sold it will be sold to other Vietnamese enterprises instead of foreign investors. After all, building a strong enough Vietnamese business team is the foundation for sustainable development in the future.
The story behind Vingroup's decision to transfer the entire operation of VinM art, VinMart+ chain and VinEco Company to Masan Group is something to ponder as Vingroup decided to cooperate with a domestic partner rather than a foreign one to balance the domestic retail market.
Many people still regret when that Saigon Beer was acquired by a Thai investor. To avoid such cases, it is more important than ever to develop specific strategies to strengthen Vietnamese businesses.
Vietnamese people also need to give priority to Vietnamese goods.
After over 30 years of Doi Moi (reform), Vietnam has had large private groups operating in many industries with international stature. There are also Vietnamese USD billionaires, but only a handful.