Vietnam becomes key destination for Korean investors
Seong-young Lim of Korea’s Ministry of Knowledge Economy predicted that Vietnam would continue to attract more Korean investors as it was an important destination for them.
Vietnam has still registered positive growth under the current circumstances, he explained at the Korea-Vietnam Economic Cooperation Forum last week as part of the three-day international shop industry and franchise shows in HCMC’s District 7.
Seungtae Hyun, executive vice president of the Korean leading exhibition and convention company COEX, said retail and franchise trade were among the attractive business sectors to Korean investors as consumer spending was expected to grow some 20% a year.
Vietnam, Seungtae forecast, is comparable to other emerging markets like China and Russia in attracting international retailers including those from Korea. In addition Vietnam was ranked 13th of the world in terms of population.
He noted Korean companies would be able to use Vietnam as a spring board to expand their investment in neighboring countries Laos and Cambodia.
Kwon Ki Hyun, business development manager of Korea’s CJ Bakery Vietnam Co. Ltd., which operates the Tous Les Jours chain, said Korean firms in the distribution, retail and franchise trade areas now saw more opportunities in Vietnam than in their home market.
Vietnam’s population is around 86 million while South Korea has some 45 million people, Kwon told the Daily, and on top of that, there are more young consumers in Vietnam than in Korea.
Kwon said CJ Bakery Vietnam Co. Ltd. now operated five bakeries in HCMC and would open one more this year before franchising the Tous Les Jours brand in Vietnam next year.
Lee Chang Keun, honorary chairman of the Korean Chamber of Commerce and Industry (KoCham) in HCMC, said there remained barriers facing foreign retailers, especially in relation to licensing. He said this still took a lot of time and money.
Lee pointed to South Korea’s department store operator Lotte Shopping’s application for opening a second Lotte Mart in this city as a case in point. He raised a question whether this was one of huddles for Korean retailers to overcome before they would be able to compete on par with their Vietnamese counterparts.
Nguyen The Hung, acting director of the Southern Foreign Investment Center (SFIC), said it was easy for international retailers to open the first store in Vietnam. But, they had to meet the Economic Needs Test requirement for the other outlets as in compliance with Vietnam’s commitments to the World Trade Organization.
Hung said the distribution market began to open up to foreign firms from January 1 this year and the Government was improving policies to better support foreign retailers.
Sung Im Ha, vice chairman of KoCham in HCMC, said it was understandable why Korean companies complained about certain policies as Vietnam was a developing market. He advised newcomers survey the market carefully before deciding to invest in this market.
He told the Daily after the forum that certain barriers would not prevent Korean investors from coming to Vietnam to capitalize on this growing market. “I’m sure more Korean investors will come.”
Hung of SFIC under the Ministry of Planning and Investment said at the forum that South Korea was Vietnam’s second largest foreign investor after Taiwan as Korean companies had registered US$20.15 billion for more than 2,200 projects from 1988 to July 2009.
