A Lotteria restaurant in Hà Nội. The Korean fast-food chain has become popular among Vietnamese young people. — VNS Photo Đoàn Tùng
Korean Kim Heung Soo, CEO of Daekwang Maika Co., Ltd based in HCM City and Daekwang Apparel JSC in Bình Dương Province, said he had been in Việt Nam for almost 25 years and his business is “very good.”
He opened Daekwang Maika Co., Ltd, in 1994 when he was 28 to produce garments for export, and Daekwang Apparel in Bình Dương in 2006.
“My business has been very good. We make garments in Việt Nam and export them all to other markets, earning US$80-100 million a year, with the US accounting for 92 per cent of the total exports and Asian countries for the rest,” the chairman of the Korean Chamber of Commerce and Industry (Kocham) for southern and central Việt Nam said.
Another Korean success story in Việt Nam is that of LOTTE Mart.
After opening its first store in HCM City’s District 7 in 2008 the retailer now has a total of 13 shopping centres and hypermarkets in several big cities.
Kang Min Ho, general director of LOTTE Vietnam Shopping JSC (LOTTE Mart Vietnam), said: “With a policy to prioritise Vietnamese goods, we have developed Vietnamese products and contributed to promoting Vietnamese products, especially local specialities, among consumers within and outside the country.
“We will continue to focus on developing Vietnamese goods as well as creating a modern and convenient shopping environment.
“Việt Nam is a populous country with more than 95 million people, with young people accounting for a high ratio. The share of modern trade in Việt Nam is still lower than in other countries in the region. People’s incomes are increasingly rising. These are bases for the retail market to develop.”
"Việt Nam is also the focus of investment in the region due to its rapid economic growth, clear and transparent investment environment, huge potential and the Government support," he said.
“This is also the main reason why LOTTE Group and LOTTE Mart attached special importance to investing long-term in Việt Nam.”
A LOTTE Mart store in HCM City. Many Korean investors have come to Việt Nam and achieved great success. — VNS Photo
The market would see expansion by a series of retail brands in the future and obviously LOCK&LOCK would also expand, he said. Chun Hae Woo, general director of LOCK&LOCK Vietnam, said: “Việt Nam is a young and dynamic market and Vietnamese consumers always want to experience new things. With regard to the retail market, we believe Việt Nam is the most promising in the region.”
Chun said his business in Việt Nam enjoyed “very good growth.” Besides developing new brands, LOCK&LOCK also did a lot of research to develop new products.
“We will continue to expand our network of stores to many provinces and cities to enable more Vietnamese families to experience good quality products and services from the number 1 Korean brand.”
Many other Korean brands in various sectors, including electronics, heavy industry, entertainment and fast foods -- such as Samsung, LG, Posco, CJ, Hyundai, CGV, and Lotteria – have also achieved success in Việt Nam.
According to Park Chulho, general director of the Korea Trade-Investment Promotion Agency (Kotra) in Hà Nội, more than 5,000 Korean firms have a presence in Việt Nam.
“Since the establishment of official diplomatic relations in 1992, the Korean-Vietnamese partnership has been developing strongly in many fields including politics, economics, society and culture, science, security, education, and labour.”
As of last year the Republic of Korea was Việt Nam’s third largest trading partner while Việt Nam was Korea’s fourth largest.
“Bilateral trade in the first nine months of this year reached $45 billion and we expect the figure for the whole year to exceed $50 billion, increasing by 100 times from $0.5 billion in 1992,” Park said.
“Investment by Korean firms in Việt Nam has also increased significantly.”
According to the Foreign Investment Agency, Korean firms have invested a total of $57.5 billion in Việt Nam, accounting for 18.1 per cent of the total foreign investment in the country.
Korea is the largest foreign investor in Việt Nam followed by Japan, Singapore and Taiwan.
Investment fields
Park said, “Based on last year’s Korean investment trends in the country, manufacturing and processing still make up the largest ratio - 70 per cent - of Korean investment.”
They accounted for 82 per cent last year, he said.
Others in the services sector, like wholesale and retail, culture, and science and technology, were also expanding at a fast pace, he said.
Electrical and electronic manufacturing accounted for the largest portion of the manufacturing and processing sector (65 per cent), followed by textile and fabric (20 per cent).
“Korean enterprises are most keen on the materials and parts industry, which directly support not only existing sectors, but also new fields such as auto, medical equipment and aircraft manufacturing,” he said.
Korean investors were also keen on services and distribution, even though they seemed to shift from offline wholesale and retail to online distribution.
“Since Korean investors consider Việt Nam a major manufacturing hub, most investments from South Korea are focused on this sector.
“Due to the changes in the investment environment in China, a number of Korean investors are relocating to Việt Nam.
“Korean firms will not focus solely on manufacturing but will eventually expand to distribution, wholesale and retail, logistics, technology, science, and infrastructure.
“As Việt Nam’s economy and industry are developing, investment in services related to these sectors will inevitably increase.”
Kim of Kocham said, “Many Korean investors want to open factories here to exploit and process farm produce for export.”
He said while the Vietnamese Government had been making efforts to improve its business and investment environment, more would need to be done to attract foreign investors.
Investors want to invest near large cities but infrastructure there is very poor, and more investment is needed in infrastructure there, including accommodation for foreign investors and traffic, according to Kim.
“Before issuing policies that could affect businesses such as raising basic salary, the Government needs to hear their opinions by holding forums or dialogues.”
Chun of LOCK&LOCK said: “Being a Korean firm, LOCK&LOCK has received a lot of support from Việt Nam. We want to thank the Vietnamese Government and hope Việt Nam will continue to offer incentives to foreign investors as well as improve administrative procedures and create favourable conditions for investment and trading.”
