According to the article, despite falling behind in terms of developing business overseas compared to rivals Samsung and Hyundai, SK Group, the RoK’s third-ranked chaebol, is making a bold move into the Vietnamese market in an attempt to catch up to its rivals by tapping into the wealth of the country’s youthful consumers.
SK has therefore moved to purchase large stakes in two significant Vietnamese business groups, including the operator of supermarket chain VinMart.
The article points out that VinMart, which is typically located in a large condominium complexes, symbolises the growing allure of supermarkets in Vietnam. Until roughly five years ago, the country’s main shopping venues were traditional open-air marketplaces, although now supermarkets are rapidly emerging.
April saw SK invest US$410 million into VinMart’s operator, VinCommerce, in order to gain a 16.3% stake in the company, whilst SK has also appointed members to VinCommerce’s board as both sides consider business collaborations.
As Vietnam’s largest retailer, VinCommerce runs a network of roughly 2,300 supermarkets and convenience stores. However, due to an expansion strategy which has so far backfired, the company has racked up significant losses, according to the article.
VinCommerce continues to operate a large number of unprofitable stores, making commentators on the local industry believe that a revival will prove to be difficult, although SK appears keen to step in to invest anyway, the article notes.
“Compared to other major chaebols, SK is late in carrying out overseas expansion, such as in Vietnam,” said Kazuhiro Momomoto, researcher at the Japan External Trade Organization.
Recent years has seen SK invest heavily to establish a foothold in the country. Indeed, 2018 saw the group spend US$470 million for a stake in VinCommerce’s current parent, food conglomerate Masan Group. Following this, SK injected a sum of US$1 billion into Vingroup, Vietnam’s largest conglomerate, to gain a 6.1% stake in 2019, with Vingroup going on to transfer majority ownership of VinCommerce to Masan in a deal announced in December, 2019.
Through those investments, SK has devised plans to put together an upstream-to-downstream distribution and sales network in the Vietnamese market. Part of this strategy is sharing general know-how gained by managing Eleven Street, a major e-commerce platform in the RoK.
SK, which last year entered into a capital tie-up with Amazon.com, is keen to transform VinCommerce into an “omnichannel operator” on the same scale as Amazon or China’s Alibaba Group Holding, thereby putting the Vietnamese company on a quick path to profitability.
The country is home to a population of 100 million with an average age of 31, and plenty of young consumers are eager to spend.
The article highlights the fact that other companies based in the RoK have been trailblazers within the Vietnamese market earlier previously.
Specifically, the RoK’s Lotte Group owns the 65-story Lotte Center Hanoi in the heart of the Vietnamese capital. Along with office space and a hotel, the structure contains a Lotte Department Store along with a major Lotte Mart supermarket.
Furthermore, there are reports that the group will open a luxury hotel in Vietnam in 2025.