Japanese investors are marching towards Vietnam. Not only accounting for 90 percent of the total foreign direct investment (FDI) in the country; Japanese have been penetrating the Vietnamese market through merger and acquisition (M&A) deals.
Of the four big brewery companies which have registered to become the strategic shareholders of Sabeco, two are from Japan – Kirin Brewery, the biggest drink producer who has been operating a factory in Vietnam for the last two years, and Asahi Breweries, which has advantages in hard liquor.
They are the two of the huge number of Japanese investors who plan to make investment in Vietnam in the time to come.
Japanese companies, both big and investors, flock to Vietnam
Consumer goods market has become the “aiming point” of Japanese investors. Nichirei has spent more than 6 million dollars to obtain 19 percent of Cholimex. The sweets manufacturer Ezaki Glico holds 10.5 percent of Kinh Do Group’s chartered capital. House Food plans to set up a branch, preparing for trading packaged food from 2013.
Aeon, the biggest retailer in Asia, has officially announced the investment license on the 109 million dollar first shopping mall in HCM City which is expected to become operational in 2014. Nishitohge Yasuo, General Director of Aeon Vietnam, said that the group decided to invest in Vietnam after realizing the great economic development potentials and the high growth of the consumer goods market.
A report by Thomson Reuters showed that the total value of M&A deals in Asia-Pacific (not including Japan) in the first quarter of 2012 reached 1.5 billion dollars. While the M&A market in the region dropped by 38 percent, the Vietnamese market still could see the 270 percent increase in value.
In 2011, Japanese led the Vietnam’s M&A market with 14 affairs made, while the number is expected to be higher this year. DIAIF fund bought 31 percent of stakes of JVC, a healthcare equipment distribution company, while Tama Global Investment bought 20 percent of CotecLand.
Japanese investors also target small but potential businesses. Kmix bought 45 percent of stakes of Huy Bao, Veglia Laboratories bought 20 percent of Viet Esco, Cyber Agent fund bought stakes of Tiki and NCT.
Investment up, tax down
According to the Japan External Trade Organization (Jetro), in 2011, the number of FDI projects was double that of two years ago with 208 projects registered with the total registered capital of 1.84 billion dollars.
Meanwhile, in the first quarter of 2012 alone, Japanese capital flow to Vietnam reached 2.3 billion dollars, accounting for 89 percent of the total FDI capital in Vietnam, making Japan the biggest foreign investor among 26 countries which have FDI in Vietnam.
The biggest FDI projects all have been registered by Japanese, including the Tokyu Binh Duong urban area project, the tyre factory Bridgestone in Hai Phong, Oshima Shipbuilding Khanh Hoa, Sumitomo supporting industries development – a project developed by Shimizu Coro and N&G.
Meanwhile, industrial manufacturers have announced the inauguration of their factories in the first quarter of 2012. JS Group built a doorframe factory, Tamron manufactured lens, Nippon Oil made lubricant, while Shin-Etsu recycled rare earth and silicon materials.
Japan is not only a big foreign investor, but also a big ODA donor in the last 20 years. This can bring big advantages to Japanese enterprises when they invest in Vietnam.
Experts have said that Japanese enterprises now have big advantages when doing business with Vietnam thanks to the commitments made by the Japanese government and the support from Japanese non-government organizations, Under the ASEAN-Japan economic partnership agreement, in 2012-2015, a lot of imports enjoy tax reductions since April 1, 2012.