Foreign companies take shortcuts into Vietnam

Samsung Group-owned Cheil Worldwide’s Cheil Vietnam Limited Company last week illustrated  the trend by inaugurating a joint venture with Vietnam’s Mekong Marketing Communications Corporation to provide a full marketing business with a focus on digital marketing services.

Cheil Worldwide is Korea’s largest advertising group. It set up a representative office in Vietnam a few years ago and wanted  the new joint venture to grow into one of Vietnam’s top three advertising agencies in the next three years, said Cheil Vietnam director Dion Lee. The inauguration came shortly after WPP, the world leader in marketing communications services, announced its wholly-owned global public relations and public affairs firm Burson-Marsteller was to launch Burson-Marsteller Vietnam.

Burson-Marsteller Vietnam is a joint venture with local partner Chu Thi Company Limited with the foreign company holding a majority stake.  Chu Thi Co is a leader in Vietnam’s content industry – its founder Chu Thi Hong Anh has been associated with WPP since 1995 and has served as chairwoman for JWT and Mindshare in Vietnam. WPP stated that the investment was part of the group’s continued strategy of developing its networks in fast growing markets and sectors, with Vietnam being one of the fastest growing markets in the world.

WPP has been operational through its companies in Vietnam for more than 10 years.
Last year, it acquired Who Digital and establishing a joint venture with OgilvyOne. Earlier, the firm acquired a 20 per cent share of Smart Media and WPP’s media unit GroupM took out holdings in three subsidiaries of DacvietVAC Group Holdings. WPP businesses and associates in Vietnam generate revenues of  $50 million and employ 1,000 people.

In a similar development, in early March 2012, Edelman, a world leading independent public relations firm, announced its buy-out of AVC Communications, a wholly Vietnamese-owned public relations and marketing firm founded in 2000. The move came in response to the growing demands from Edelman’s clients.

“Because its [Vietnam’s] immediate and medium growth prospects are one of the best in Asia-Pacific, our clients are pounding at our door for communications help to navigate the Vietnam market,” said Edelman president Richard Edelman. Tran Thi Thanh Mai, general director of TNS Media Vietnam, said WPP was an example of aggressive and non-organic expansion where foreign firms acquired local operating companies and developed them.

“Foreign companies acquiring or cooperating with local companies can obviously take advantage of their local partners’ strength, while being able to save time and costs to consolidate their presence in the country,” said Mai. Le Quoc Vinh, CEO of Le Bros - a leading Vietnamese-owned public relations firm, said a deep understanding of the local market, a rich client base and domestically established relationships were what foreign players were looking for.

“Thus, teaming up with a local company is the quickest way for a foreign company to approach the domestic market,” he said. Vietnam is home to around 5,000 advertising and communications firms, most operating in Hanoi and Ho Chi Minh City. The industry’s revenue almost doubled from $555 million in 2008 to $1 billion in 2011, according to Vietnam Advertising Association figures. Foreign firms are soaking up 70 per cent of the local market share.