Foreign retailers ramp up investment in Vietnam

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AEON MALL Binh Duong Canary

Enhancing investment in Vietnam

Recently, when talking with VIR, Yasuo Nishitohge, general director of AEON Vietnam Co., Ltd., said that Vietnam has great potential in the retail sector, so expanding business in the country is necessary.

In early 2017, AEON Group signed an agreement to cooperate with Vietnamese BIM Group, a diversified group of companies concentrating on three main business sectors, including tourism development and real estate investment, food-agriculture, and commercial services, to develop an AEON Mall in Hadong district, Hanoi. Meanwhile, in Ho Chi Minh City, this Japanese retailer is promoting the construction of its third shopping mall.

“We are behind schedule of opening 20 shopping malls by 2025, but up till now, there have been four only due to the lack of appropriate sites,” Nishitohge said.

He added that AEON will speed up their investment plan in the coming period. In particular, the group schedules to open two new shopping malls every year. In the short-term, this giant retailer will focus on big cities like Hanoi, Ho Chi Minh City, and Danang. Investments into other localities are another plan in the future.

In Ho Chi Minh City, AEON proposed constructing its third shopping mall on a 10-hectare site. The deal is being negotiated, so Nishitohge has not released the exact location, but he revealed that suburban areas like District 8, District 12 or Thu Duc are eyed by the group, so the third shopping mall may be located somewhere among these places.

In June 2017, another giant retailer from Japan, Seven & I Holdings Co., Inc. entered the Vietnamese market with its first 7-Eleven convenience store located in Ho Chi Minh City. The company plans to open 20 convenience stores with the brand 7-Eleven in 2017 and 100 stores in the next three years. The participation of 7-Eleven has heated up the already fierce competition among convenience stores in Vietnam.

This year, French company Groupe Auchan is reviewing the market in Dong Nai province to launch a supermarket. After multiple surveys, Auchan is expected to construct a 1,500-square-metre supermarket in Bien Hoa, which will specialise in local clean food products.

Auchan joined the Vietnamese market in 2015 and currently, there are 13 Auchan supermarkets in Ho Chi Minh City, Hanoi, and Tay Ninh, with an average acreage of 1,500 square metres each.

Partnership with domestic enterprises

Along with the wave of foreign investment into Vietnam, international retailers enhancing their power in Vietnam by teaming up with domestic enterprises is becoming a new trend. For example, AEON has been continuously increasing its holdings in domestic supermarket systems Citimart and Fivimart.

Accordingly, AEON provides them with its TopValu-label products and cooperates with them to develop its products as well as supply and consumption chains.

Not only expanding their systems in Vietnam, international retailers also target to sell Vietnamese products in foreign supermarkets and stores.

Talking about this trend, Yuichiro Shiotani, general director of AEON Topvalu Vietnam Co., Ltd., said that AEON has achieved the highest growth rate in the ASEAN, thus they have been considered AEON’s key investment areas.

The group now has more than 14,000 stores in Asia, of the total, 11,000 stores are located in Japan and the other 2,000 are in other ASEAN countries.

“At first, Vietnamese products will be distributed in AEON stores in ASEAN countries, then in Japan,” Shiotani said.

In early 2017, South Korean Lotte Group finished all necessary procedures to acquire Ciputra Hanoi Mall for the purposes of enhancing its retail business in Vietnam. Lotte aims to spend $300 million on this project, and the construction was expected to start in the second quarter of 2017, but since then, no further information has been released yet.

Ciputra Hanoi Mall was scheduled to be constructed in 2007, but before being acquired by Lotte, it was left abandoned. This could be considered the first and biggest foreign-invested real estate project in Hanoi with the total investment of over $2 billion.