Japanese groups accelerate their M&A activities in Vietnam

According to statistics from the Foreign Investment Agency under the Ministry of Planning and Investment, cumulatively as of September 30, Japan companies invested into more than 5,430 projects registered at $76.87 billion. This has made Japan the third-largest European investor in Vietnam, after the South Korea ($88.3 billion), and Singapore ($81.13 billion). In the first nine months of this year, total newly registered and newly added capital and stake acquisition and capital contributions from Japanese investors in Vietnam hit $2.6 billion, up 86.4 per cent on-year.

Phi Hoa, founder and CEO, ONE-VALUE

The wave of mergers and acquisitions (M&As) from Japan into Vietnam is expected to continue to surge in terms of both the number of transactions and their value.

The number of “in-out” M&A deals between Japan and ASEAN countries has remained high, second only to deals between Japan-North America and Japan-Europe. Last year, the total number of Japan-ASEAN transactions was 110, marking a 17.3 per cent decline in volume from the previous year, but an 89.4 per cent increase in transaction value. In Vietnam, Japan maintains a significant role in M&A activities.

In total, transactions in Vietnam in 2023 reached 220 deals, with a total value of $5 billion, with Japanese investors contributing substantially, accounting for about 40 per cent of the total transaction value, despite challenges posed by global economic fluctuations and the depreciation of the yen. The growth of Japanese M&A activity has continued positively into 2024. In the first half of 2024, the number of deals involving Japanese investors rose by 19.4 per cent compared to the same period last year, reaching 2,312 deals, with a total transaction value exceeding $60.5 billion. Notably, Vietnam ranked among the global top 10 and regional top 2 in terms of Japan’s In-out transactions, with a deal value of $157 million.

Amid global economic uncertainty, with lingering impacts from the pandemic and predictions of prolonged economic crises, many Vietnamese businesses face the risk of bankruptcy and may be forced to “sell out” to survive. Meanwhile, since the global economy was disrupted in 2020, Vietnam has emerged as a favoured destination for Japanese companies looking to expand internationally. Many Japanese firms are exploring the Southeast Asian market, seeking to expand production and business activities, with Vietnam standing out as a prime target.

Thus, the current economic crisis unintentionally provides Japanese enterprises with a “shortcut” into the Vietnamese market, optimising both time and costs through M&A as their strategic entry method.

Based on these trends, the Japan-Vietnam M&A market is expected to become more vibrant than ever, presenting golden opportunities for Vietnamese companies to capitalise. According to ONE-VALUE, a consulting firm specialising in the Japan-Vietnam M&A market, Japanese businesses regard Vietnam as their top destination, surpassing other regional markets such as China, Indonesia, Thailand, and the Philippines.

Key sectors such as renewable energy, healthcare, and logistics remain highly promising, enhancing long-term cooperation between the two countries. Additionally, Vietnam’s consumer market of 100 million people increasingly attracts major Japanese enterprises. Notable transactions this year include AEON Entertainment’s $208.33 million investment in Beta Media to develop a high-quality cinema chain and Saizeriya - one of Japan’s most successful Italian restaurant chains - entering the Vietnamese market.

M&A activities not only bring profits but also promote technology transfer and the development of high-quality personnel in Vietnam. This contributes to sustainable growth for both countries in an increasingly globalised world.

The rising frequency and growing value of M&A transactions between Vietnam and Japan reflect not only short-term economic collaboration but also long-term strategic partnerships. As Japanese investors shift their focus from short-term profitability to sustainable business operations, they are expected to channel greater investments into renewable energy, high-tech manufacturing, and digital transformation projects in Vietnam.

This strategic shift aligns with the global trend towards sustainable development, reinforcing Vietnam’s role as a critical hub for Japanese businesses aiming to strengthen their presence in the ASEAN region.

With an aggressive expansion strategy and long-term investment commitments, Japan will continue to play a pivotal role in the development of the M&A market in Vietnam and ASEAN. High-quality transactions and robust partnerships lay the foundation for sustained success between the two nations in the future.

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