Korean food giants look to Vietnam to expand materials sources

In September, Korea’s CJ Group signed a memorandum of understanding (MoU) with the People’s Committee of southern Ninh Thuan province to develop chili-growing in the area.

The plan is split into two phases. In the first CJ is experimenting with a one hectare area through 2014.

In the next the two sides will discuss cooperation in growing a large scale chili area over 10 years, or longer. About 3,000 local farmers are expected to be involved with an estimated output of 3,000 tonnes of dried chilies per year, from 12,000 tonnes of fresh chilies.

The Korean group is also considering building a chili processing and packaging plant in the province. It aims to also produce different sauce products once material production is stable.

CJ Group experts would provide high-quality chili varieties and technology transfer, as well as guarantee appropriate purchasing prices from farmers.

“In the past, Japan was our top material market, but now this is moving to Vietnam. The deal with Ninh Thuan is only one of several prominent investments in the country. Alongside chili, CJ is also working on farming cabbage, as these two products are staples in making kim chi,” said Lee Ho Yeon, a CJ Group procurement expert.

“Strict production, delivery, and good quality control are of paramount importance at CJ,” Lee added.

Leading Korean retailer Emart is also looking to diversify its material supply sources.

Emart assessed the quality of vegetables and lobsters from Vietnamese producers and was reportedly not pleased with the results.

“Vietnamese firms need to improve their production standards and redesign their packaging to convey the message of quality to their consumers and import partners,” said Lee Chang Hun, in charge of procuring food and agricultural products for Emart.

Lee said Vietnamese instant coffee brand G7 and several household appliances in Emart only account for 2 per cent of similar imported product volumes at their stores and that online sale of Emart products in Vietnam stands at more than $660,000 per year, and is forecast to increase sharply in the coming time.

Regarding Emart’s plan to open its first mega-supermarket in Vietnam, Lee said their joint venture with local partner U&I is seeking suitable partners in Hanoi and Ho Chi Minh City to push up the plan.

General secretary of the ASEAN-Korea Centre Chung Hae Moon said there are great efforts by countries in Asia, particularly in Southeast Asia, to realise the ASEAN Economic Community by 2015.

“Korean firms need to reach strong, sustainable agreements on material supply with Vietnamese firms to effectively tap the region’s development opportunities after 2015,” said Chung.