Overseas packaging titans continue to snap up locals

Nguyen Van Dong, chairman of the Vietnam Printing Association (VPA), highlighted both the substantial potential and looming risks present in Vietnam’s printing and packaging industries at an exhibition in Ho Chi Minh City last week.

“Neighbouring countries are struggling with market development, while we present promising growth in printing and packaging. Last year, we welcomed numerous foreign companies exploring investment environments and production partnerships,” Dong said.

Overseas packaging titans continue to snap up locals, Source: VNA

However, more than 10 major Vietnamese packaging corporations have been acquired by foreign investors, and the acquisition trend underscores the potential vulnerability of domestic entities that are unable to attract competent successors and lack the robust business acumen required to meet market challenges posed by foreign corporations, Dong added.

“A few months ago, a packaging company in Hanoi decided to sell 80 per cent of its ownership to a foreign company,” he said.

Among those, Thai conglomerate SCG Group has been at the forefront, actively acquiring local manufacturers within the printing industry to augment its foothold in Vietnam.

Several acquisitions by SCG, such as 80 per cent of Tin Thanh Packaging, 94 per cent of Bien Hoa Packaging, and 70 per cent of Duy Tan Plastics, have facilitated its rapid expansion in the industry, enhancing its capability to serve fast-moving consumer goods manufacturers and consumers in Vietnam.

With geographical proximity and cultural parallels granting SCG and other Thai conglomerates an advantage over European, South Korean, and Japanese enterprises, SCG now supervises over 20 subsidiaries in Vietnam.

Other foreign brands in the packaging industry include Tetra Pak, which launched its specialised centre for food and beverage innovation in July, in collaboration with DenEast, a contract manufacturing service provider.

Another high-profile foreign name in the packaging industry is Swiss aseptic packaging solutions provider SIG, which celebrated 25 years in Southeast Asia this year. SIG boasts a number of renowned clients in Vietnam, such as Nutifood and TH Group, focusing on sustainable packaging.

According to the VPA, the country’s printing industry is bustling with over 2,000 enterprises, of which around 400 are foreign entities. These overseas companies make up one-fifth of all printing enterprises but capture over one-third of the market share, especially dominating the export market.

“Foreign companies, with financial strength and operational know-how, can stabilise their growth with mere capital infusion and technology investments, leaving local enterprises disadvantaged. Without apt solutions, local companies risk losses and diminished competitive standing,” said Dong of the VPA. “In addition, without elevating managerial capacities, domestic printing entities risk losing ground in the competition, progressively succumbing to the overarching influence of foreign companies in the industry.”

Meanwhile, amid the surge in e-commerce and domestic market growth, Judy Wang, chairperson of Yorkers Exhibition Service Vietnam, said that with the proliferation of e-commerce and the expansion of the domestic market, there is a growing realisation among Vietnamese and international printing and packaging companies about the importance of creating a brand imprint.

“The evolving market dynamics require these enterprises to escalate their digital transitions and employ advanced technologies to elevate product quality, thereby augmenting value for the consumers and fortifying customer retention,” Wang noted.

Research conducted by the Vietnam Pulp and Paper Association (VPPA) projects a promising uptick in the consumption of paper packaging in the country.

“Between 2021 and 2025, consumption is anticipated to rise by 12 per cent, spurred by accelerating urbanisation rates. The printing industry has been a significant contributor to the economy, injecting 1 per cent to the nation’s GDP in the past three years, roughly equivalent to $2 billion,” the VPPA said.

When incorporating the revenue generated by foreign companies, the total revenue for Vietnam’s printing and packaging industries is estimated to have reached $4 billion. Notably, the printing industry in Ho Chi Minh City accounts for approximately 60 per cent of national revenues.

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