Vietnam a key market for Japanese

So far in 2024, Japan is the second-largest foreign investor in Vietnam, Photo Le Toan

In early August, Marubeni Corporation, through its subsidiary Marubeni Growth Capital Asia Pte. Ltd. (MGCA), acquired additional shares in Vietnam’s AIG Asia Ingredients Corporation. The move follows MGCA’s acquisition of a significant minority stake in AIG, announced in November 2023.

Since its initial investment, Marubeni has been a strategic business partner working with AIG on its long-term strategic plan, expanding its natural food ingredients portfolio and new business development initiatives. Marubeni believes there is a strong alignment between the company, which led it to further strengthen the strategic partnership.

Bharat Sarma, president and senior managing director of MGCA, said, “AIG is making strategic changes along multiple dimensions. MGCA is delighted to partner with AIG, and we are committed to rapid growth, leveraging the Marubeni ecosystem, and creating significant value together.”

Meanwhile, AEON Entertainment, a subsidiary of AEON Group, has established a joint venture with Vietnam’s Beta Media to open 50 cinemas in Vietnam by 2035, with an investment of around $200 million. The move demonstrates AEON Entertainment’s capability and effort to expand in the international market.

Nobuyuki Fujiwara, chairman of AEON Entertainment, said, “We have strong confidence in the Vietnamese film industry. It will continue to grow, and there will be many opportunities for us from Japan to contribute.”

The expansion of AEON Entertainment is in line with AEON Group’s strategy to scale up its presence in Vietnam. In its long-term vision, it identifies Vietnam as the second key market alongside Japan to intensify investment.

Elsewhere, Sojitz Corporation has developed wide-ranging businesses spanning from retail, wholesale, and distribution to food processing in Vietnam. The Japanese company plans to invest in digital transformation to improve the efficiency of its supply chain while creating new businesses in the country. To facilitate the goal, Sojitz invested in Vietnamese company Finviet Technology Corporation in April following its acquisition of wholesale company DaiTanViet JSC in November 2023.

Masataka “Sam” Yoshida, head of the Cross-border Division of RECOF Corporation, said that in many cases, strategic goals such as building a dominating position in the Vietnamese market cannot be obtained by one transaction only.

“After the initial investment is put on track, companies start to look at the next opportunity; whether it is distribution after production, maintenance service after sales channel, or northern market after southern market of Vietnam,” Yoshida said.

Despite the slowdown of the Vietnamese economy, its growth potential is much higher than Japan, and Japanese companies still hold abundant cash to invest. As long as Japanese investors are concerned, they remain keen to explore more targets for strategic investments in Vietnam, Yoshida noted.

“We saw a constant flow of investments by Japanese strategic players to acquire well-positioned Vietnamese companies in such sectors as retail and wholesale distribution and packaging,” Yoshida added. “Japanese companies have been more active in ‘real economy’ sectors like manufacturing, logistics and distribution. One of the key driving forces remains the global supply chain issue, and many Japanese corporations are starting to place high priority on Vietnam as a hub in the region rather than China or Thailand. Some companies are also striving to enter or expand in the Vietnamese market while the global competition is intensifying.”

According to a survey released by the Japan External Trade Organization (JETRO) in May 2024, Vietnam had the second-highest percentage of respondents (24.9 per cent) planning to expand their overseas business, trailing behind the United States. Among large groups planning to expand overseas, Vietnam also ranked second (28.6 per cent), trailing behind India (29.5 per cent). About 24.1 per cent of Japanese small- and medium-sized enterprises also have plans to expand into Vietnam.

Matsumoto Nobuyuki, chief representative of the JETRO in Ho Chi Minh City, said, “While China had the highest rate of overseas expansion in the 2020 survey, Corona was an opportunity for companies to recognise the need to diversify their supply chains, rather than relying too much on China. In doing so, the question of where to relocate these functions was considered, particularly in ASEAN, with many companies choosing Vietnam, which has been the second most popular country after the US since the 2021 survey.”

In terms of foreign investment in the first half of 2024, Japan is the second-largest foreign investor, trailing behind Singapore. New investment was up 153.6 per cent on-year, a large proportion of which was in liquefied natural gas power plant projects, indicating continued strong interest in the infrastructure sector. Expansion investment was also up 30.3 per cent on-year, indicating a strong appetite for expansion.

“While it is true that Vietnam is attracting a high level of interest from Japanese investors, cumbersome administrative procedures may have a negative impact, and we hope that efforts will be made to resolve these issues in order to continue to attract more investment not only from Japan but also from other countries in the world in the second half of this year,” Nobuyuki noted.

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