Nov 27, 2012

Vietnam - Despite economic downturn, FMCG manufacturers still see opportunities in VN

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VietNamNet Bridge – While most investors keep hesitant in making investment decisions at this moment, in the context of the economic downturn, fast moving consumer goods (FMCG) still march forward in the Vietnamese market.

The foreign direct investment (FDI) situation in the first 10 months of the year proves to be unsatisfactory, with the registered capital just accounting for 63.7 percent of the same period of the last year.

However, there is still a grain of comfort that 359 projects have been expanded with the additional investment capital of 3.8 billion dollars, up by 12.3 percent over the same period of the last year. This means that the investors have been successful in Vietnam and they now plan to scale up the production.

Most of the expanded projects are in the fields of processing industry, manufacturing and distribution.

FMCG welcome

The fact that Japanese Suntory, Pepsi, Sanofi Aventis (pharmacy) or Kirin Vietnam decided to pour more money into the Vietnamese market, shows the optimism kept by big investors.

They have every reason to keep optimistic: though the market demand remains weak due to the high inflation, people still have to spend money on meals and healthcare.

Some foreign investors have been following a straight line to penetrate the Vietnamese market. They first conducted market surveys and then set up production bases in Vietnam.

British Virgin Island’s Astralis Mining Ltd, for example, decided to invest 30 million dollars to build a brewery which would make products for both the domestic consumption and export. The brewery is expected to be located in the Vietnam – Singapore Industrial Zone No. 2.

Meanwhile, others take a roundabout to cement its position in the Vietnamese market. At first, it buys stakes of Vietnamese companies in an effort to gradually control the distribution network.

Japanese Sojitz Company, for example, bought 51 percent of stakes at Huong Thuy Trade, Service and Production Company. Suntory has joined hands with Pepsi in a plan to improve the exploitation capability in the drink industry (Suntory has acquired 51 percent of PepsiCo Vietnam’s stakes).

Japanese remain the biggest investor in Vietnam. Five years ago, Japanese investors mostly eyed the technology, electronics and engine manufacturing sectors. Meanwhile, in 2012, they mostly target the food processing sector.

Shinichiro Hori, General Director of Dream Incubator Vietnam, said it is not only a consultancy firm, but it has also made investment in Vietnam through DIAIF fund and merger and acquisition (M&A) deals.

DIAIF, with the total investment capital of 70 million dollars, mostly eyes the food and beverage (F&B) and healthcare industry. DIAIF has become the strategic shareholder of JVC, a healthcare equipment company, holding 31.1 percent of stakes of the company. It is also a shareholder of Nutifood.

Sources said that a leading US powder milk group is looking for a suitable place in the triangle HCM City – Dong Nai – Binh Duong in a plan to prepare to set up a factory in Vietnam.

The HCM City High Tech Park Management Board has revealed that Sanofi Aventis has decided to set up a research and development center capitalized at thousands of billions of dong at the park.

According to the Binh Duong provincial Planning and Investment Department, of the 17 new projects in the first eight months of 2012, there were two familiar names.

These include Masan Industry Company belonging to Masan Group, which decided to invest 600 billion dong on the instant noodle and rice gruel production line.

The other was Kirin Vietnam, which decided to raise the chartered investment capital to 15.8 million dollars to make bottled fruit juice and other kinds of drinks.


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