VietNamNet Bridge – Globally known brands are taking steps to
restructure their exclusive distribution partners in Vietnam, a part of their
plans to become the number one in their fields in the Vietnamese market.
VTC News has reported that Abbott
has officially completed the deal of buying 3A Nutrition, its partner which has
been distributing Abbott’s products in Vietnam for the last many years.
Commenting about the deal, Dau tu
wrote that the foreign partner used 3A Nutrition as a stepping stone which
helped it to integrate more deeply into the Vietnamese market and strive for
the number one position in the market.
3A Nutrition seems to voluntarily
become a part of Abbott, affirming that the company sale to Abbott aims to help
Abbott’s products cement their positions in the domestic market.
However, a question has been
raised that why Abbott, a giant dairy producer in the world, which has more
than enough money to build a distribution company of its own, still had to seek
an exclusive distributor, when entering the Vietnamese market?
Eighteen years ago, Abbot chose
3A Nutrition as its distribution partner, because the then owner of the company
was Dr Chris Quach, a Viet Kieu in the US, who had deep knowledge about the
powder milk market in Vietnam with Japanese Meiji brand, the US Similac, Dutch
Guigoz and German Dumex.
What impressed Abbott at that
time was that the 3A’s boss really wanted to become a good marketing group for
the products and strive to help reduce the malnutrition index of Vietnamese
children to the deepest low.
Especially, in many years later,
3A did not operate as a business group, but an educator.
This was what Abbott wanted when
penetrating the Vietnamese market. And 3A Nutrition did its job as the
exclusive distributor too well. Every year, 3A even spent 2-3 billion dollars
on the research and development activities.
Robert Tran, a senior executive
of Robeny Group, a Canadian consultancy firm, believes that 3A really helped
reduce the risks in debt collection, delivery and market research. If Abbott
does not take over 3A at this moment, it would miss the golden opportunity.
If so, 3A would belong to some
groups which could be the rivals of Abbott. Moreover, Abbott should take over
3A now, because it has got all necessary information about the market, which
allows it to distribute products and easily expand the market.
The financial terms of the affair
have not been revealed, but an executive of Abbott Nutrition said Abbott would
use 20 million dollars as working capital to develop business in Vietnam.
Merger and acquisition experts
have said that everything is very cheap at this moment, and that any one, who
has money, would have the opportunities to buy the things they need.
In case of Abbott, the dairy
producer has grabbed the opportunity to buy a company at a good price, which
would help Abbott reinforce its strength in the nutrition product market in
Vietnam.
The reports by market survey
firms all showed that the powder milk consumption in Vietnam has increased by
17 percent, thus making the competition among dairy producers stiffer.
Foreign dairy producers now hold
more than 70 percent of the market share. Abbott tops the list of the foreign
producers, holding 32 percent of the market share. The remaining market shares
are being held by domestic producers such as Vinamilk and Nutifood.
A similar case is happening with
PSD, which was the distributor of Nokia. Some months ago, the Nokia-PSD
alliance broke down, while Nokia decided to cooperate with FPT and Lucky to
boost sales on the domestic market.
Right after the separation with
Nokia, PSD has found a new foreign partner. Buu dien newspaper has reported
that PSD has become the distributor for Samsung, which is the Number One in the
smart phone market in Vietnam with 53 percent of the market share, and the
Number Two on the mobile phone market in general.
Will it happen that Samsung, once
obtaining its goal of dominating the market, it will take over PSD?
Compiled by Kim Mai
Business & Investment Opportunities
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