Thai firms using M&A route to enter Vietnam


A growing number of Thai companies are moving into Vietnam through mergers and acquisitions (M&As), taking advantage of that country’s close proximity and cultural compatibility, says HSBC.

Tan Siew Meng, chief executive officer of the Hongkong and Shanghai Banking Corporation’s (HSBC) Thailand unit, said Thai companies were involved in at least 377 projects in Vietnam, with total registered capital of US$6.7 billion to $6.9 billion (Bt218 billion to Bt225 billion).

Thailand is the 10th-largest investor in Vietnam and moving up the ranks quickly. South Korea is No 1 on the list with investments totalling $37.8 billion, closely followed by Japan with $37.3 billion. 

At the second Vietnam-Thailand Joint Committee meeting in Hanoi two weeks ago, the two sides agreed to increase two-way trade to $15 billion by 2020. 

Bilateral trade reached $10.6 billion last year, up 12.5 per cent from 2013. Vietnam accounts for about 3-5 per cent of Thailand’s direct investments abroad.

“We have seen a trend of rising investment flows from Thailand to Vietnam because home-grown Thai corporates have been very successful in the domestic market and now they are pursuing growth overseas, and we think this trend will continue to grow,” Tan said.

Pham Hong Hai, CEO of HSBC (Vietnam), said that the country’s 90 million people had an average age of 29-30 years and studies have shown that its middle-class population could increase from 12 million in 2014 to 30 million by 2020. Therefore, there is great opportunity for Thai corporates to distribute their products to an increasingly strong consumer base.

The International Monetary Fund expects Vietnam’s gross domestic product to expand by 5.6 per cent this year, while the Asian Development Bank forecasts growth of 6.1 per cent. 

“Vietnamese people love Thai [merchandise] because it comes in that sweet spot where it is not too cheap or too expensive like Western products, while its quality is better than that of the Chinese and not that [far] away from Western quality,” he said.

Hai said regulations in Vietnam were still in an early stage of development, which was the No 1 obstacle for doing business in the country because the rules are still subject to interpretation by local authorities. However, the ongoing efforts of the Vietnam Business Forum are becoming more effective and the regulators have shown signs that they want to improve this aspect.

The Vietnamese government is also expected to make changes to the country’s M&A law this year to allow foreign businesses to control up to 60 per cent of a listed company, up from the current 49 per cent.

“Vietnamese companies have been expanding very well from good economic growth in the past 10 years and many of them cannot run by themselves any more because they need expertise and capital from foreign investors, so I see this as a very good M&A trend that Thai companies could [be] in the best position to participate in,” he said.

Hai said the Vietnamese government was planning to spend about $80 billion over the next 10 years on subways, bridges, and road and highway projects, so demand would be very high for construction materials. He also expects consumer products, especially from Thailand, to continue to be in high demand because of the rising middle-class population.

Internet infrastructures and wireless technology are already in high demand and will be growing in the near future, he said.

So far, Thai corporates are strong in the retail and plastic-manufacturing sectors, he said. Charoen Pokphand, TCC Group, PTT, Siam Cement Group and Central have all invested in Vietnam for a long time.




Source : The Nation | March 30, 2015

Thomas D’Innocenzi


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Thomas D’Innocenzi is a highly accomplished, results-focused international consultant with extensive experience in global sourcing and business development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global marketing and sourcing operations. He has extensive experience in international business development to accommodate rapid growth. Skilled in building top-performing teams, bench-marking performance, and developing organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. Tom founded Nova Advisors with the mission of providing expert Global Business Development consulting services for companies seeking to expand their market share as an independent consultant. Tom has a network of experts and advisors throughout the Asia-Pacific region and North America. His expertise includes business development, global sourcing, manufacturing, commodities, logistics, QA/QC, FDA, regulatory compliance, sustainability, and supply chain optimization. Tom is experienced in the medical device, apparel, consumer goods and technology services verticals helping companies advance their global sourcing capabilities and develop new markets through a local and sustained approach. Located in SE Asia and the United States, Tom expands market reach to drive sales. His global sourcing strategy includes directly negotiating with commodity suppliers, supply chain networks and distributors for optimal terms based on his expertise and first-hand knowledge of the players. Contact Tom to use his consulting service to increase your global market and make global sourcing profitable for you in the Asia Pacific Region and the United States. USA Direct: +1.904.479.3600 SINGAPORE: +65.6818.6396 THAILAND: +662.207.9269
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