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<Report from overseas office> [Vietnam] What is the potential of the Vietnamese market? The presence of Korean companies

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1: Feel Korea in Ho Chi Minh City

May 17, 2019, 2:00 PM.
The sight of my arrival at Ho Chi Minh City Airport is still vivid in my mind.

Of all the foreigners waiting for immigration, half were Koreans like me.
This was the moment when I realized firsthand what I had read in the article that there are 96 international flights a week between Ho Chi Minh City and Seoul Incheon International Airport, more than twice as many as between Ho Chi Minh City and Narita/Haneda.

2: History of Korean companies' expansion into Vietnam

In Ho Chi Minh City, eating the same Korean food as in your home country is a no-brainer.
As a matter of fact, as of May 2019, there are 160,000 Koreans living in Vietnam.
There are currently 8,000 Korean companies operating in Vietnam.
Recently, more than 1,000 new corporations are being created annually.

Compared to Indonesia, which has been called the largest market in Asia, the number of companies entering Vietnam is more than three times greater and the number of corporations established each year is more than ten times greater.

Let's take a look back at the history of Korean companies' expansion.

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Against this backdrop, a trade agreement between the United States and Vietnam came into effect and started in 2001.
Investment in manufacturing rapidly increased, especially in labor-intensive industries such as textiles, sewing garments, and shoes, taking advantage of Vietnam's low labor costs.

In addition, with Vietnam's accession to the WTO in 2007 and other developments, South Korean companies have further accelerated their expansion.
Since 2013, the quality of investment has changed, as the investment area has been expanded to include the parts and materials industry, led by Samsung, and the investment field has become more sophisticated and diversified.

Looking at the current investment status by industry
The manufacturing industry dominates, followed by the real estate and construction industries.

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Furthermore, with the change of the South Korean government in March 2017, taxes on domestic real estate holdings and inheritance nearly doubled compared to the previous government, which accelerated real estate investment in Vietnam, especially in Hanoi and Ho Chi Minh City. Hanatour, Korea's largest travel agency, has also launched a "Hanoi and Ho Chi Minh City Real Estate Tour" and the real estate boom continues.

3: The presence of Korean companies as seen in magazines for Koreans in Vietnam

The investment situation by industry is well illustrated by the advertisements of companies in magazines for Koreans in Vietnam.

The advertisements of the companies that appeared in the May issues of Sinchao and Good Morning, which have high recognition and subscription rates among Koreans and expatriates living in Ho Chi Minh City, had the following characteristics.

On the other hand, advertisements on the front and second pages of magazines were dominated by ads for major companies such as Samsung TV, refrigerators, and emerging financial services. In particular, Samsung's ads took up the entire front page of not only magazines for Koreans in Vietnam, but also the in-flight magazine of Vietnam Airlines.

4: South Korean companies are behind Vietnam's burgeoning film industry

The presence of Korean companies is not limited to manufacturing industries such as Samsung and LG.
The whirlwind of the Korean Wave in Vietnam cannot be underestimated.

Since its entry into the market in 2011, CJ Entertainment has steadily implemented a strategy to strengthen local content by teaming up with Vietnamese film companies. In a market that had been dominated by Hollywood films, CJ Entertainment advocated diversification of film content and concentrated on local films by expanding the distribution and screening of local Vietnamese commercial and artistic films.

Additionally, the team collaborated closely with the production company from the planning stage through production, marketing and screening of the film, and established a feedback system to enhance the perfection of the local film.

As a result, the number of local audiences watching local films has increased significantly. In 2011, when it first opened, only 11 local films were shown, but just seven years later, in 2018, the number had quadrupled to 40.

South Korean companies are likely to break away from the speed-only strategies they have used in the past in order to grow steadily in the Vietnamese market. This is supported by the fact that, according to the editor-in-chief of Sinxiao Vietnam, many Korean companies are now feeling the limitations of managing their business with a bowl of rice, and are increasingly asking for marketing data and statistical information. They are in need of fact-based planning and long-term strategies. While examining the successes and failures of Korean companies as leading indicators, it would be possible to re-examine low-risk entry and local management. We also believe it is important to analyze the internal management in the Vietnamese market of Korean companies that have entered the market earlier.

Translated with AI Translator


  • Intage Inc

    Author profile
    Ryu Pogiru

    A male researcher from South Korea living in Vietnam.
    He does everything from sales to research with his natural vitality.
    He specializes in analyzing consumer insights and has worked on a wide range of projects not only in Japan, Korea, and Vietnam, but also in Europe, the United States, and the Middle East.

  • Intage Inc

    Editor profile
    INTAGE

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