Vietnamese enterprises make their mark on foreign markets

Vinfast set up a series of branches in the US, Canada, France, Germany, and the Netherlands to prepare for the market launch. Photo: Internet

“Offshore fishing”

Of all enterprises investing abroad in the first half of this year, the most prominent was Vingroup with four investment projects in France, the Netherlands, Canada, and Singapore. Simultaneously, this unit has increased its investment capital in the US and Germany with a total of nearly US$450 million. Last July, Vinfast Trading and Service Co., Ltd. officially put branches in the US, Canada, France, Germany, and the Netherlands into operation to prepare for the market launch. As planned, Vinfast will officially launch two smart electric car models VF e35 and VF e36 globally in March 2022.

At the end of July 2021, FPT Software Company also announced an investment in Intertec International – a information technology service provider in Latin America with 20 years’ experience. Thanks to this cooperation, FPT Software can expand its business opportunities in the US and in Latin America, meeting the increasing demands of customers in this region. At the beginning of this year, FPT Software established a production center in Costa Rica.

Due to declining domestic iron ore mines, in May, Hoa Phat Group successfully acquired 100% of the shares of Roper Valley iron ore mine project in Australia with reserves of 320 million tons and mining capacity of 4 million tons/year. Hoa Phat is continuing to research some new iron mines in Australia to ensure a long-term supply of at least 50% of the group's iron ore needs (equivalent to 10 million tons/year). Currently, Hoa Phat is planning to buy some new iron mines in Australia to ensure a long-term supply of at least 50% of the group's iron ore demand (equivalent to 10 million tons/year). Besides, coking coal, the raw material that constitutes up to 30% of the steel price, is also being imported by Hoa Phat from Australia - the world's largest coking coal supplier. Currently, Hoa Phat is considering buying a few Australian coking coal mines in the near future to gradually become self-sufficient in this important production material.

According to the Ministry of Planning and Investment, in the first seven months of 2021, Vietnam's total investment capital abroad newly granted and increased by US$570.1 million, an increase of nearly 2.3 times over the same period in 2020. Of which, 28 projects were granted new investment registration certificates with a total capital of US$145.3 million, equal to 70% of the same period in 2020, and 11 projects were adjusted capital with a total additional capital of US$424.8 million USD, an increase of 9.1 times.

Good results

The big investments mentioned above have shown the ambition of Vietnamese enterprises in foreign markets, because there have been units that have achieved success and made a certain mark.

Specifically, after 15 years of investing abroad, Viettel Global Investment JSC (Viettel Global) is present in a series of markets in Africa, Latin America, and Southeast Asia. In particular, at the end of 2020, Viettel Global was holding first rank in terms of market share in four markets: Metfone in Cambodia, Unitel in Laos, Telemor in Timor-Leste, and Lumitel in Burundi. Moreover, Mytel in Myanmar also rose to second place after just two years of business, reaching 31% of market share, approximately 1.6% less than the largest network operator in this country.

In the first half of 2021, Viettel Global's net revenue reached VND9,888 billion, up 15%; gross profit increased by 25%, reaching VND4,062 billion. Viettel Global said that excluding Mytel in Myanmar, which was still affected by the exchange rate loss, leading to a decrease in profits from affiliates, most of the market had a strong growth in revenue. Notably, Halotel in Tanzania, Lumitel in Burundi, Movitel in Mozambique, and Natcom in Haiti saw double-digit revenue growth.

At Vietnam Dairy Products JSC (Vinamilk), in the first six months, net revenue from Vinamilk's foreign branches reached VND1,705 billion. Along with that, the export segment also brought in net revenue of VND2,772 billion.

With the successes achieved, Vinamilk has just announced a joint venture with Del Monte Philippines Corporation, Inc. (DMPI) – a subsidiary of Del Monte Pacific Limited and a leading food and beverage company in the Philippines. The products of the joint venture are expected to be officially launched to Filipino consumers in September 2021. Vinamilk expects the joint venture to bring in revenue of US$8.8 million (equivalent to more than VND200 billion) in the first 12 months of operation (from August 2021). And the average compounded growth rate is expected to reach 50% in the medium term.

FPT is also a prominent name for its success in foreign markets over the years. In the first half of this year, FPT earned 11 large projects with a scale of more than US$5 million, while there were only two contracts of the same size in the same period last year. Thanks to an increase in the number of large contracts, FPT's foreign market information technology service revenue reached VND6,683 billion, up 15%, pre-tax profit reached VND1,061 billion, up over 18%. Its revenue grew in all markets, especially the US market, increased by 41%.

Penetrating foreign markets is considered an inevitable path to maintain growth for large enterprises after capturing enough in the domestic market. According to Le Viet Hai, Chairman of the Board of Directors of Hoa Binh Construction Group, if the company operates in the domestic market only, it is difficult for them to maintain fast growth momentum, increasing five times in five years like 30 years ago since its establishment.

Because at this rate, by 2028, Hoa Binh's revenue will be greater than the total output of Vietnam's construction industry in 2019 (US$16 billion).

Therefore, going to foreign markets is an inevitable path. “Only in this way can Hoa Binh get rid of the narrow domestic market, and bring many construction and construction materials enterprises as well as the supply chain of related products and services to export to the global market,” said Hai.

With that orientation, the Board of Directors of Hoa Binh Construction Group has approved the investment policy of two projects in Canada and is researching other projects. The effectiveness of these projects will be the basis for Hoa Binh to enter the global market in the future.

Accumulated to July 20, 2021, Vietnam has 1,423 valid overseas investment projects with a total investment capital of more than US$21.8 billion. Vietnam's investment abroad focuses most in the mining sector (36.3%); and agriculture, forestry and fishery (15.3%). The areas receiving the most investment from Vietnam are Laos (23.8%); Cambodia (13.1%); and Russia (12.9%).