Southward Advancement
South Korea’s leading companies in the distribution, logistics and food sectors are focusing on “southward advance policy” targeting the Southeast Asian market. This is to push into the market with a high potential spending power due to large populations and lower average age groups in order to break through the domestic market which has reached the critical point.
E-Mart Co., South Korea's largest discount chain, announced on September 8 that it plans to tap into the Vietnamese market by investing US$200 million (218.2 billion won) in the country by 2020. To this end, the company will sign a memorandum of understanding (MOU) for the investment expansion with the Vietnamese city of Ho Chi Minh in Seoul on the 9th. The signing ceremony will be attended by the two parties’ key officials including E-Mart CEO Lee Gap-su and Dinh La Thang secretary of the Party Committee of Ho Chi Minh City.
Under a strategic partnership, the South Korean retail giant will build giant retailers, supermarkets and various other types of commercial facilities in Ho Chi Minh City as well as expand the investment in the local social development. E-Mart opened a 160-square-meter toy library in the city in July and donated 10,000 motorcycle helmets for children as it engages in social activities in Vietnam. The company also plans to expand its imports from the country from non-food products, including clothes and toys, to food products, such as fruits and fisheries, as a way of enhancing mutual cooperation. E-Mart opened its first Vietnamese branch in the Go Vap district of Ho Chi Minh City in December last year.
CJ Korea Express Co. has become the largest logistics company in Malaysia on the same day. The company announced that it bought a 31.4 percent stake in Century Logistics, the nation’s No. 2 logistics company, through its Singapore-based subsidiary CJ Korea Asia Pte Ltd. for 47.1 billion won (US$43.17 million), becoming the largest shareholder in the Malaysian firm. The merger between CJ Korea Express Malaysia and Century Logistics will enable the Korean firm to be the dominant player in the Malaysian logistics market.
Lotte Group is also focusing on the Vietnamese market as it is using Vietnam as a strategic foothold after China and is constructing “Lotte Center Hanoi,” the 272-meter-high skyscraper in Hanoi, the capital city. The group operates 13 Lotte Mart stores and two Lotte Department Stores in Vietnam and Lotteria has emerged as the No. 1 fast food chain in the local market. In addition, CJ Foodville’s Tous Les Jours has become the largest bakery chain in Vietnam, while CJ O Shopping has become the biggest player in the home shopping market of Vietnam and Thailand. GS Home Shopping is the market leader in Malaysia.
Food businesses are also making an effort to expand its presence in the Southeast Asian market. Hite Jinro entered into a contract to be the sole distributor with Thailand’s largest liquor company Boon Rawd Group last year and established its Vietnamese subsidiary this year. Orion Corp. jointly established the Delfi-Orion venture with Indonesia’s biggest confectionary firm, Delfi, in July.