Chinese silently acquire Vietnamese businesses
Chinese silently acquire Vietnamese businesses
The latest information about the new big shareholder of Bao Minh insurance (BMI) – a Chinese company – has affirmed the growing tendency of Chinese acquiring Vietnamese businesses.
More and more Chinese businesses in Vietnam
No information about the deal of Chinese Firstland Company Ltd purchasing BMI’s shares had leaked out until the deal was wrapped up in early 2014.
Firstland has become a big shareholder of the insurance group after successfully buying 5.63 percent of Bao Minh’s shares from Vietnam Airlines.
In late December 2013, Gaoling, a Chinese investment fund, spent $40 million to buy 6.2 million stakes of Vinacafe Bien Hoa and became the second biggest shareholder of the coffee company.
Ninety percent of Vinacafe Bien Hoa’s shares is now being held by three institutional investors, including Masan Consumer with 53.2 percent, Gaoling 23.3 percent and the Vietnam Coffee Corporation 12.8 percent.
A series of other merger and acquisition (M&A) deals, where the buyers were Chinese, were completed in 2013.
CP Porkland, for example, bought 70.82 percent of CP Vietnam, SW Kingsway Capital bought 10 percent of VInaCapital, China Investment bought 19 percent of Mong Duong 2 thermopower plant in Quang Ninh province.
Prior to that, in 2012, Vietnamese saw the well known beverage brand Tribeco falling into the hands of Uni President, a 100 percent Taiwanese company.
A report from the Foreign Investment Agency showed that in 2013, Chinese foreign direct investment capital unexpectedly rose to $2.3 billion from $345 million in 2012. Besides the two main business fields of real estate and textile & garment, Chinese businesses have also been targeting the mining, production and processing, construction and infrastructure development.
“Chinese wave” makes Vietnamese worried
Instead of rejoicing over the Chinese foreign investments, Vietnamese do not take this as “a good omen”.
The China Daily commented that the higher labor cost and lower export price both have prompted Chinese manufacturers to relocate their factories to Vietnam.
Meanwhile, Dr. Alan Phan, who has deep understanding about the Chinese market, believes that Chinese businessmen flock to Vietnam to expect the opportunities from TPP (Trans Pacific Partnership Agreement), of which Vietnam would be a member.
Analysts have warned that though being a TPP member, Vietnam may not be able to enjoy the full advantages of the membership status, while the best pieces of the TPP cake may fall into the hands of Chinese businesses.
Diep Thanh Kiet, Deputy Chair of the HCM City Textile, Garment and Embroidery Association, noted that Vietnamese businesses still cannot take full advantage of the free trade agreements (FTA) and other bilateral and multilateral agreements.
Meanwhile, Chinese, who have experiences and good understanding about the markets, may make the corrupt use of the TPP to make profit in Vietnam.
“Chinese will not stand idly and see their partners leaving for Vietnam,” Kiet said.
“They will struggle to scramble for the pieces of TPP cake by buying Vietnamese companies, setting up businesses in Vietnam so as to export to TPP markets from Vietnam,” he explained.
Analysts have also commented that Chinese companies, powerful in financial capability and familiar with business tricks, will be the redoubtable rivals for Vietnamese young and inexperienced enterprises.
vietnamnet
