Taekwang cracking open Vietnamese logistics market

Korean Taekwang company showed interest in taking over Gemadept, the largest logistics firm in Vietnam, as part of an effort to establish a secure logistics base in Southeast Asia, according to Korea Economic Daily.

The Korean economic newspaper cited that Taekwang recently submitted a letter of intent to acquire the company listed on the Ho Chi Minh City Stock Exchange. Taekwang is pushing to acquire Gemadept as a way to create synergies by combining its existing manufacturing operations in Vietnam with Gemadept’s logistics business.

Founded in 1990, Gemadept has about a dozen subsidiaries in the areas of logistics, port operations, and real estate development.

Gemadept runs logistics and plant facilities not only in Vietnam but in Cambodia and Laos as well. It has an annual sales volume of around KRW200 billion ($177.6 million), with net profit estimated at around KRW20-30 billion ($17.8-26.7 million).

Gemadept is listed on the Ho Chi Minh City Stock Exchange at a VND7.5 trillion ($329 million) valuation. The state ownership in the company is 8.7 per cent, while foreign investors hold a combined stake of 21 per cent.

The Korean company, which entered Vietnam in 1994, is running a variety of businesses, including shoe-making subsidiary Taekwang Vina.

M&A perspectives in the logistic field are promising, yielding a high annual growth of 20-25 per cent thanks to the steadily rising retail and import-export sector values.

Recently Nippon Express Co., Japan’s largest international freight forwarder, announced plans to take control and turn its Nippon Express Vietnam joint venture into a wholly Japanese-invested firm. The joint venture was established in Vietnam six years ago with local firm Transimex. This strategy is scheduled to be completed in 2018.

The ambitious moves of these companies to enter Vietnam reflect their confidence in the growth potential of the domestic logistics market, especially as the demand is rising because of strong export growth. Additionally, the market is fully open due to WTO commitments allowing foreign logistics firms to have 100 per cent foreign-invested stakes since last year.

By Phuong Thu / VIR