According to Savills Vietnam's latest retail market report, the demand for mergers and acquisitions (M&A) in Vietnam from major foreign retail players is increasingly common and shows a continuous upward trend.
To penetrate a market of over 90 million people, instead of choosing the traditional method of building a framework brick by brick, foreign investors are employing mergers and acquisitions as their trump card, a move that is the most effective because it achieves multiple goals with one arrow.
What do major foreign retailers prefer?
First objective: Speed
When pursuing M&A deals, acquiring shares or the entirety of a retail business in Vietnam, foreign investors receive more comprehensive support than if they were to independently explore a new market step by step. This is seen as a rapid move that allows foreign investors to transition to new markets in the shortest possible time.
Second objective: Easy
Through mergers and acquisitions, accessing legal procedures becomes easier and less complicated. According to statistics from foreign investment promotion and consulting firms in the Vietnamese market, regulations and documents in purely Vietnamese are completely different from those in other countries and are extremely complex, always posing a challenge for new players entering the market.
Third objective: Safety
M&A minimizes risk, meaning it provides security for foreign retailers. This is because acquiring a domestic retail business means inheriting a stable customer base with established shopping habits. Compared to traditional investment methods, M&A is the optimal choice as it saves foreign investors money, effort, and time.
Fourth objective: To take control of the race on equal terms away from home.
Savills assesses that M&A activities in the retail sector help foreign investors access the Vietnamese market on a more level playing field, and in many cases, they even gain the upper hand. According to estimates by the Hanoi Supermarket Association, approximately 50% of Vietnam's retail market share belongs to foreign businesses. In reality, this figure is estimated to be higher.
Given this situation, in the future, the operations of domestic retail businesses are likely to shrink due to a lack of experience, insufficient investment scale, and limited human resources. Foreign retailers are characterized by their systematic approach, careful planning, and long-term strategic vision, while Vietnamese retailers are considered flexible and adaptable because they understand consumer habits and culture.
However, in the international arena, this flexibility is no longer an advantage, although this strength may be applicable to some new markets in the provinces. For sustainable development, Vietnamese retail businesses need to build longer-term, more far-reaching strategies and focus more on building a professional workforce to prepare for this endurance-based "race."
Fifth objective: Capture consumer market share and expand production.
The Vietnamese retail market has always been fertile ground for foreign investment funds. These entities are willing to invest in domestic businesses to develop and expand their retail market in sectors such as food and beverage (F&B), entertainment, and education. In addition, foreign investors also target the manufacturing sector because domestic production offers more competitive costs and fully meets consumer shopping habits and preferences.
Furthermore, this study also deciphers the wave of M&A in Vietnam's retail industry. In reality, Vietnamese retailers are still primarily engaged in trading activities, including brand building and sales. The root cause of this situation stems from the level of management expertise.
It's not that Vietnamese businesses don't want to continue developing and building sustainably, but rather that the larger the scale, the higher the chance of becoming uncontrollable. When unable to overcome the saturation and decline phase, the leaders of domestic retail businesses often easily decide to divest in order to seek other opportunities…www.expertis.vn
See more: What do investors want to buy from the selling company?
According to Vnexperss
