February 23, 2020 10:59

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Vietnam's M&A market is attractive to Japanese investors

09:54 | 22/08/2019

VCN- According to experts from Japan, with the attractiveness of an emerging market, Vietnam is the top destination for Japanese investors in mergers and acquisitions (M&A).

tin nhap 20190820143409 Many opportunities for breakthroughs in M&A activities
tin nhap 20190820143409 Strong desire for M&A deals in real estate
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tin nhap 20190820143409
Representatives of Mitsubishi Corporation Japan and Phuc Khang Corporation at the signing ceremony of a joint venture to develop green real estate. Photo: N.H.

Record transactions

Tamotsu Majima, Senior Director of Japan's leading M&A advisory service company - RECOF Corporation, said that the number of transactions between Japanese enterprises in Vietnam has reached a record level. In the past four years, there were about 20-25 transactions, but there were 21 transactions in July alone this year.

Japanese companies are increasingly interested in Vietnam, especially in the fields of production and services. This is due to Japan and Vietnam’s economies becoming closer. Now, more and more Vietnamese people travel to Japan and vice versa. Besides, Vietnamese have participated in Japanese economic activities, the Japanese are also increasingly seeking Vietnamese workers.

Masataka "Sam" Yoshida, RECOF's senior managing director, also said that along with Singapore, Vietnam is Japan's leading investment destination in ASEAN, followed by Indonesia, Malaysia and Thailand.

According to Yoshida, Japanese companies are investing heavily in Vietnam due to the competitive demand for production and US - Chinese trade tensions. Besides, Vietnam's economy is growing, attracting more and more Japanese enterprises to invest in the fields of consumption, goods and many other industries. There are notable transactions such as Taisho Medicine Manufacturing JSC buying shares of Hau Giang pharmaceutical company, or Misui Corp Company buying Minh Phu seafood shares and Sumitomo Corp buying shares of Gemadept.

"In the future, the Japanese economy is expected to slow down, but Japanese enterprises' investment activities in Vietnam will not decrease. Despite the increasing competition pressure with other countries such as South Korea, Thailand and Singapore, Japanese enterprises will continue to invest in the fields of consumer goods, health, real estate, construction, logistics, and finance in Vietnam,” said Yoshida.

Challenges of post-M&A

Regarding the difficulties faced by Japanese businesses when investing in Vietnam, experts from RECOF Corporation said that Japanese investors are competing with other Asian investors operating in Vietnam. In addition, the requirements for management and compliance are becoming increasingly strict with Japanese companies. Besides, Japanese companies investing abroad are often not familiar with local business practices and need time to get acquainted. On the other hand, Japanese enterprises are too cautious and indecisive in M&A agreements which require smart decisions and quick action, so Japanese investors are facing many difficulties in seeking opportunities from M&A activities.

Regarding the challenges of post-M&A, Masahiro Kotaka, KPMG Japan Managing Director, said that challenges only appear when M&A is completed. If a Japanese company invests in a Vietnamese company, it does not simply merge shareholders into one, but it must make efforts to create a completely new body of governance.

"When I advise my clients, they always ask: What is your definition of an M&A deal? 3-5 years after M&A, what is your target? Unfortunately, many Vietnamese businesses do not know the picture of post-M&A,” said Kotaka.

“In my opinion, we should hold a discussion to create a partnership between the two parties to create the next definition of post-M&A. Japanese always rely on partner data and must understand what is happening with the partners before making a further step. This may be different with European investors. Therefore, Vietnamese enterprises need to understand the approach of different investors to have the right strategy,” said Kotaka.

According to Mr. Masataka "Sam" Yoshida, except for some areas such as fashion, food and beverage, Japanese companies really want to develop their own brands in the global market and they are less interested in developing local brands. However, some Japanese companies have succeeded in consolidating their brand with local businesses that they have purchased, so that both companies can increase their brand appeal in Vietnam, such as in the field of real estate and finance. Therefore, the first thing that Vietnamese companies need to do is to improve brand value by promoting technologies and know-how from foreign partners when participating in equity investments or a joint venture establishment.

By Nguyen Hue/Kieu Oanh