A memorandum of understanding between E-mart and Vietnam’s Ho Chi Minh City was signed on September 9. Emart will make the investment over the next four years.
The investment is expected to be used for building new supermarkets and commercial facilities, as well as local social development. E-mart opened a supermarket worth $60 million in Ho Chi Minh City last year, in addition to a toy library in the city.
The Korean company had earlier said it planned to open 52 stores in Vietnam by 2020.
E-mart is betting the country’s rapid growth, averaging 5.2 per cent since 2013, driven by a young and urban demographic with higher spending power.
Vietnam’s growth was the highest among Southeast Asian peers featured in the 2016 Global Retail Development Index conducted by US management consulting firm AT Kearney. Vietnam was seen as the 11th fastest emerging retail market, up from 28th spot two years ago.
Government data showed that retail sales in the country rose 7.4 per cent year-on-year in August 2016. Consumer spending rose to $116.2 billion, while the retail market was forecast to be worth $109 billion in 2017.
Free trade pacts signed by Vietnam have encouraged foreign retailers to tap into this liberalizing market. Vietnam fully opened its retail industry in 2015, which is coupled with a lot of tax preferences for investors.
Japan’s Takashimaya and Miniso have set up retail shops in Vietnam in July. Meanwhile, 7-Eleven is planning a local presence through the franchising route.
Existing players are opening new outlets, as well as acquiring local businesses. Vingroup, the most active domestic company which launched over 90 stores in 2015, aims to introduce twice as many in 2016. It acquired Maximark and Vinatexmart, two Vietnamese operators, as part of this strategy.
Thailand’s Central Group had acquired Big C Vietnam for $1.05 billion, along with electronics store chain Nguyen Kim and e-commerce site Zalora Vietnam. Other M&A deals include TCC Holdings buying Metro Cash&Carry Vietnam, and AEON acquiring Fivimart and Citimart.
Central has since announced that it has halted further investment in the country and would focus on consolidation.