15:03 | 28/03/2018 Companies
The Republic of Korea's distribution and food processing companies are shifting to Vietnam from China amid tougher business conditions and strained bilateral relations in the world's most populous market, the RoK’s Yonhap news agency reported.
|A Lotte Mart outlet in Ho Chi Minh City - Photo: Yonhap|
RoK retail giant Lotte Group has been negotiating the sale of its hypermarket chain in China after it suffered great losses and did not see any sign of recovery.
Most of its 99 Lotte Mart discount stores in China have suspended operations for more than one year and Lotte Group saw about 1.2 trillion won (US$1.1 billion) in lost sales.
Lotte said it aims to raise the number of Lotte Mart outlets in Vietnam to 87 by the end of 2020 from the current 13. Present in Vietnam in 2008, Lotte Mart's sales in the country rose to 266 billion won last year from 62 billion won in 2011.
Lotte Group has been operating department stores, hotels and cinemas in Vietnam since 1998. It is also building "Eco Smart City", to be completed by 2021, on about 100,000 sq.m of land in Ho Chi Minh City with an investment of over 2 trillion won.
The city will be equipped with a department store, a shopping mall, a hotel and office and residential buildings. Lotte also plans to invest 330 billion won in the development of "Lotte Hanoi" on 73,000 sq.m by 2020, featuring a department store, a shopping mall and cinemas.
EMart, the RoK's biggest discount store chain and an affiliate of Shinsegae Group, said it will consider building several more outlets in Ho Chi Minh City. Sales at EMart's mall in Ho Chi Minh City, which opened in December 2015, rose to 52 billion won in 2017 from 41.9 billion won in 2016. EMart completed the sale of scores of outlets in China last year.
CJ Group, a Korean food and entertainment conglomerate, has been actively expanding its business in Vietnam in recent years, hoping Vietnam could serve as a springboard for its expanded presence in Southeast Asia.
CJ Cheiljedang Corp., a Korean leading food manufacturer, has bought several food processing firms in Vietnam, hoping to achieve more than 700 billion won of sales by 2020. It has invested 70 billion won in the construction of a food processing factory in Ho Chi Minh City.
CJ Foodville, the restaurant arm of food and entertainment conglomerate CJ, currently operates 36 Tous Les Jours bakery outlets in Vietnam.
CJ Freshway, a food distribution and catering affiliate of CJ Group, meanwhile, posted sales of 49 billion won in Vietnam in 2017, up from 1.8 billion won in 2012 when the company began business in the country.