South Korean retailers are persisting with expansion efforts in the Vietnamese market even as Malaysian giant Parkson Retail Asia’s subsidiary files for voluntary bankruptcy.
Lotte Shopping, part of South Korea-based Lotte Group, is set to open the $250 million Lotte Mall West Lake Hanoi next month.
A status that appeared Monday on the Hanoi mall’s Facebook fan page says Lotte World Aquarium, part of the mall, is also set to open next month.
Situated by the West Lake, the project will also have a hotel, a Lotte cinema center and an office center.
Lotte Group broke ground last December on a $900 million multi-function Eco Smart City in Ho Chi Minh City’s Thu Thiem Peninsula. The 50,000-square-meter project will comprise a shopping mall, a hotel, an office complex, serviced apartments and a separate residential complex.
Another arm of the group that is expanding in Vietnam is Lotte Duty Free, which opened a new store in Danang City last November. Vietnam was “a strong foundation” for maintaining its leading position in Southeast Asia, the company said.
It also plans to open a store in downtown Hanoi in 2023 as part of what it calls the Lotte Duty Free Belt in the Asia Pacific region. The company has not provided further details.
Last month, The World Bank’s International Finance Corporation (IFC) signed an agreement to invest VND460 billion ($20 million) in CVS, a subsidiary of Vietnam’s Son Kim Retail Corp., to help expand the retail network of GS25 Vietnam, a convenience store chain.
Catering to the changing taste of a growing urban clientele that is looking for safe and reliable ready-to-cook meals, the HCMC-based convenience store operator aims to diversify its product range with a focus on high quality fresh food.
Supporting its efforts, IFC will advise GS25 Vietnam on enhancing its in-store food safety practices and reducing food loss and waste.
The IFC’s $20 million funding will help GS25 Vietnam - a joint venture between Son Kim Retail and Korean firm GS Retail - open over 500 new convenience stores nationwide by 2025. The network expansion is expected to create up to 6,000 direct jobs (more than 60% of which will go to women) and generate thousands of indirect jobs with the JV increasing its supply of locally produced food.
Meanwhile, the Thaco Group, one of Vietnam’s leading private conglomerates, plans to open its third Emart hypermarket in HCMC this year under a master franchise contract with Korean retail giant Emart. The existing two Emart hypermarkets are also located in the southern economic hub.
The retail expansion by Thai firms is happening in the context of Vietnam and South Korea elevating their bilateral relationship to a Comprehensive Strategic Partnership last December. Just last month, the two governments agreed to make joint efforts to almost double bilateral trade to $150 billion by 2030 and deepen their multi-faceted cooperation.
The expansion also happens amid Parkson Vietnam filing for voluntary bankruptcy with the HCMC administration after 18 years in the Vietnamese market. Malaysia's Parkson Retail Asia, its parent company, said declaring bankruptcy was the best course of action because continuing operations in Vietnam was not economically feasible.
The Vietnamese market is home to a population of around 100 million with a growing middle-class population. As such, the South Korean retailers’ expansion efforts are facing fiercer competition from Japanese companies, including Aeon – Japan’s largest retailer.
Aeon has seven operational malls in Vietnam with two in HCMC, one in Binh Duong province bordering the megacity, three in Hanoi and one in the northern port city of Hai Phong. The giant is seeking to expand its Vietnam mall network to 25 by 2025 and has earmarked around $1 billion for the purpose.
Aeon signed an agreement last October with Boxed, an American online platform which sells household consumables in bulk and licenses its e-commerce software through its Spresso Software and Services Division. Under the agreement, Aeon will launch Boxed’s end-to-end software and services platform in the Vietnamese market with Aeon Vietnam Co Ltd.