Building-material market restructured as foreigners buy local companies

The hot development of the real estate market benefits the building material industry, but Vietnamese companies are struggling to get a share of the market as cement and tile factories have been sold to foreign investors.

building-material market restructured as foreigners buy local companies hinh 0

In early March, SCG Cement, wrapped up the deal to buy a 100% stake of VCM, a building material company in the central region, in a deal worth US$156 million.

Five years ago, the deal to buy a 85% stake of Prime Group, valued at US$240 million, or VND5 trillion, helped turn SCG into the world’s biggest tile manufacturer. 

Two years later, SCG spent US$61.17 million more to buy the remaining 15% of Prime Group’s stake.

The Thai giant has, step by step, swallowed a series of Vietnamese building material manufacturers in recent years. 

It bought Buu Long Cement Company in Dong Nai province and spent US$5.5 million to increase the plant’s capacity to 200,000 tons per annum. 

SCG once stated that it had invested hundreds of millions of dollars in many projects in Vietnam, while the figure is expected to increase to US$1 billion if it finds other opportunities.

Siam City Cement (SCCC), an SCG’s fellow countryman, spent hundreds of millions of dollars to acquire a 65% stake in Holcim Vietnam. 

Meanwhile, Semen Gresik from Indonesia in 2013 took over a 70% stake in Thang Long Cement after paying US$230 million.

Foreign investors pocket big money

Most of the Vietnamese brands have been thriving after being transferred to foreign investors.

By the time Prime was sold to SCG, it was holding 20% of the market share and running six tile factories. 

Under the new management of SCG, the market share has increased to 30%, while the products of the company have been diversified.

In 2014, the enterprise reported revenue of VND5 trillion and the pre-tax profit of VND1.2 trillion, an increase of VND350 billion over 2013. In 2015, its revenue increased by 5% over 2014.

Tran Van Huynh, former chair of the Vietnam Building Material Association, commented that once foreign investors take over Vietnamese building material companies, especially ceramics and cement, they have the right to exploit natural resources in Vietnam.

Meanwhile, some building materials are set up in advantageous locations for both tourism development and national defense. 

Therefore, if they are sold to foreigners, this will not only have economic but environmental and social impacts as well. This means that not all companies and factories can be sold to foreigners.

Huynh suggested that the State should come forward and say clearly which plants can be sold and which cannot, so as to ensure harmonization of development goals. 

Vietnamnet

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