From cement to plastics
Siam City Cement (SCCC) has recently spent hundreds of millions of dollars to acquire a 65% stake of Holcim Vietnam, which has had a large market share in the southern market for decades.
After the deal, the company was renamed Siam City Cement Vietnam, while the Holcim brand has changed to INSEE.
SCG, another investor from Thailand, last March announced that SCG Cement, one of its subsidiaries, spent US$160 million to acquire a 100% stake of a building material company in the central region which can churn out 3.1 million tons a year.
Prior to that, SCG took over Buu Long Cement in Dong Nai province and poured millions of dollars into the plant to upgrade the production capacity to 200,000 tons per annum.
The presence of the two big players – SCG and SCCC – in the Vietnamese market is a big threat to Vietnamese manufacturers.
According to Nguyen Quang Cung, chair of the Vietnam Cement Association, there are 80 operational cement production lines owned by 60 investors with the total capacity of 800 million tons a year, while the figure is expected to rise to 100 million tons by 2020.
Of the 60 investors, the number of foreign investors is modest, but the market share they are hold is large.
The Vietnamese plastics market is lucrative thanks to increasingly high demand. The market was estimated to have the value of US$15 billion last year, while the figure is expected to rise to US$20 billion in some years.
SCG’s are now holding the controlling stake in some large manufacturers after acquiring a 24% stake of Tien Phong Plastics, 20.4% of Binh Minh Plastics and 80% of Tin Thanh Plastics.
If counting the projects in other business fields, from petrochemistry, paper, packaging, and cement to building materials, SCG has had about 20 companies operating in Vietnam in the last 25 years.
Nguyen Hoang Ngan, general director of Binh Minh Plastics, said Thai investors are still planning to take over more plastics companies, because the move will allow them to reap profits soon while there is no need to spend time on building workshops and developing distribution networks.
Deputy chair of the HCM City Business Association Pham Ngoc Hung commented that Thai businessmen always prepare well before taking steps. “They are not noisy. They take professional and firms steps to penetrate the Vietnamese market,” he said.