Postal and logistics companies push into Vietnam
VOV.VN - Postal and logistics companies have set their sights on the growing middle class of Vietnam, a market they view as the next e-commerce battleground in Southeast Asia, experts have said.
Taekwang jumped into the foray to secure a logistics and e-commerce base in Vietnam earlier this year on May 23 with its bid and letter of intent to take over Gemadept – the largest logistics company in Vietnam.
Founded in 1990, Gemadept has about a dozen subsidiaries in the areas of logistics, port operations, and real estate development.
Chief among its operations are the Phuoc Long ICD Port, Nam Hai Port, Nam Hai Dinh Vu Port, Nam Dinh Vu Port, Dung Quat Port, and Binh Duong Port. As well, it has substantial investment in the Gemalink Cai Mep Deep-sea Container Port and Gemadept Hoa Sen International Port projects.
Gemadept also runs logistics and plant facilities in Cambodia and Laos. It has annual sales of roughly US$180 million, with earnings estimated at approximately US$18-US$26 million.
Taekwang, which made entry into the Vietnamese market in 1994, is pushing to acquire Demadept to create synergies by combining its existing manufacturing operations in Vietnam with the logistics business of Demadept eying further expansion into the promising e-commerce market.
The Republic of Korea headquartered company, entered Vietnam in 1994 with the establishment of shoemaker Taekwang Vina. The chaebol has since then developed factories and projects in the fertilizer, petrochemical and thermal power industries.
On July 27, Amazon launched its express delivery service – Prime Now – in Singapore on its initial incursion into the lucrative logistics and e-commerce Southeast Asain market, expressly stating it is eying Vietnam as one of its next moves.
The launch of Prime Now squarely places the US online retail giant in direct competition with China based Alibaba allowing online shoppers to order a wide range of goods from baby products to food, electronic items and beer.
The entry of Amazon is good news for Vietnamese consumers who will benefit from more choice, price competition and better delivery services because of the stiffer competition in the Southeast Asian region.
This past June, in anticipation of the entry of Prime Now, Alibaba, the company founded by Chinese billionaire Jack Ma and which holds an 83% controlling interest in Lazarda, boosted its investment in the company’s Vietnam operations by an additional US$1 billion.
Meanwhile, in mid July, DHL eCommerce commenced delivery operations in Vietnam with next day delivery to the capital city of Hanoi and southern metropolis of Ho Chi Minh City.
Thomas Harris, managing director of DHL eCommerce Vietnam, said: Only 15% of e-commerce shoppers in the country paid online in 2016, making cash on delivery a must-have feature for e-commerce to succeed.
That, combined with concerns about the hassle of returns and refunds, has made growth an uphill battle for many local e-tailers.
We recognize that having a fast and reliable delivery service won’t by itself guarantee success Mr Harris continued, which is why we’ve tailored our nationwide network to accoodate cash on delivery as well as for returns.