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Multi-field business all the rage
On May 9, Thanh Cong Group officially opened a policlinic in HCM City, the first step in its plan to form a leading medical care company in Vietnam. The interesting thing in this case is that Thanh Cong was established as a textile and garment company.
Jumping into different business fields has become a fashion. A lot of companies in Vietnam are trying to expand their business operations by doing multi-field business.
Nam Viet Joint Stock Company has raised its chartered capital from VND80bil ($5mil) to VND100bil ($6.25mil) in order to arrange capital for two projects: a woodwork technological complex and villas in Thu Duc district, HCM City. The Vietnam Shipbuilding Industry Group (Vinashin) is planning to set up a brewery, while the Vietnam Tobacco Corporation (Vinataba) has kicked off the construction of a brewery in Long An province.
Meanwhile, Domesco, a pharmaceutical company, is preparing to turn itself into an economic group by 2015. It wants to provide services in many fields, from office leasing, real estate, finance investments, hotels and restaurants.
Nguyen Van Sinh, General Director of Dapha Group, said that making investments in many fields, production, trade and service is the best choice for now. This is a kind of ‘putting eggs into many baskets’ to disperse risks and preserve capital in the context of market fluctuations.
In adherence to its motto, Dapha has invested in the production of chemical substances, inox water tanks, purified water and fine arts.
Vietnam now has eight economic groups: VNPT (telecommunications), Vinacomin (coal and minerals), PetroVietnam (oil and gas), EVN (electricity), Vinashin (shipbuilding), Vinatex (textile and garment), VRG (rubber), Bao Viet (finance and insurance).
According to the Steering Committee for Enterprise Renewal and Development, by the end of 2007, the total amount of money economic groups and general corporations had injected in financial investments, securities, real estate and banking reached VND15tril ($0.93bil).
Meanwhile, according to the Ministry of Finance, the total outward investments by the groups have the value of nearly VND117tril ($7.31bil).
The Prime Minister has asked state owned groups and general corporations to focus on their main business fields, and the investments in the main business fields must not be lower than 70% of total investments. Investments in other business fields are allowed only if the other fields are related to the main business fields.
However, analysts fear that the instruction of the Prime Minister may be followed by state owned corporations only. Meanwhile, equitised corporations will still move ahead with their multi-field business plans, and there will be more and more Thanh Cong cases.
In related news, the Ministry of Construction has released Instruction No 06, requesting that companies belonging to the ministry report to the ministry on their financial investments (indirect investments, making capital contributions to other businesses). The ministry has also asked its companies not to invest in securities and make risky investments in financial investment funds and banks.
VNN
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