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Vietnamese businessmen repent of cooperation with foreign investors
The high hope Vietnamese businessmen once put on the cooperation deals with foreign partners has become the disappointment, because the cooperation has not brought the desired effects.
The bitterness of cooperation
Just after six years of joining hands with Coca Cola, the Vietnamese partners in the joint ventures with Coca Cola – Vinafimex and the Da Nang Soft Drink Company, were given “early retirement” by the foreign partner.
The domestic partners might put a high hope on the cooperation deals when signing the cooperation agreements. At that time, the domestic drink market witnessed a boom, while the foreign partner was considered the “drink baron” in the world. Therefore, they believed that the presence of the foreign big guy would give them more strength to conquer the domestic market.
Nowadays, when reconsidering the lessons from the joint ventures between Vietnamese and foreign partners, economists say the decision of selling stakes to Coca Cola is the most typical example for the failure of the joint ventures.
Coca Cola has become a big drink brand in the domestic market over the last 20 years. However, the big guy has not paid any dong in corporate income tax in Vietnam because of the repeatedly declared loss.
Coca Cola said that the group’s business strategy in Asia Pacific had the long term vision until 2020, while in the first phase in Vietnam; it just strived to become the leader in the market. This was understood that the group would continue expanding its business in Vietnam, while the turnover would continue increasing, but it would still incur loss.
That was the reason that prompted the Vietnamese partners to bargain away the shares to Coca Cola and quitted the joint ventures.
In late 2012, Tribeco (TRI), a leading soft drink brand in Vietnam, also got dissolved after a long period of taking loss. All the operation of Tribeco Saigon was then taken over by Tribeco Binh Duong.
After the dissolution, TRI’s shareholders received VND2.300 per share, a nonentity level.
It was well known to everyone that this was a hostile takeover deal. Tribeco, a strong brand after 20 years of development, then fell into the hands of Tribeco Binh Duong, a 100 percent foreign owned enterprise.
Tribeco Binh Duong, controlled by Uni-President, a foreign group, has turned Tribeco Saigon into a merely seller, not a producer.
The fatal mistakes
It is obvious that in case of Coca Cola Vietnam or Tribeco, Vietnamese partners were at the disadvantage when the cooperation came to the end.
Meanwhile, some battles between Vietnamese and foreign partners are still ongoing. Bibica, a sweets manufacturer has admitted its big mistake when cooperating with South Korean Lotte.
The battle between Bibica and Lotte has not come to an end yet, as the Saigon Securities Incorporated (SSI) did not attend the shareholders’ meeting and it has not expressed its standpoints.
The fact that the foreign partner, which now holds 38 percent of stakes, wants to rename the enterprise into Lotte instead of Bibica and attempt to control the distribution network showing that the foreign partner plans to develop the enterprise into its subsidiary.
Experts have recently expressed their concern about the continued increase of PCL’s share proportions at Vietnamese Tien Phong and Binh Minh Plastics Company.
They believe that this is the first step taken by the foreign partner in its strategy to become the leading manufacturer in the Vietnamese market.
vietnamnet
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