The Korea Herald


Korea Inc. heads to Vietnam to strike deals

Top chaebol chiefs join state visit, as new deals signed with Korea’s third-largest trading partner

By Jo He-rim

Published : June 22, 2023 - 15:43

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Samsung Electronics' new R&D center, in the Starlake city area of Hanoi, Vietnam, which is being developed by Daewoo Construction and Engineering. (Samsung Electronics) Samsung Electronics' new R&D center, in the Starlake city area of Hanoi, Vietnam, which is being developed by Daewoo Construction and Engineering. (Samsung Electronics)

With South Korean President Yoon Suk Yeol taking his largest economic delegation involving top conglomerate chiefs on a state visit to Vietnam on Thursday, anticipation is growing on new joint business opportunities their trip will create for the two countries.

For the three-day state visit, Yoon has formed his largest-ever delegation to accompany him, consisting of 205 entities -- 24 conglomerates, 28 mid- and small-sized companies, six economic lobbying groups, six economic associations and three public companies, encompassing diverse industries of semiconductors and defense to cosmetics and food.

The delegation also includes South Korea's top four conglomerate chiefs -- Samsung Electronics Chairman Lee Jae-yong, SK Group Chairman Chey Tae-won, Hyundai Motor Group Chairman Chung Euisun and LG Group Chairman Koo Kwang-mo.

During the visit, the business heads are expected to strengthen cooperation in supply chain, next-generation technology, energy and environment-friendly initiatives with Vietnam, South Korea's third-largest trading partner after China and the United States.

One of the key areas where potential business opportunity lies is in the defense sector. Vietnam is reportedly interested in military helicopters made by Korea Aerospace Industries, as it seeks to replace its old ones.

GS Energy is also expected to forge an investment deal worth 3.5 trillion won ($2.7 billion) with Vietnam's biggest asset management firm VinaCapital in the liquefied natural gas sector.

Yoon's economic delegation also includes Korean Air Chairman Cho Won-tae, Hanwha Solutions Vice Chairman Kim Dong-kwan and Daewoo Construction and Engineering Chairman Jung Won-ju, who doubles as chairman of Herald Corp.

Daewoo E&C, which is currently working on the Starlake City project in Hanoi, is expected to establish a partnership agreement with local companies during the presidential visit.

Other South Korean companies have also been actively forging business ties with Vietnam over the years.

Samsung Electronics, a global leading consumer appliances and mobile devices manufacturer, has established ties with Vietnam early on. Its construction and trading arm Samsung C&T opened its overseas headquarters in Vietnam in 1989, three years before South Korea and Vietnam established diplomatic relations.

The tech giant currently produces more than half of its smartphones sold in the world from its two manufacturing plants in in Bac Ninh and Thai Nguyen provinces in the northern part of Vietnam.

In the opening ceremony of Samsung's R&D center in Vietnam in December last year, Lee had said the center would strengthen the Southeast Asian country's industrial competitiveness, and also boost the friendly relationship of the two countries.

SK Group, South Korea's second-largest conglomerate, also has strong connections with Vietnam, having invested in the country's leading businesses.

Not only has SK invested $500 million to establish SK South East Asia Investment with the aim of finding a potential growth engine in Southeast Asian countries like Vietnam in 2018, the conglomerate has also established a strategic partnership with Masan Group, Vietnam's largest food and retail company.

In 2021, SK acquired 16.3 percent stake in Vietnam’s VinCommerce -- a retail affiliate of Masan Group. In the same year, SK also invested in Crown X, a consumer retail platform of Masan Group.

Hyundai Motor Group has also established joint ventures with Vietnam’s Thanh Cong Group to lead sales in the Vietnamese market. The automotive group established a joint venture called HTMV with Vietnam's Thanh Cong Group for car production in 2017.

The two also launched another joint venture called HTV in 2021, and Hyundai became the No. 1 seller in the Vietnamese automotive market two years later.

Since LG Electronics first tapped into the Vietnamese market in 1995, LG Group affiliates now operate a total 12 corporate entities in the Southeast Asian country. The combined production volume of LG affiliates in Vietnam last year posted about $12 billion, taking some 3 percent of the country's growth domestic product.