Vingroup: Vietnam’s Biggest Company

founded and run by instant noodle entrepreneur who hit it big in Ukraine Vin group is today Vietnam's biggest private company the sprawling conglomerates arise has been rapid today even group owns and operates schools hospitals Resorts amusement parks and Vietnam's tallest building but is the group's recent Venture into electric vehicles that has gotten a particularly large amount of publicity in this video we're going to look at Vietnam's very own chebor Vin group but first I want to remind you about the newsletter check out the newsletter to read the entire scripts for previously released videos including those you might not have seen before the sign up links in the video description below I try to put one out every week maybe two alright back to the show for such a sprawling conglomerate Wing group is surprisingly young just about 30 years old founder fam nut vong was born in 1968 in what was then the Democratic Republic of Vietnam his father served in the Air Force and his mother sold tea on the streets their family was quite poor and struggled to survive but fam was fortunately gifted enough in mathematics to receive a scholarship to study mining in the Soviet Union such a thing was the dream of many Vietnamese students at the time in his third year in college he started his first business selling Goods out of his dorm which unfortunately failed he graduated in 1993 just as a Soviet Union collapsed uttering in a new era of chaos but also opportunity fam married and moved to Ukraine once in their new home fam borrowed ten thousand dollars to start a Vietnamese restaurant in Kiev the restaurant attracted many visitors and fam had a new idea he borrowed even more money to import some production equipment from Vietnam to produce instant noodles he then sold them under the brand name mivina as fam recalled ukrainians were very poor and very hungry and who hates instant noodles the company technocom is considered to be the ancestor of Vin group and was founded in August 8 1993. in a Year fam sold a million noodle packages soon thereafter mivina came out with instant mashed potatoes dried herbs and soups the name becoming synonymous with fast food mivina products were exported all over Europe technocon grew to employ some 1 900 people and supposedly generated 100 million dollars in Revenue by 2004 97 of ukrainians had eaten at least one pack also something I've noticed is just how many Asian fortunes were made in instant noodles whether it Asylum group in Indonesia or mivina in Ukraine it is a little interesting fam's rise has an instant noodle king in Ukraine was not actually that strange a generation of Vietnam's smartest people as selected by University exams went to Eastern Europe for school they were well positioned for post-soviet capitalism for instance ho hung on and win dang Quan also founded an instant Noodle Company in Russia they ended up bringing it back to Vietnam creating masan group one of Vietnam's largest private conglomerates set up a Soviet Trading Company in 1992. they first became wealthy by importing heavy equipment into Vietnam later became Vietnam's first female billionaire when her company vietjet went public viajet is known as Vietnam's first truly private airliner Vietnam retained its private sector throughout the central planning years however the country's red tape made it difficult to found new companies in the 1990s each new private Enterprise had to be approved by the relevant political figures furthermore new businesses found it hard to obtain funding the banking system still largely lent to the country's state-owned Enterprises as directed by the party the Vietnamese economy went through the Asian financial crisis of 1997 with little damage with growth slowing down only slightly to 5.8 percent and 4.8 percent in 1998 and 1999. nevertheless in 1999 the Vietnamese government decided that a larger private sector was necessary to attract foreign direct investment and drive future growth they passed the 1999 Enterprise law which reformed their business formation laws simplifying procedures and abolishing the need for things like sub licenses the new law immediately sparked a wave of new company formation fams included Chinese and Hong Kong billionaires agree however you might make your first bucket of gold the way to real riches would be then to plow that gold into real estate in 2000 shortly after the new business laws were introduced fam traveled to the beach city of not trying for a vacation na Trang is a tourist City located on Vietnam's South Central Coast despite this the city did not have a five-star hotel Pham decided to invest the earnings from his Ukrainian instant noodle business into developing this Vietnamese real estate in 2001 he founded the company hontra tourism trade and service which was later renamed the VIN Pearl Vin Pearl focuses on Resorts and tourism a year later he founded a second company Vietnam General trading or Vincom which focuses on Commercial Real Estate development Vin perle's first real estate development project opened up in 2003 the five-star 500 room Vin Pearl Resort in not train a year after that came Vincom Center bot Trill developed by fam's commercial real estate company Vincom Vincom Center batro was hanoi's first commercial Tower complex the place has become a luxury destination for both domestic and local shoppers in order to learn how to run the sprawling retail operations fan traveled to Phuket to study tourist Resorts and to Singapore in order to study commercial malls in 2006 Vin Pearl opened vimperlan in not Trang its first amusement park it is quite impressive you take a 3.3 kilometer cable car over the ocean to get to the area which includes a five-star Resort and luxury restaurants in 2009 fam and his companies made a Savvy bet that paid off in a huge way after a big run-up from 2007 to 2008 Vietnamese real estate prices crashed some 30 percent thanks to a combination of the global financial crisis new restrictions on real estate lending and higher interest rates fam and Vincom saw an opportunity for a well-funded financially stable company to buy at cheap prices build up a huge land bank and take leadership in the Vietnam real estate industry in order to fund this effort in 2010 fam sold technocom's Ukrainian manufacturing factories and instant Noodle Brands to Nestle for about 150 million dollars then in November 2009 Vincom raised some 100 million dollars by selling convertible bonds in Singapore vincom's ability to tap the international markets gave it an advantage over local real estate companies which suffered prime interest rates from 9 to 20 percent a year later the real estate market started to turn and Vincom seized their chance launching a series of projects that hit the market at exactly the right time in 2012 fam restructured the whole company merging Vin Pearl and Vincom to create Vin group today Vin group is Vietnam's second most valuable company and the largest one not to be a state-owned Enterprise the company's bread and butter has thus far been real estate development its publicly traded residential real estate division vinhomes builds and sells residential Apartments to Vietnam's Rising middle class one of vinholm's Flagship projects as Landmark 81 Vietnam's tallest building a 1513-foot super tall skyscraper part of a massive commercial development known as vinholm's Central Park Vincom retail handles commercial projects like shopping malls and Office Buildings Vincom has developed over 80 commercial projects across Vietnam including Vincom Mega Mall Royal City Asia's biggest underground mall the resorts and amusement park businesses were reorganized into two other branches of the company Vin wonders and the aforementioned Vin Pearl fam envisioned a complete ecosystem for Vietnam's Rising middle class he envisioned Vin group not only providing a person's home but also their health care food entertainment and even transportation in the same year as the merger Vin group founded vinmec International General Hospital a high-class Hospital modeled after a resort hotel this hospital soon became a chain with 10 such International clinics across the country in 2013 Vin group founded Vin School a non-profit with the goal of educating people who bought and lived in vinhomes's real estate complexes Finn school started with a preschool elementary school middle school and high school across 27 campuses they opened their own University vigny a few years later in November 2014 Vin group entered the supermarket and food retail sector with vinmart they launched with nine supermarkets with the goal of eventually having consumer retail contribute half of the combined group's revenues in 2017 Vin group founded an automobile subsidiary Vin fast as well as an electronic subsidiary a year later vinsmart more on those two later other subsidiaries include a beauty brand a fashion brand an animated film studio and a casino the somewhat unfortunately named Corona Casino fin group's diversification efforts seem a bit random but we can look to similar situations Elsewhere for some insight take likashing's Chong Kong Holdings now CK Hutchison Chung Kong started as a real estate development company but then entered the Telecommunications supermarkets and utility spaces Lee's diversification strategy was brilliant by purchasing dominant location-dependent franchises like the park and Shop supermarket chain as well as recurring revenue streams like Telecom and utilities CK built an impregnable Global business Vin Mart attempted to aggressively grow and consolidate the industry in a similar way in just a year of operations vinmart tripled its Supermarket count to 27 and convenience store count to 200. by 2016 it had become Vietnam's single largest retail chain with 65 supermarkets and 1 000 plus convenience stores but also turned heavy losses amidst Fierce competition in what turned out to be a brutal low margin industry by contrast Hong Kong's tight real estate market and strange price competition laws cemented park and shop into a comfortable profitable agopolis position alongside welcome Vietnam's retail industry on the other hand not only featured for an entrance like Japan's aeon 711 Family Mart Korea's Lotte but also domestic players like Saigon Coop Mart satra and hapro finally in 2020 Vin group called it having lost hundreds of millions of dollars in the Venture they sold the majority stake in their retail operations to the aforementioned masan group masan then promptly closed 700 locations many of which were some 50 below their Break Even threshold I have not seen Vin group attempt to enter the utilities and Telecom Services businesses perhaps because those businesses are already run by the state another interesting comparison to make is with South Korea's chebor namely Samsung the company's Crown Jewel is Samsung Electronics South Korea's biggest business thusly in 2018 Vin group also entered the electronics business with their vinsmart subsidiary Vin Smart's goal was to become Vietnam's first globally recognized smartphone brand just four months after their founding the company released four phones price from about 110 dollars to two hundred and seventy dollars which seems a bit fast in 2020 they announced the deal with at T to sell 2 million phone units into the United States the key technology feature for these phones would have been a camera positioned under the screen but a few months later in 2021 vinsmart announced that they would withdraw from the smartphone and television businesses in order to focus all their resources on cars 2020 seemed to have been a year Reckoning for Vin group has the company also considered selling its education and health units than in light of the pandemic though it seems like they ended up keeping them vinfas was founded in September 2017 has Vin group's seventh Core Business its vision is to become one of the world's leading electric vehicle companies producing cars buses and scooters they quickly began work on a highly automated Factory in an economic zone in haifeng City and about 335 hectares large it would be the world's third largest such facility then in October 2018 they unveiled a prototype sedan and SUV at the Paris Motor Show to acquire technical competency bin fast struck Partnerships with foreign companies like General Motors and Siemens the company intends to export the production around the world including the United States in 2022 they opened six Flagship Vin fast stores in California vinfat's efforts come in context of the Vietnamese government's attempts to ramp up their industrialization efforts cars have been manufactured quote unquote in Vietnam for a while over 17 automakers have entered the Vietnamese Market since 1995. however almost all of these are knocked down assembly type Partnerships in which a foreigner like Toyota ships over a kit for a local assembler like fako Vietnam's largest auto manufacturer to put together this isn't the worst situation ever but it does relegate the Vietnamese native partner to simple manual labor so the government wants to absorb technology and localize more production but local content ratios have consistently failed to hit their targets the government's goal was to hit 20 to 25 percent by 2005 and 40 to 45 percent by 2010. as of 2022 they have stayed at seven to ten percent the same as they were in 2016. it is a sign of Vietnam's subpar and persistently lagging performance and car part manufacturing has a Nimble private Enterprise Vin group seems capable of competing in the fierce EV auto market but there are a lot of challenges first Vin group is big but it might not be big enough in 2021 the whole group generated about 125 trillion Vietnamese Dong which sounds like a lot but is about 5.3 billion dollars that is less than what Tesla made in a single month based on 2022 Revenue then fast can't rely on his parent for money so it has tried various methods to raise funds SPAC IPO Etc and that apparently has been challenging in 2022 the company moves as Financial HQ to Singapore so to better attract investors second the company does not have the technical expertise and the companies who have it are pretty good at withholding it many places have tried foreign Partnerships to jumpstart their local automaker Industries Taiwan Thailand China Australia the list goes on and on thus far the list of native automakers these Partnerships have nurtured is pretty small furthermore vinfas can't much rely on its local market the Vietnamese car market is relatively small based on 2021 sales Vietnam's car market lags behind those in Thailand and Malaysia despite a far larger population this means vinfas has to rely on export sales to reach scale a difficult proposition since the global EV markets are already so competitive with byd Tesla VW and everyone else in the pool there are a million branching Pathways from here but I want to look back at two interesting waypoints the first is Samsung Motors Samsung had long wanted to join Hyundai and Daewoo in the Korea Auto space striking an alliance with Nissan for technical assistance they built a massive 6 billion dollar automaking facility in Busan and started shipping cars just in time for the Asian financial crisis the crisis upended plans forcing the car maker to sell itself to Renault before it could find its niche in the market and Achieve scale now as part of the Renault Nissan Mitsubishi Alliance things that Samsung Motors called now Renault Korea motors have been doing quite well the second path is that of another real estate development company that recently jumped into the electric vehicle space China ever Grand new energy Vehicle Group Limited evergrant had been China's biggest real estate developer and kind of like Vin group they have also Diversified into various unrelated businesses their EV expansion was especially random the subsidiary used to be a health clinic chain before literally Switching gears my guess is that evergrand was trying to soak up local subsidies in line with the government's push towards electrification as their parent company struggle with literally hundreds of billions of dollars of liabilities and fell into bankruptcy ever Grand new energy ambledon finally in October 2022 they announced deliveries of their first EV model the hung Chi 5 SUV the SUV was first shown at a concept event in 2020. a month and a half later in December 2022 Reuters reported that ever Grande new energy is suspending mass production of the hung T5 due to a lack of new orders the whole situation has been ominous considering that then group also depends on real estate development for their core revenues as well though their debt situation isn't anywhere near as bad we shall see if in fast ends up being more like Samsung Motors or ever Grande new energy vehicle Corp Vietnam search for domestic car making Champion is reflective of the Vietnamese government's overall industrialization challenge in 1996 the Communist Party of Vietnam declared its intention to turn Vietnam into industrialized economy by 2020. 20 years later in 2016 it had to admit it failed to do so reforming the country's manufacturing base has been hard with much of Vietnam's economy populated with large and slow-moving state-owned Enterprises the Vietnamese government is starting to lean more on private Enterprise to drive reform and growth hopefully Vin group can lead the way for the rest of the country in taking that huge step all right everyone that's it for tonight thanks for watching subscribe to the Channel Sign up for the newsletter and I'll see you guys next time

Channel: Asianometry

Views: 108,627

Keywords: asianometry

Id: fhqE6Z8-8Tw

Length: 18min 40sec (1120 seconds)

Published: Thu Apr 27 2023

Reddit Comments

[u/First-Ad684]

Oh boy, I can't wait to see the comments war in this post. Better grab some snacks 😋

[u/SunnySaigon]

It’s such a cool family that all Vinmarts changed their branding to Winmart

[u/Starshot84]

Other countries with narrow roads made narrow cars. But in Vietnam there are an increasing amount of big fat vehicles with 1/7 passengers in them.

[u/zrgardne]

Any news on car sales in US?

Reviews were poor. And they are clearly fighting an uphill battle.

[u/_Sweet_Cake_]

Who in their right mind would spend "car money" on a Vinfast?

[u/Careful_Tangerine_32]

I like this guy he focus mostly on east asia but most of his video are well researched. I would trust anyone who would do a multi video series on all the minutiae of the semi-conductor industry

[u/AV-Guy_In_Asia]

It should be called VinSmokeNMirrors. It's well known these guys are some of the biggest crooks in Vietnam that made their billions from what effectively is land theft. There's also a rumour from those who are well versed on the matter that several key Vin Group people are under investigation in the current Government corruption drive.

I predict Vinfast will be gone within 12 months, other Vingroup companies closed down or sold off and some key people caught up in legal trouble. Watch this space...

[u/ComradeH_VIE]

I raise you a better (read: more comments and replies) thread: put this video in the "bad sister" thread of the sub.

The next step is to enjoy the chaos.

[u/AV-Guy_In_Asia]

"According to a December 2022 filing with the SEC, VinFast reported whopping net losses of $1.3 billion in 2021 and $1.45 billion through September 30, 2022, with additional losses expected to incur “in the near term.”"

Does this sound like a healthy business? 🙄