All Eyes on VRICs
Vietnam Replacing Brazil as Investment Destination
By Kim Tae-gyu
Staff Reporter
As the world economy shows signs of recovery, Korean firms fix their eyes on the four emerging countries of Vietnam, Russia, India and China, which are collectively dubbed as ``VRICs.''
VRICs are regarded as the new buzzword to replace BRICs, which stood for Brazil, Russia, India and China. In other words, Vietnam has a shot at replacing Brazil as a next-generation growth engine.
Leading the endeavor is the Lotte Group, the country's fifth-largest conglomerate in terms of assets, which has arduously advanced into the above-mentioned four nations.
Its flagship subsidiary, Lotte Department Store, has already waded into Russia and China. It plans to open its second outlet in China next year and another in Hanoi, Vietnam in 2013.
In addition, Korea's largest department store established a fresh division earlier this month that will take charge of its overseas businesses in the VRICs countries with the objective of securing a fourth of its revenues from international operations by 2018.
The group's other units in such areas as beverages and snacks also tried to make inroads into the VRICs as the domestic market has hit saturation point.
Other iconic corporations of Korea have pulled out all the stops to enter the four VRIC nations including Samsung Electronics, LG Electronics, Hyundai Motor and POSCO through setting up factories or building up strong sales channels there.
As a result, financial companies followed suit to back up the manufacturers.
According to the Financial Supervisory Service, Korean banks or insurers maintained a total of 314 branches across the world as of the end of last year. Among them, 56 were in China followed by 51 in the United States and 36 in Vietnam.
Of note is Vietnam where the upside potential is highly regarded by local entrepreneurs ― the 36 Vietnam-based financial branches are almost equivalent to those in the whole of Europe at 39.
``From the perspective of global entrepreneurs, Brazil may be more attractive thanks to its richer natural resources, more spacious territory and larger population,'' a Seoul analyst said.
``But Korean businessmen seem to prefer Vietnam, called little China here, because of the cultural closeness of the two countries on top of the cheap labor. In spite of the conflicts during the Vietnam War, the two nations get along very well. In my view, VRICs will create a new buzz in the post-crisis era.''
Along with the U.S. forces, Korea participated in the Vietnam War in the 1960s and 1970s to support the government of South Vietnam, which was eventually defeated by the communist North Vietnam, the current Vietnamese administration.
In spite of the past antagonism, the two countries have maintained a good relationship afterwards and a host of Korean entities advanced into Vietnam to take advantage of the inexpensive workforce.
Vietnamese loves Korean products as well as dramas ― many of their favorite foreign entertainers are Koreans. A lot of Vietnamese brides also come here every year to get married to Korean men, mostly in rural areas.