Korean retailers eye opportunities in Vietnam

Lotte Mall West Lake Hanoi in Hanoi / Courtesy of Lotte Group

By Kim Jae-heun

Local retail firms are stepping up efforts to tap into the Vietnamese market, which has huge growth potential thanks to its rapid economic growth and a high proportion of working age population, the company officials said Sunday.

Lotte Group, one of the top two retail giants in Korea along with Shinsegae, is the most active in the scene. The company currently has 20 affiliates operating in Vietnam, including Lotte GRS, Lotte Shopping and Lotte Culture Works.

Lotte Shopping is set to open Lotte Mall West Lake Hanoi, in Hanoi, in August, in which the company invested a total of $250 million (329.7 billion won). It will be Vietnam's largest shopping mall complex also consisting of a hotel and offices.

The retail giant is also investing about $900 million to establish Thu Thiem Eco Smart City, which is a complex that will consist of a shopping mall, hotel, offices, housing and a cinema. In August, Lotte World Aquarium is set to open in Hanoi as well.

“Vietnamese retail market grew about 100 times in the past 20 years. It is an attractive business destination with s high portion of the young population, who love Korean food, K-pop and K-drama. At our newly opening Lotte Mall West Lake, we will provide some 3,600 square meters of venue for young consumers to enjoy cultural content such as a yoga experience space, handcraft workshop and a book store,” a Lotte Shopping official said.

Shinsegae plans to open a third Emart store in Vietnam under a master franchise contract with the local THACO Group in the second half of this year.

GS Retail has already opened over 200 GS25 convenience stores in the Southeast Asian country. The company's local joint venture is expected to expand its business in Vietnam by signing an investment contract with the International Finance Corporation.

Vietnam has a domestic market with a population of nearly 100 million. The middle-class population is expected to reach 56 million over the next 10 years, with the highest growth rate in Southeast Asia at 10.1 percent between 2016 and 2021.

Looking at the composition ratio of the population, those under the age of 30 account for 50 percent of the population while the working-age population takes up 70 percent.

“Vietnam has such a huge potential for growth as it has a considerable amount of young and working-age population. Also, Korean products are very popular among local consumers thanks to K-pop and K-drama. In the time when many retailers are looking for their next business destination after China, there is no better option than Vietnam at the moment,” a local retail firm official said.