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| E-mart's discount store in Go Vap, Vietnam / Korea Times file |
By Kim Jae-heun
E-mart said it will sell its retail store business in Vietnam to a local firm there after facing repeated obstacles to expanding its operations in the Southeast Asian country. Korea's largest retailer will receive royalty payments from the Vietnamese buyer instead.
E-mart revealed through a public disclosure on Monday that its board of directors has decided to sell off a 100 percent stake in E-mart Vietnam Co. to Truong Hai Auto Corporation (THACO) Group. THACO Group is one of the leading car manufacturers in Vietnam and the fourth-largest firm in the country.
Through the deal, E-mart will no longer operate its brand discount store in Vietnam. The discount store will be run as franchises managed by THACO, which will pay royalty fees to E-mart.
The retail giant entered the Vietnamese market in December 2015 and opened its first discount store in Ho Chi Minh City. However, it was unable to open additional stores there, due to the local government's delays in approving construction plans.
Last year, E-mart decided to sell the business to THACO Group, which is also engaged in the real estate business and runs several shopping malls in Vietnam.
E-mart expects THACO to open over 10 discount stores in the Southeast Asian country by 2025.
"Our strategic alliance with THACO will not only pay us royalties for using the E-mart brand in Vietnam, but also give us the opportunity to export our private brand products," an E-mart employee said.
Vietnam has a population of around 100 million, a large proportion of which is people in their 20s and 30s. Private spending in Vietnam has been growing every year, boosting the country's appeal to retailers around the world, especially for those running supermarkets or discount stores. Big cities like Hanoi and Ho Chi Minh City have over 8 million people residing there.
After more franchise stores open in Vietnam, E-mart said it will help small and medium-sized enterprises (SMEs) in Korea export their products to the Southeast Asian country.
The number of Korean products sold at E-mart's store in the Go Vap district of Ho Chi Minh City increased from 170 in 2015 to 1,000 in 2019 and 1,200 in 2020. About 85 percent of the products carry E-mart's proprietary "No Brand" label.
Also, 70 percent of No Brand products are made by SMEs in Korea.
