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Local firms need to work together

Update: February, 25/2015 - 09:16

Vietnamese businesses should form alliances to boost competitiveness, Nguyen Quoc Thinh, director of the Trademark Centre at the Viet Nam University of Commerce, told Hai Quan (Customs) newspaper.

What do you think about the tendency for mergers and acquisitions (M&A) among businesses in 2015?

A growing number of businesses are aware that M&A is profitable and brings about good opportunities for businessmen who have strategic vision. But it's likely that foreign enterprises will continue to buy Vietnamese enterprises, dominating the trend.

Domestic businesses tend to merge with each other to increase linkages and competitiveness on the market. Experts have urged them to establish strong link to protect themselves, to maintain and develop trademarks.

What are the main reasons for this tendency?

M&A is a common trend all over the world. The fact that Viet Nam has signed free-trade agreements (FTA) and joined the ASEAN Economic Community (AEC) will make a big impact on the M&A of enterprises.

The integration process brings more freedom to trade. Thus, foreign businesses want to seek co-operation and business opportunities in Viet Nam. The purchase of domestic enterprises will help reduce the risks of developing a new market and shorten access to markets and customers.

The restructuring and equitisation of State enterprises also play an important role in creating this tendency.

What is M&A's impact on the building of Vietnamese trademarks?

Vietnamese don't have an objective view on this issue so they think the selling of a trademark to foreign enterprises is a failure, causing the loss of a "truly Vietnamese" trademark.

This is not completely right because many firms consider M&A as a form of business that brings about huge benefit and big value. Their business target is to develop to a certain level and then sell to foreign partners for big return.

The "buy-sell" activity is not always unfavourable to Vietnamese enterprises. Objectively speaking, we won't preserve a tree that is too old to be exploited. While there arises the number of new trademarks developed by young entrepreneurs, a trademark which is not competitive should be got rid of to make way for a new one.

What is your opinion on business strategies of foreign firms in Viet Nam when they implement M&A?

Many foreign corporations and businesses will come to Viet Nam to conduct M&A. Most of them will have long-term experience and strong financial competence. They will have different business strategies. They will be ready to run at a loss at the early stage to dominate the market and then increase prices later.

We can take AEON group from Japan as an example. The corporation has taken bold steps that support each other. AEON has bought shares in Fivimart and Citimart while developing a retail chain.

Buying shares from two supermarket retailers enabled AEON to get a firm position in Viet Nam, bring about immediate advantage, stable turnover and quick market access. In addition, the corporation has potential to develop its own brand.

This is a strategy that most entrepreneurs think about, but it depends on whether they have enough financial resources to carry it out and how to implement it.

What should Vietnamese enterprises prepare in the wake of the M&A wave?

As M&A becomes more common, I don't worry about how a trademark is lost, but how to make it more competitive. As such, domestic enterprises should ally with each other and have long-term strategies aim at improving management and competitiveness of products to cope with pressure from foreign companies and big corporations.

On the other hand, Vietnamese businesses should sell only a part of trademarks while proposing certain conditions to concerning counterparts. Vietnamese enterprises should consider M&A with enterprises in less developed economies like Laos, Cambodia, Myanmar or even countries in Africa and America.

For example, Hoang Anh Gia Lai Jointstock Company has bought a number of Lao enterprises. Although Vietnamese businesses are still weak compared with foreign ones, in the future, they will grow stronger. — VNS

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