21:09 (GMT +7) - Thursday 17/08/2017

Business

Taekwang eyes local logistics provider Gemadept

Released at: 16:23, 24/05/2017

Taekwang eyes local logistics provider Gemadept

Photo: Viet Tuan

Korea Economic Daily reports that South Korean conglomerate is hoping to establish a secure logistics base in Southeast Asia.

by Ngoc Chi

South Korean conglomerate Taekwang is keen on acquiring Vietnam’s largest logistics and seaport services firm, Gemadept, with the aim of establishing a secure logistics base in Southeast Asia, the Korea Economic Daily has reported.

The newswire also said that, if successful, Taekwang hopes to create a combination between its factory production system and the logistics system of the Vietnamese company.

Taekwang entered Vietnam in 1994 with the establishment of shoemaker Taekwang Vina. The group has since developed factories and projects in the fertilizer, petrochemical, and thermal power industries.

Gemadept is listed on the Ho Chi Minh Stock Exchange at a VND7.5 trillion ($329 million) valuation. State ownership stands at 8.7 per cent, with foreign investors holding a combined 21 per cent.

Its share price increased strongly over the last month before information emerged that it is likely to divest capital from subsidiaries in the logistics field and its 15 per cent share in Gemadept Tower.

In 2014, Gemadept sold 85 per cent of Gemadept Tower to South Korea’s CJ Group. At a price of VND40,000 ($1.7) per share, Gemadept’s market capitalization reached over VND7.2 trillion ($316.8 million).

Previously, Samsung last year also announced it would enter into Vietnam’s aviation sector through cooperating with the country’s largest airport terminal logistics business, Aviation Logistics Services (ALS).

The news was officially released on Samsung SDS’s website, explaining it will establish a joint venture in Vietnam and boost its presence in Southeast Asia’s logistics market.

Samsung SDS plans to provide an integrated logistics service, including global and inland transportation, warehousing services, and customs brokerage, while utilizing ALS’s customer network along with attracting potential customers by strengthening its external sales force through the partnership.

The rapid growth of Vietnam’s export-oriented manufacturing sector has boosted demand for logistics services but the local logistics sector has largely failed to fully meet this demand. Many enterprises are therefore looking for opportunities to enter the sector.

According to the Vietnam Logistics Business Association, logistics costs in Vietnam represent 25 per cent of annual GDP, significantly higher than in countries such as the US, China and Thailand. When free trade agreements officially come into being, tariffs on tens of thousands of goods will gradually come down to 0 per cent, boosting Vietnam’s imports and exports and requiring a logistics sector that can cope.

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