vn02

Foreign fashion giants set footprint in Vietnam through M&A

The Hanoitimes – Vietnamese fashion market has allured many foreign brands and some of which have decided to acquire local clothing companies to enable them enter the potential market as soon as possible.
Japanese global apparel retailer Uniqlo last week took a step closer to opening its first store in Vietnam next year as planned by acquiring a 35 percent stake of Vietnamese fashion company Elise, which has more than 100 outlets nation-wide.
Uniqlo has recently announced plans to open the store in Ho Chi Minh City next year. The store will be operated through a joint venture between Fast Retailing and Mitsubishi Corporation, who will own a 75 percent and 25 percent of the company, respectively.
According to analysts, while many foreign fashion brands such as Zara, H&M and Mango are present in Vietnam, Uniqlo doesn’t want to lose its part, especially when Vietnamese consumers tend to prefer Japanese goods.
Uniqlo plans to double the number of its stores in Southeast Asia and Oceania to around 400 by 2022. Its global network spans 20 markets in Asia, Europe, North America and Australia with around 2,000 stores. It aims to triple its revenue in Southeast Asia to 300 billion yen (US$2.67 billion) for the year ending in August 2022.
Late last year, Stripe International, another Japanese apparel manufacturing giant also announced the acquisition of Vietnamese NEM Group’s apparel brand, which helped it land the first time in Vietnam.
According to Stripe International’s announcement, it decided to make the acquisition of NEM Group, which expanded its women’s casual brand “NEM” to 44 stores mainly in Hanoi and Ho Chi Minh City as of October last year, as it saw Vietnam is a strategic market in the ASEAN that it intends to conquer.
Large room for players
Tran Thi Thanh Thuy from the Multilateral Trade Policy Department under the Ministry of Industry and Trade said that the deals proved that the Vietnamese market is attractive to foreign firms with advanced technologies, experience, efficient governance and strong finances.
The Vietnamese market has seen the presence of many other famous brands over the past few years. Late last year, Zara and H&M also made their debuts in Hanoi to break open the market of fast and affordable fashion for men, women, teenagers, and children.
According to the Vietnam Retailers Association, more than 200 foreign fashion brands are present in Vietnam, providing a wide range of products from mid- to high-end products, which hold 60 percent of the market share.
Experts said that Vietnam has become very attractive for foreign fashion brands thanks to its young population, high growing economy and improved income.
“Foreign brands show big interest in Vietnam because of the industry’s high average growth rate of 15-20 percent,” Chairwoman of the Vietnam Retailers Association Dinh Thi My Loan said.
The fashion market is estimated to grow to more than US$3.8 billion this year and to over US$5 billion by 2021, according to BMI Research.
According to a report from market analysis firm Nielsen, Vietnamese spending on clothes is now the third priority, after spending on food and savings.
Thanks to high spending on fashion goods of Vietnamese consumers, many foreign fashion brands have so far reported good business performance in Vietnam just after a short time of entry to the country.
Mitra Adiperkasa, the operator of Zara retail stores in Vietnam, for example, reported revenue of VND950 billion (US$40.87 million) in the first half of this year, up 133 percent year-on-year, while H&M also posted revenue of VND322 billion (US$13.85 million) from four stores in Vietnam in the period.
Source: http://www.hanoitimes.vn/investment/2018/10/81E0CE8F/foreign-fashion-giants-set-footprint-in-vietnam-through-m-a/