Samsung set up logistics joint venture: Domestic market battle hotter

Establishing a logistics joint venture with Minh Phuong, Samsung has not only shown its desire to move into new fields in Vietnam, but it can also trigger a new domestic logistics market which is still in the hands of Vietnamese businesses.
Establishment of Samsung logistics joint venture with Vietnamese partner Minh Phuong Company, a company well known in the logistics market and logistics in the country, has caused quite a lot of surprises in Vietnam.

p / In order to penetrate into the domestic logistics market, road transport accounts for 65% of the market share in Vietnam, perhaps Samsung is no faster way than a joint venture with Minh Phuong.

In order to encroach on the domestic logistics market, road transport accounts for 65% of the market share in Vietnam, perhaps Samsung has no faster way than a joint venture with Minh Phuong.

From phone to logistics

For most Vietnamese, the Samsung brand is only associated with phones, TVs and washing machines. The group invested nearly $ 20 billion in electronics manufacturing plants in Vietnam. Few people know that logistics is also where Samsung is step by step, step by step into this market.

In fact, Minh Phuong is the second step in the logistics market of Vietnam, because it has formed a joint venture with Air Logistics Joint Stock Company (ALS) to manage the terminal. At Noi Bai International Airport, one of the two airports to receive the largest cargo traffic in Vietnam (along with Tan Son Nhat Airport).

It is understandable that participating in managing the cargo terminal in Noi Bai will help Samsung to ensure delivery time, smoothness in the supply chain and reduce costs, as Noi Bai is a major export gateway. Most of the electronics from Samsung to Vietnam abroad, because the corporation has two largest production in the world in Bac Ninh and Thai Nguyen.

But when Samsung shook hands with Minh Phuong, the story turns to another direction. Minh Phuong is one of the largest trucking companies in Vietnam. Owner of this company, has been the US news agency Bloomberg hailed as “logistics queen” of Vietnam. In order to encroach on the domestic logistics market, road transport accounts for 65% of the market share in Vietnam, perhaps Samsung has no faster way than a joint venture with Minh Phuong.

Heat is rising

In any economy, logistics always occupies an important position. Just like blood vessels flow from the manufacturer to the consumer. In Vietnam, the development of the economy has led to the scale of the logistics market is expanding. According to estimates by the Ministry of Industry and Trade, logistics services in Vietnam now account for $ 20-22 billion annually, accounting for 20.9% of the country’s GDP. If only the most important part of logistics is transport, accounting for 40-60% of the cost is also a huge service market.

Due to the increasing scale of the market, many foreign companies have been operating in Vietnam for a long time, such as DHL Sypply Chain, Maersk Logistics, APL Logistics, Nippon Express, and Kerry Logistics. In the segment of ocean transport and air transport connecting Vietnam with international markets, most of the market share is in the hands of foreign companies. But in domestic logistics market, it seems that domestic enterprises still dominate the market.

Statistics of the Association of Logistics Vietnam said that the country has more than 1,300 logistics companies are operating, including foreign-invested enterprises.

Nguyen Tuong, deputy general secretary of the Vietnam Logistics Association, acknowledged that some foreign investors have joined the domestic logistics market, but disagreed with the 75% market share. Logistics services are in the hands of foreign companies.

“Currently, domestic logistics, including trucking, other domestic transport, warehousing, seaports, customs agents … are mainly provided by Vietnamese companies. “Said Mr. Tuong, for example, that many companies that have implemented integrated logistics services (3PLs) such as Transimex Saigon, Gemadept, Tan Cang Saigon, etc have provided services comparable to Transnational companies are providing logistics services in Vietnam.

Le Duy Hiep, Chairman of the Vietnam Association of Logistics Enterprises, also affirmed that it is not the turnover of foreign logistics enterprises accounting for over 80% as people say. If the services that are performed in Vietnam such as port, inland transportation, warehousing, etc. are being taken into account, domestic enterprises are now gaining big revenue.

However, the time for domestic enterprises to continue dominating the domestic logistics market is threatened by pressure from foreign companies. Samsung is not the only foreign investor establishing logistics joint ventures in Vietnam to gain market share in the country. Previously, DHL and Kerry Logistics. Japanese carriers such as Yusen Logistics and Logitem have been around for a long time.

In May 2017, the Korea Economic Daily reported that Tae Kwang Industrial Co. Ltd, a Korean textile and chemical company, has expressed his desire to buy back the big share of the shipping industry and logistics company Gemadept.

If domestic logistics enterprises continue to provide only small supply chain services in the territory of Vietnam with a number of segments such as forwarding services, warehouse leasing, customs clearance, retail consolidation and Market share in ports, the loss of much of the revenue to foreign investors will not be far away story.