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Japanese retail giant Aeon buys into local competitors

Thursday, January 29, 2015, 22:01 GMT+7
Japanese retail giant Aeon buys into local competitors
Shoppers are seen at the AEON Mall Tan Phu Celadon in Ho Chi Minh City January 1, 2014.

Japanese retail group Aeon has recently established a joint venture with two large supermarket chains in Vietnam by buying a large stake in them.

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Accordingly, Aeon has decided to buy a 30 percent stake in Hanoi-based Fivimart and 49 percent of Ho Chi Minh City-based Citimart, according to Nikkei Asian Review newswire. However, Aeon did not disclose the value of the deals.

Fivimart currently has 20 supermarkets in the capital city of Hanoi, while Citimart has 27 supermarkets, mainly in the southern economic hub of Ho Chi Minh City.

The annual profits of the two local retailing groups are in the range of US$45.1 million to $47.6 million, according to Aeon.

Aeon said it would boost the process of studying Vietnam's retail market as well as its business operations there, and shared experience of quality management and logistics operations with the local partners.

Aeon officially opened its first mall in Tan Phu District in Ho Chi Minh City in January 2014, and cut the ribbon for the 2nd shopping center in the neighboring province of Binh Duong in November.

The Japanese giant plans to open its third mall in Long Bien District in Hanoi at the end of this year.

The total amount of Aeon’s investment in the three shopping centers is estimated at around $500 million.

It has planned to open the second facility in Ho Chi Minh City, the fourth in Vietnam, in 2016. In late 2014, Aeon and Citimart completed a deal for business collaboration. It is expected that the name of the local supermarket chain will be changed to AeonCitimart.

Lam Minh Huy, chairman of Citimart, told local media after the deal that Aeon will help Citimart change its current management system, support its rebranding process and change the operating method after becoming its strategic partner.

In addition, the two sides will jointly develop sources of goods from Vietnam and Japan, rapidly adding new stores in the future, he said.

Citimart was established in 1994, under the ownership of the Dong Hung Commercial Services Ltd. Currently, its system has grown to nearly 30 stores in six provinces in Vietnam, including Hanoi and Hung Yen in the north and Ho Chi Minh City, Nha Trang, Binh Duong, and Kien Giang in the southern region.

Meanwhile, supermarket chain Fivimart was established in 2007 under the administration and management of Nhat Nam Corporation. This system has 18 supermarkets in Hanoi, and has set a target to have 30 stores across the country by 2020.

Aeon officially entered the Vietnamese market in 2008. The first deal of the group is the cooperation with coffee group Trung Nguyen to open convenience store chain G7-Ministop.

The biggest retailer in Japan, Aeon said it considers Vietnam the 2nd most important market in Southeast Asia after Malaysia.

The group aims to open 200 stores throughout Vietnam and increase sales to 100 billion yen ($836 million), according to Nikkei Asian Review.

Aeon stepped into the Asian market as early as the 1980s, and the Southeast Asian market brought more than 30 percent in operating profit to the group in the period from March to November 2014.

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