The 2011 white book about M&A of PricewaterhouseCoopers (PwC), an international auditing firm said that Japanese investors, who are now under the pressure of the population and domestic demand decreases, now tend to make outward investment. Together with China and India, Vietnam has become the aiming point in Japanese investors’ M&A strategy.
According to PwC, the Japanese population, after reaching its peak in 2007 with 128 million people, would decrease to 120 million by 2025 and approximately 100 million people by 2045. The country’s problem not only lies in the population decrease, but also in the increase of the number of old people. It is estimated that by 2045, the number of people aged more than 65 would account for 38 percent of the total population.
These are the two main reasons which have prompted investors to look for newly emerging markets, including Vietnam.
Also according to PwC, the survey conducted on 98 private businesses listing their shares on Tokyo stock exchange--has pointed out that the potentials on the market growth and the good labor force in Vietnam are really the attractive factors for the Japanese businessmen.
In fact, the M&A transactions between Vietnamese and Japanese businesses began increasing after Vietnam joined the World Trade Organization WTO in 2007. Though the transactions were interrupted in 2008 and 2009 due to the global finance crisis, they have regained the growth with 16 M&A deals completed in 2011, while the figure is expected to be double this year.
According to investment consultancy firms, Japanese investors tend to target Vietnamese listed companies which have the value of 5 million dollars at minimum and 100 million dollars at maximum, which operate in the fields of consumer goods, finance and banking, and retail.
Tosifumi Iwaguchi, Managing Director of Recof Corporation--which specializes in giving advices about M&A deals in Vietnam, said on Dau tu that recently, more and more Japanese businesses come to Vietnam, and they not only see Vietnam as a consumption market, but also plan to turn Vietnam into their production bases.
While some Japanese investors only make capital contribution to hold minority proportion of stakes, others try to collect enough shares to hold controlling stakes which allows them to join the board of directors and manage the business. The move by the Japanese investors to collect shares in big quantity has been described as the move to swallow Vietnamese businesses, which has raised big worries to Vietnamese businessmen.
Nguyen Thanh Phong, Deputy General Director of the Hanoi Stock Exchange, said that Vietnamese businesses need to choose one way for themselves in the current big difficulties. “If they are not capable to hold out, they should be accepted to be partially swallowed, which would help them survive and develop,” he said.
Consultants have said that Japanese investors have all been satisfied with the M&A deals made recently. In general, it takes Japanese investors a lot of time to learn about the Vietnamese market and the Vietnamese partners. Japanese investors always draw up detailed plans on the business development strategy when implementing their business plans. They always know exactly which market segments they would target, who will be the main clients to consume their products and what prices should be reasonable.
According to Tosifumi Iwaguchi, there is a thing that would make Vietnamese businessmen feel secure that Japanese businesses would not escape from the market or give up the projects they commit before. He has also mentioned the possibility of approaching the high ranking executives, who can make decisions, of 20,000 Japanese companies listing on the Tokyo stock market. If so, Recof Corporation would be able to act as the bridge to link Vietnamese and Japanese businesses.