VietNamNet Bridge - An attractive market with a forecast growth rate of no less than 10 percent and weak Vietnamese enterprises are why foreign investors in the packaging industry have entered the Vietnamese market.

According to the Vietnam Print Association (VPA), the packaging production, package printing and printing that serves the processing industry and export have been witnessing a stable growth rate of 10 percent for many years.

Meanwhile, the Vietnam Packaging Association (VINPAS) predicted that the packaging industry would have growth rates of 15-20 percent in the years to come thanks to high demand in the domestic market and for export.

International analysts commented that Vietnam is becoming the world’s new production base with a series of bilateral and multilateral trade agreements. The production expansion will lead to the development of the packaging industry.

According to VINPAS, Vietnam has nearly 1,000 packaging factories which make packing products of different materials, including paper/carton, metal film, plastics and PET bottles.

Nguyen Van Dong from VPA believes that foreign enterprises would increase their investment in Vietnam’s packaging industry through both foreign direct investment (FDI) and merger & acquisitions (M&A).

A lot of M&A deals in the industry have been reported in the last few years. A subsidiary of Thai SCG Group took over an 80 percent stake of Batico in a deal worth $44 million. 

An attractive market with a forecast growth rate of no less than 10 percent and weak Vietnamese enterprises are why foreign investors in the packaging industry have entered the Vietnamese market.

This is one of the Vietnamese largest complex package manufacturers, with 20 years of experience and big clients which are multi-national groups such as Nestle, Bayer, Henkel, Dupont, CP and Walmart, and Vietnamese enterprises such as Kinh Do, Trung Nguyen,Vifon and Vinamit.

As for SCG, the group began penetrating the Vietnamese market a long time ago when it set up Kraft Vina specializing in making carton packages in the southern province of Binh Duong. Sources said it plans to spend $126 million more to strengthen the production capacity of the plant twofold.

The other M&A deals include one where South Korean Dongwon Systems Corporation spent $21.86 million to buy Minh Viet Packaging and spent $38.81 million to buy Tan Tien Plastic Packaging.

Prior to that, MeiwaPax Group spent $15.38 million to buy Saigon Trapaco, while Japanese Oji Holding Corp bought Bao Bi United and Sagasiki Vietnam bought Goldsun Printing & Packaging.

Dong believes that in the future, the buyers will be not only investors from Asia, but from Europe as well.

When asked why Vietnamese investors had sold their businesses despite the predicted high growth rate, Dong said Vietnamese investors did not  think their products would be competitive after more foreign investors flock to Vietnam with more modern technologies and better management skills.


Mai Chi