IIN SUPPORT From Vietnam’s communist economy, comrades could expect the government to provide them with health care, education, housing, and entertainment. In today’s free-market Vietnam, those needs are still served by a dominant entity, albeit a capitalist one. Vingroup, the country’s largest conglomerate, and its two listed subsidiaries, Vinhomes (a property developer) and Vincom Retail (providing other real estate services), together account for 28% of the floating shares in the Vietnam Stock Index (see graph). . Their income is equivalent to almost 2% of the Vietnamese. GDP.
Having made Vingroup a dominant force in the country, its founder and chairman, Pham Nhat Vuong, now wants to make it a household name abroad. In December, the group announced plans to list VinFast, its electric car division, in the United States this year, open showrooms across the West and sell 42,000 electric vehicles (GOs) globally by 2022, up from the previous target of 15,000. On March 29, in the boldest move yet, VinFast said it would invest $2 billion in its first overseas factory, to be built in North Carolina with the capacity to make 150,000 GOone year.
It’s quite a journey for a company that got its start in 1993 making instant noodles in Ukraine, where Vuong found himself after studying geological engineering in the Soviet Union. He later expanded operations to his home country and in 2010 he sold the Ukrainian business to Nestle, a Swiss food giant, for $150 million. The Vietnamese arm became Vingroup. He has been building up lines of business ever since, making Vuong, which retains a majority stake in the parent company, the richest man in Vietnam.
Between 2011 and 2021, Vingroup’s revenues grew nearly 50-fold, to more than $5 billion. Gross operating profit has increased tenfold in the last decade, to around $800 million. Vingroup’s share price is also 50 times higher than at its initial public offering in 2007. It spun off Vincom Retail in 2017 and Vinhomes a year later, retaining majority stakes in both. These lucrative real estate deals generate most of the parent company’s profits.
Now Vingroup wants more to come from the more technological sectors, says Le Thi Thu Thuy, deputy of Vuong at Vingroup and CEO by VinFast. In particular, the company is looking GOyes To do this, the group is reorganizing its industrial divisions. Last year it liquidated VinSmart, an unlisted subsidiary that had seized just over 10% of the domestic smartphone market with its own models, and launched two new GO-focused high-tech companies: Vin IT ISa battery manufacturing subsidiary, and Vin AI, a machine learning arm that is run by a former researcher at DeepMind, Google’s artificial intelligence unit, and tasked with developing self-driving technology. As part of the electric switch, VinFast will also stop making gasoline vehicles by the end of this year.
The plan is to conquer the world GO market with fancy new models and a clever new business model. VinFast will sell cars while leasing their batteries, which represent a large part of a GOthe cost of that lowers the sticker price, as well as easing concerns about long-term decline in range as batteries degrade (the company will replace those that no longer recharge properly). $41,000 from VinFast PV8 is one of the cheapest electric all terrainIt’s around, even after taking into account monthly battery payments of $100 or more.
Vietnamese President Nguyen Xuan Phuc, whom Vuong took for a ride in a PV8 at the VinFast factory in Haiphong earlier this year, he certainly seemed impressed. Subsequently, Mr. Phuc reiterated how Vingroup’s business objectives dovetail with the government’s economic goals. These include the creation of large, internationally competitive conglomerates in the mold of South Korea. chaebol like Samsung. No Vietnamese company is a better fit than Vingroup.
However, ambition does not guarantee success. Vingroup’s industrial businesses, of which car manufacturing is by far the largest, posted a net loss of around $1 billion last year. Chris Robinson of Lux Research, an analysis firm, is skeptical of VinFast’s ability to compete with established automakers like Volkswagen, which is pouring billions into affordable products. GOs, or Tesla, the superstar of the industry. He believes that VinFast will have a hard time gaining a large market share outside of Southeast Asia. Wall Street’s enthusiasm for upstarts GO it has cooled of late in the US, which could dash VinFast’s hopes of a successful New York listing. World motorists and investors may be harder to impress than Phuc. ■
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