Emart Shifts to Franchise Model After Selling Vietnam Stake ... "Strategic Business Restructuring"

Transfer Over 100% Stake to Local 4th Largest Business Group Taco Group
Targeting 10 Store Openings by 2025

Emart Vietnam Store No.1, Gobap Branch

[Asia Economy Reporter Jo In-kyung] E-Mart is transferring its stake in its Vietnam subsidiary to a local company and expanding its business through a strategic partnership.

E-Mart announced on the 17th through a disclosure that it held a board meeting on the 13th and resolved to sell 100% of the shares of 'E-MART VIETNAM CO., LTD.'. The shares will be sold entirely to THACO, the fourth largest company in Vietnam's business sector, and the local business will be converted into a franchise model.

Previously, E-Mart opened its first store in Vietnam, the Ho Chi Minh Go Vap branch, in 2015 but faced difficulties in opening additional stores due to licensing and other issues.

THACO operates businesses in automobiles, real estate, and agriculture, and owns multiple real estate properties including business sites and shopping malls.

Through this partnership, E-Mart expects to open more than 10 additional stores in Vietnam by 2025.

Vietnam, with a population of about 100 million, has a high proportion of young people in their 20s and 30s, and its retail market grows annually, making it one of the countries with very high potential for the development of distribution markets such as large marts. For this reason, many distributors plan to open stores not only in large cities with populations over 8 million such as Hanoi and Ho Chi Minh but also in new cities with populations over 1 million that have high growth potential.

E-Mart anticipates that accelerating store openings in Vietnam will greatly help domestic companies, especially small and medium-sized enterprises (SMEs), to export to Vietnam.

For example, the number of Korean products handled at the Go Vap branch has continuously increased from about 170 items in 2015 to 1,000 items in 2019, and 1,200 items last year. About 85% of these are E-Mart's private brand (PB) products such as No Brand. Considering that about 70% of No Brand products are manufactured by domestic SMEs, E-Mart explains that additional store openings will lead to increased exports by domestic SMEs.

An E-Mart official said, "Through this strategic partnership with THACO, we can expect royalties for brand use as well as exports of PB products such as No Brand," adding, "The growth potential and profitability of the Vietnam business will be strengthened simultaneously."