Industrial parks

Singapore (VNA) – The Singaporean economy grew 0.2 percent in the first quarter of this year, a positive signal compared to a 2.4 percent contraction in the fourth quarter of 2020.

The growth was fuelled by an expansion of 7.5 percent in manufacturing sector, 3.7 percent in information-communications, finance-banking and professional services.

The construction sector contracted by 20.2 percent year-on-year, improving from the 35.9 percent decline in the previous quarter. The improvement came on the back of a pickup in public and private sector construction activities in the first quarter as compared to the previous quarter, said the Singaporean Ministry of Industry and Trade .

Last year, Singapore’s gross domestic product suffered a 5.4 percent contraction, marking the first recession since 2001.

In a report released in February, the ministry forecast that Singapore’s economy will recover gradually this year and achieve a growth of 4-6 percent./.

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Ube Construction Materials, a Tokyo-based wholly owned unit of chemical giant Ube Industries Ltd., said it owns a 51 percent stake in the new local arm, Ube CT Construction Materials Vietnam Co., which has an initial capital of 753,100 USD.

The rest of the stake is held by two other Japanese companies – 37.5 percent by T. Chatani & Co., a subsidiary of chemical goods trading house OG Corp., and 11.5 percent by Koatsu Gas Kogyo Co., a manufacturer of high-pressure gas.

The waterproof materials market in Vietnam is expected to expand in line with the country’s economic growth, an Ube Industries spokesman told NNA, commenting on the establishment of the new local unit as the Ube group’s first business base in Vietnam.

Ube Construction Materials was founded in 2015 and plays a central role in the group’s construction materials business.

Source: VNA

Digiworld aims to grow 25 per cent on average annually in the next decade

Two months ago, Digiworld’s executive told securities firms that a partner producing and assembling Xiaomi tech products is opening a plant in Vietnam’s northern port city Haiphong, and that the plant would commence operation in the second half of this year.

Albeit the information was not yet confirmed by Digiworld’s leadership at the company’s recent annual general shareholders’ meeting on April 4, the company’s CEO Doan Hong Viet was quoted as saying, “This is informal information; Xiaomi and Digiworld will be making an official announcement on a suitable timing in the future.”

In fact, Digiworld is the exclusive distributor of all Xiaomi products in the Vietnamese market. According to Viet, home appliances would be one of hte key segments of Digiworld by 2024 with the target of holding a “remarkable market share”, in which TV sets would secure the largest share in value.

The home appliances market, with teh main items being TV sets, refrigerators, washing machines, ovens, and the like, has been totally untouched by Digiworld until the present. Viet explained that the overly high import duty of about 15 per cent was the reason why Digiworld had yet to engage in importing products for distribution and wholesale in the Vietnamese market.

At the recent AGM, CEO Viet also lifted the curtain on Digiworld’s intention to venture into other product segments to realise the target of reaching a market cap in the billion-dollar range.

“If there was a plant assembling Xiaomi products in Vietnam, the tariff barrier would disappear, providing the bedrock for us to break into this up-and-coming segment. This will be the answer for the question how Digiworld would attain an annual growth pace averaging 25 per cent in the upcoming decade,” said Viet.

On the sidelines of Digiworld’s annual general meeting (AGM), Viet said that the company will be making an official foray into the home appliance wholesale market late this year or early next year. Hence, this new segment will make no contributions to the company’s revenue and post-tax profit targets which have been set at VND15.2 trillion ($660.87 million) and VND300 billion ($13 million) for 2021.

“Digiworld is the exclusive distributor of Xiaomi and Huawei products in Vietnam. If we succeed in grabbing about 5-10 per cent market share of the TV market, which is now valued at about VND40 trillion ($1.74 billion), that would be remarkable. For the time being, we are distributing Xiaomi items in this segment,” said Viet.

The Chinese TV market is dominated by Xiaomi. In Vietnam, the TV market belongs to three top players – Samsung, Sony, and LG.

According to figures by the Ministry of Industry and Trade’s Domestic Market Department, the domestic home appliances market is valued at about $12.5-13 billion and the purchasing demand for household electronic items and kitchen devices will remain high at least to 2025.

At the recent AGM, CEO Viet also lifted the curtain on Digiworld’s intention to venture into other product segments to realise the target of reaching a market cap in the billion-dollar range.

Accordingly, mergers and acquisitions (M&A) deals through acquiring firms possessing distribution channels which Digiworld doesn’t have is the tactic helping the company to realise its 25 per cent annual growth target.

Digiworld was also reported to have been working with several consultancy firms and “targeting” several firms for M&A but has yet to reach the stage of “making an announcement”.

Last year, consumer goods fetched Digiworld VND265 billion ($11.5 million), only 2 per cent of the company’s total revenue, fulfilling only 53 per cent of the projection.

The solution for this disappointing performance is “giving priority to finding new products as well as engaging in M&A”.

Digiworld’s putting investment into pawnshop chain Vietmoney is an example. The company has been using Vietmoney’s outlets as a lever to stimulate business activities.

Accordingly, in September 2020, Vietmoney announced wrapping up its Series A funding round from Digiworld Venture and Finnish equity fund Probus Opportunities.

These two partners were reported to co-manage a 30 per cent stake in Vietmoney and have seats at Vietmoney’s Board of Management.

According to Digiworld’s report, the partners have put VND50.5 billion ($2.2 million) to possess a 21.86 per cent stake in Vietmoney.

“To grow into a billion-dollar company, we are seeking growth across the board, from consumer goods to supplementing new brands, customers, and sales channels. We are also constantly searching for new models towards realising the target of shaping a complete consumer ecosystem,” said Nguyen Hai Khoi, Digiworld’s investment director.

Khoi shares that Vietmoney is providing personal financial solutions that could effectively serve Digiworld’s consumer goods segment.

Statistics by fintech firm FiinGroup show that around 48 per cent of the Vietnamese population have low income of below $300 per month, a potential segment for consumer lending firms.

Top Thai Brands 2018 attracted 210 Thai firms to explore business opportuntities in Vietnam

The four-day event features a great variety of quality Thai products and services and is expected to attract more visitors, including distributors and consumers alike. The expo also aims to create a business platform for both Thai and Vietnamese enterprises to expand their networks and develop partnerships.

Typical products from Thailand include home appliances, automobile and motorcycle parts and components, food and beverage, health and well-being, cosmetics, as well as pet related products. It also covers service sectors, including education, tourism, franchise, and restaurant.

Ureerat Ratanaprukse, the Thai consul general in Ho Chi Minh City, said, “After the Prime Minister of Vietnam’s official visit to Thailand in August last year, bilateral relations between Thailand and Vietnam have gained significant momentum, especially in the economic aspect.”

“Two-way trade volume reached $15 billion, with $9.3 billion of registered capital. This reflects the confidence of the Thai private sector in Vietnam’s vibrant economy,” she added.

Building upon our robust economic cooperation, Top Thai Brands further accentuates the global trend where “branding” holds added-value to the products and also widens opportunities for small- and medium-sized enterprises to grow.

The event not only creates business opportunities for the Thai private sector but also provides access for Vietnamese parties to top quality Thai products at reasonable prices, thus contributing to mutual benefits and partnerships between Thai and Vietnamese entrepreneurs.

Top Thai Brands 2018 is taking place from May 10 to 15 at Saigon Exhibition and Convention Centre in District 7. The exhibition is being organised by the Thai Trade Centre in Ho Chi Minh City in collaboration with Vietnam National Trade Fair & Advertising Company.

Semiconductor crisis forces top-level action. Source: freepik.com

The world’s semiconductor industry sales hit $40 billion for the month of January – a rise of 13.2 per cent on-year, revealed the Semiconductor Industry Association.

Now, consumers are having to deal with price hikes and a lack of products from automobiles and videogames to TVs and smartphones as a global shortage in semiconductors grows.

The shortage in chips, the so-called “brain” within every electronic device, has been slowly getting worse since last year, according to The Guardian. Temporary delays in supplies as factories shut down due to the coronavirus pandemic caused initial issues. However, although production is somewhat back to normal, surges in the demand driven by new habits stemming from the pandemic is causing the situation to worsen.

Mainly, a boom in sales of TVs and computers, the launch of brand new videogame consoles, and arrival of 5G-enabled mobile phones have all driven the demand.

The crisis has even affected Apple, the biggest buyer of semiconductors at $58 billion annually. It was forced to delay the launch of the iPhone 12 by two months last year as a result of the shortage.

“Chips are everything,” said Neil Campling, media and tech analyst at Mirabaud. “There is a perfect storm of supply and demand factors going on here. But there is a new level of demand that can’t be caught – everyone is in crisis and it is getting worse.”

In possibly the most shocking development, Samsung – the world’s second-largest buyer of chips – last month said it might have to postpone the launch of a high-end smartphone, despite also being the world’s second-largest producer of chips.

“It is incredible that Samsung sells $56 billion of semiconductors to others, and consumes $36 billion of them itself, finds it may have to delay the launch of one of its own products,” said Campling.

Ford meanwhile recently cancelled shifts at two car plants and said profits could be hit by up to $2.5 billion this year due to chip shortages, while Nissan is delaying output at plants in both the United States and Mexico. General Motors also said it could face a $2 billion profit hit.

In February Sony, which along with other console makers has struggled with stock shortages over the last year, said it might not hit sales targets for the new PlayStation 5 this year. Its rival, Microsoft’s Xbox, forecasts supply issues continuing at least until the second half of the year.

In a bid to unblock the jam, governments are now getting involved. CNBC reported a fortnight ago that US President Joe Biden is looking to place $37 billion into the sector in an attempt to lower America’s reliance on overseas supply chains. Biden said at the end of March, “We shouldn’t have to rely on a foreign country to provide for our people. We need to sharpen America’s competitive edge by investing here at home.”

But countries including the US and Germany have also reached out to Taiwan to help remove bottlenecks in production. Along with the pandemic, the new administration believes the semiconductor shortage was exacerbated by the previous president’s actions against China.

“Manufacturing of microelectronics in the US has reached a historic low, and this is a big problem for us,” said Terry Halvorsen, IBM’s general manager for Client and Solutions Development.

Taiwan dominates the outsourcing of semiconductor manufacturing. Its contract manufacturers together accounted for more than 60 per cent of total global revenues in the field in 2020, according to Taipei-based research firm TrendForce. Much of its dominance is due to Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC), the world’s largest foundry. TSMC accounted for 54 per cent of all revenues via outsourcing of semiconductor manufacturing globally last year.

Dan Wang, a technology analyst at research firm Gavekal said, “Looking at market share, TSMC manufactures around 50 per cent of all semiconductors in the world – and I think that still understates how important it is because these are some of the most advanced chips out there.”

At the start of March, TSMC said it plans to invest $100 billion over the next three years to increase capacity. The move came after Intel Corporation’s announcement to spend $20 billion on the expansion of advanced chip-making capacity.

“Ultimately, securing the microelectronics supply chain of the US and its allies is a challenge they need to face now,” Halvorsen of IBM noted. “It’s the only way we can ensure sustainable long-term capability in this critically important area.”

The last big supply shock for the industry was a decade ago after the Fukushima earthquake damaged operations at Renesas Electronics, the number three supplier of auto chips.