Sagawa to buy Vietnamese delivery service
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The Sagawa group will acquire Phat Loc Express, Vietnam’s fifth-largest delivery service, gaining a foothold to expand operations nationwide as online shopping continues to grow.
Japan’s SG Holdings, the parent of Sagawa Express, will buy all of Phat Loc’s shares from management. The Vietnamese company was established in 2001 and has about 1,200 employees. Its roughly 60 branches cover deliveries in the entire country. Phat Loc logged sales of over $9 million in 2015, and the purchase price likely will be a similar amount. With a market share of just a few percent, the company is dwarfed by Vietnam’s two major delivery services.
Vietnam’s service quality remains rather low, and packages sometimes arrive late or damaged. The Sagawa group will tap its Japanese know-how to try to boost the quality of Phat Loc’s service in order to challenge Vietnam’s delivery leaders.
SG Holdings teamed with major Vietnamese real estate and retail company Vingroup in November. The Japanese business will deliver products for the group’s supermarkets and convenience stores. The delivery company is accelerating its Southeast Asian expansion, partnering this year with companies in Indonesia and the Philippines.
Questions & Answers
Q.What is the strategic reason for Sagawa to acquire Phat Loc Express?
What is the strategic reason for Sagawa to acquire Phat Loc Express?
The acquisition provides Sagawa a nationwide foothold to expand operations, using Phat Loc's existing network of approximately 60 branches across Vietnam. This allows them to capitalise on the growth of online shopping in the country.
Q.How will Sagawa aim to improve Phat Loc's service after the acquisition?
How will Sagawa aim to improve Phat Loc's service after the acquisition?
Sagawa intends to apply its Japanese know-how to enhance the quality of Phat Loc's delivery service. This strategy is aimed at addressing the current low service quality in Vietnam and challenging the market leaders.
Q.Does SG Holdings have other established operations or partnerships in Vietnam?
Does SG Holdings have other established operations or partnerships in Vietnam?
Yes, SG Holdings launched deliveries in Vietnam through a local subsidiary in 2012, handling its own services in Ho Chi Minh City and Hanoi. It also recently partnered with Vingroup to deliver products for their supermarkets and convenience stores.
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