Shinsegae Vietnam prepares for launch

South Korean retailer Shinsegae Group will launch in Vietnam by the end of 2015.

Shinsegae Vietnam subsidiary E-mart will roll out discount stores in the fast-growing retail economy after five years of research and planning.

Shinsegae has secured at least two sites in Ho Chi Minh City, the first in an undisclosed part of the city where it will build a flagship discount store on a 20,000sqm site, the second near Tan Son Nhat international airport.

The Korean company has worked closely with Vietnamese government officials and last week in a public ceremony announced a charity initiative to donate 10,000 motorcycle helmets annually to children in Ho Chi Minh City after signing a Memorandum of Understanding.

The Korea Herald reports that the corporate social responsibility program is an E-mart marketing strategy “to enhance its corporate image with government officials and Vietnamese consumers”.

“E-mart has been preparing for this project, which will become an important momentum that signals the beginning of its business in Vietnam,” said Choi Gwang-ho, general director of E-mart Vietnam.

“We will focus on maximising the corporate brand image to stabilise our business here by persistently carrying out campaigns in which the Vietnam government and other civil organizations can participate,” Choi said.

With a population of more than 90 million, rising disposable incomes and a retail industry dominated by traditional markets, retailers like Shinsegae see enormous potential if they establish a foothold in the market now, despite the near certainty of losses while initial customer numbers grow.

The Korea Herald reported E-mart will be keen not to repeat its “bitter Chinese experience” in Vietnam. In December the company closed four stores in Tianjin leaving it with just 10, 17 fewer than at its peak in 1997. Since 2014, it has posted accumulated losses in China nearing US$50 million.