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E-mart, South Korea’s largest retailer, has said it will sell its retail store business in Vietnam to local firm Truong Hai Auto Corporation (THACO) Group after facing a slew of obstacles to expand its operations in the Southeast Asian country, according to the Korea Times.
The Seoul-headquartered English daily reported on Tuesday afternoon that E-mart revealed through a public disclosure the day before that its board of directors had decided to offload a 100-percent stake in E-mart Vietnam Co. to THACO, one of the leading car manufacturers in Vietnam.
Through the deal, E-mart will no longer operate its brand discount store in Vietnam.
The discount store will be run as franchises managed by THACO, which will pay royalty fees to E-mart.
The South Korean retailer expects THACO to open over ten discount stores in Vietnam by 2025.
“Our strategic alliance with THACO will not only pay us royalties for using the E-mart brand in Vietnam, but also give us the opportunity to export our private brand products,” the Korea Times quoted an E-mart representative as saying.
The retail giant entered the Vietnamese market in December 2015 and opened its first discount store in Ho Chi Minh City.
The number of South Korean products sold at the E-mart supermarket in the southern Vietnamese metropolis increased to 1,200 in 2020 from 170 in 2015, according to the Korea Times.
About 85 percent of the products carry E-mart’s proprietary ‘No Brand’ label.
Also, 70 percent of No Brand products are made by small and medium enterprises in South Korea.
However, E-mart was unable to open additional stores in the Southeast Asian country, due to the local government’s delays in approving construction plans.
Last year, rumor had it that E-mart had planned to exit the Vietnamese market.
E-mart Vietnam Co. then refuted the rumor despite admitting difficulties in business expansion owing to premises and license barriers.
The retailer thus changed its strategy by looking for a capable partner in Vietnam to jointly expand its business model.
This article was originally published in Tuoitrenews