Thai footwear displayed at an exhibition in Ho Chi Minh City. Photo: Diep Duc Minh
Last month, Thailand's SCG conglomerate announced that its subsidiary TC Flexible Packaging Co., Ltd. closed a US$40 million deal to buy an 80 percent stake in a Vietnamese company.
The deal with Tin Thanh JSC, which supplies packaging for international and local giants including Kinh Do, Nestlé, Trung Nguyen and Walmart, will allow the Thai conglomerate to expand to Vietnam and strengthen its top position in Southeast Asia.
But SCG's interest in Vietnam is not limited to packaging.
Its network here consists of nearly 20 companies in different sectors such as construction materials, paper, and petrochemistry. They posted combined revenues of $288 million in the first six months, up 3 percent from the same period last year
SCG is one of several Thai businesses which has been aggressively expanding its activities in Vietnam.
CP Group, Berli Jucker, and Central Group, for instance, have sent their member companies here to either take over local firms or establish new ventures.
With eight factories in Vietnam, CP Group now owns a fifth of the local livestock feed market and around 50 percent of share in the chicken egg market.
Its revenues hit $2.07 billion last year, more than half of which came from poultry breeding and production.
Early this year, Power Buy, an arm of the Thai family-run conglomerate Central Group, bought a 49 stake in Nguyen Kim, one of Vietnam's biggest electronics retailer with more than 20 stores across the country.
In the sector of retail, Berli Jucker took over 42 stores from Japan's FamilyMart and turned them into B's Mart in collaboration with a local company.
Several other Thai investors are also reportedly eying German retailer Metro's Vietnam unit and the country's largest brewer Sabeco.
Nguyen Nam Son, founder and CEO of Vietnam Capital Partners, said Thai giants have been working on plans to expand their presence outside their home country for almost a decade.
He said that they will continue taking part in more M&A deals in Vietnam in the future.
Do Hoa, a corporate consultant, said local businesses can hardly compete with Thai companies which have strong financial capacity and determination to take over major sectors here.
He warned that in a long term, Vietnamese companies will totally lose some of its key markets.
In some other sectors like garment, Vietnamese businesses are already struggling to compete against imports from Thailand.
Nguyen Thi Ngoc Trinh, one of hundreds of dealers in Thai consumer goods, said Vietnamese love Thai clothes which are about 30-50 percent cheaper than local products, but have better quality and designs.
Thai goods like confectionery, cosmetics and electronics have flooded most of distribution channels in Vietnam, from supermarkets to traditional markets.
Not to mention online shops which either directly sell Thai goods or act as middlemen who make orders with Thai producers on the behalf of their customers.
Trade deficits with Thailand hit $1.2 billion in the first four months, a year-on-year increase of 33 percent, according to official figures.
Robert Tran, CEO of advisory firm Robenny, said the invasion of Thai goods will wipe out some local products, including those which used to be Vietnam's staples.
Vietnamese produce, for instance, can be just as delicious as Thai products but local customers favor the later for their consistent quality and chemical-free promises, despite concerns about genetically modified crops.
Vietnam is trying to make farm produce in accordance with international quality standards, but the standards are not widely applied, and mostly for exports, according to the expert.
In the meantime, economist Nguyen Van Ngai warned about chances that after taking over Vietnam's markets, foreign companies can abuse their market positions.
"Vietnamese businesses have to grow up, taking back their market with higher productivity, better quality and prices," he said.