ROK companies in Vietnam falling short in profitability
VOV.VN - ROK transnational companies operating in Vietnam have fallen far short of their expectations to earn profits on their investment in the emerging market, said speakers at a business forum in Seoul on April 13.
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ROK companies invested an aggregate total of US$15 billion in Vietnam as of the end of last year, making it the third-largest amount in any foreign country, according to the Korea Trade-investment Promotion Agency (KOTRA).
The rate of operating profit was 2.3% and net profit a mere 0.6%, falling far short of the 3.4% average for operating income and 2.6% for net income targeted. KOTRA said corporate performance may improve once a mega free trade agreement being negotiated is concluded later this year as planned.
The 10 member states of the ASEAN plus the ROK, China, Japan, Australia, New Zealand and India are working on a Regional Comprehensive Economic Partnership (RCEP) that would create an economic bloc accounting for half of the world's population and nearly 30% of the global trade and output.
KOTRA said the benefits of the RCEP for the ROK is that it can import intermediate goods at a cheaper price from among different countries and export finished products to countries like Vietnam.
Such process would create added value for ROK exporters, KOTRA said, adding that ROK companies need to set up a high-core strategy in advancing into Vietnam with the global value chain and the mega FTA in mind.
