Estimated reading time: 12 minutes
Part 2 of our two-part review of Vingroup. Read Part 1: What is the secret to success for Vinfast’s CEO, Pham Nhat Vuong?
At your first visit to Vietnam Expat or tourist, you will bump into a Vincom office or commercial center, Vinpearl land (more likely an island0, come across à Vinhome city or just look up at the Vincom towers in Hanoi or the Landmark81 in Hochiminh, the highest tower in Asia. Part of Vingroup conglomerate, owned by fortune 500 Mr Pham Nhat Vuong, CEO of not less than 36 companies each having a nationwide activity. The joke goes ‘Welcome to VinVietnam’
Rather than a business magnate, Mr Pham Nhat Vuong, Vingroup chairman is a conglomerate oligarch who has relationship and power over the various successive decision makers in the Vietnam government. In the field of real estate development and hospitality there is no barrier to any of his projects in the 48 cities of Vietnam. Vinfast first and huge car factory in Hai Phong was built and had its first vehicle rolling out within 2 years. To the point, Mr Vuong is considered by the investment fund managers as the only reliable business person to get things done and delivered as planned, through the maze of Vietnam ministries administration redtape. Perhaps he could be the one to complete the HCMC subway, since it started in 2008 and still has not finished…
Pham Nhat Vuong, Chairman of Vingroup Vinfast EV, is the richest man in Vietnam by Forbes fortune ranking. His success is a combination of factors.
1- As Vingroup chairman, Pham Nhat Vuong has connection to power
2- Driven by the flagship Vinhomes real estate business model, this fuels other ventures
3- Discreet: Search on 2 main websites mention none of his name!?
Vinfast Vingroup chairman, Pham Nhat Vuong has connection to power
The legend says the group was created end-1993 in Ukraine producing and selling instant noodles to start with.
Five years later, Mr Vuong returned to Vietnam in 1998, and by smart investments and some relationships, he made it to the Forbes billionaire list in 2012.
Getting land use rights, construction licenses, evictions accepted and paid is not a problem for this driven man.
When most entrepreneurs and corporations encounter hurdles in their projects -especially real estate developers- delaying their investments and inflating their expenses in the maze of multiple ministries stamping business licenses; Vingroup builds districts and island resorts in less than 5-years from idea to keys to property owners.
Over hundred of thousands of owners of whatever Vingroup product: home/apartment, mobile, schooling, holidays, car, motorbikes… No unsatisfied clients on social networks. Yes, that kind of connection to power.
Driven by the flagship Vinhomes real estate business model to fuel all other ventures
The flagship secret recipe is Vinhomes towns built by Vingroup: within less than 5-years Vinhomes central park was built and sells literally districts; typically multiple towers of 40 floors like Vinhomes ‘districts’ in 48 major cities braise from the ground together with its ecosystem of Vinmec hospital, Vinschool and nurse, Vinmart supermarket, Vincom center, Vinfast EV scooters and cars, VinUniversity, Vinpro home appliances, Vinmobile phones etc… (see picture of the 26 various Vingroup business sectors).
All ministries licenses (usually 8 or more government offices) are signed as the project goes on or before.
Most foreign investors have stories about the infamous wait for à stamp. Five years is usually the time a foreign investor will take to get the licenses and get just 1-one factory or building completed.
Vingroup CEO is discreet: Search on 3 main websites mention none of his name!?
The latest interview in person dates back April 2019, the rest is his representative CEO doing the job in Vietnam and abroad.
For someone about to invest on 3 continents for Vinfast first Vietnamese brand of EV Electric Vehicles. Recently in the USA, President Joe Biden approved Vingroup’s announcement to invest in a US$4Bn EV production factory in North Carolina, listing Vinfast for stock market and issuing bonds to finance its operations.
Searching in the 3 main websites of Vingroup, Mr CEO Pham Nhat Vuong, is nowhere to be found, what about that as discretion.
Hopefully, if Joe Biden signs the loan agreement and joins the Vinfast listing on the New York Stock Exchange, Mr Vuong CEO will find a way to pay a visit to the President of the USA to shake hands. Or perhaps, exercise his freedom on Elon Musk Twitter?
The Vingroup flagship and money making entity is Real estate in prime locations in 48 urban projects
So it all starts and ends with Vinhomes (or Vinpearl) projects: getting land in major cites prime locations, all authorizations and selling at an average $5000/sqm 40 stories group of buildings what you purchased to government idle administrations.
Let’s do the math of revenues for Vinhomes Central Park (picture below), 17 buildings (40 floors) + the iconic highest tower in SEAsia the Landmark81 (counts double 81 floors), project of 43.9ha and 16% living space 13.8ha.
1 Vinhomes city Sales revenue 13.8ha x 10,000m2 x $5000 x 40 floors = $27.6Bn
Do 1 vinhomes central park for example, then replicate (scale it in start-up jargon)in various 48 cities prime locations.
Total: $27.6Bn x48 cities = $1,325,000,000,000
A true national empire Vingroup Living, Entertaining and shopping: https://vinhomes.vn/en/du-an.
Vinhomes, Vinpearl and its Vincom in huge prime locations in all main cities or beautiful islands of Vietnam
Expat investors in any serious project, circa a few thousand sqm of real estate, will tell you getting the land use rights is the start of a nightmarish succession of meetings with land owners or government officials.
Once pre-selected land use rights negotiations start. Then you are approved and the nightmare goes on for months/years as you chase for the various ministries stamps for license or authorizations, with related or unrelated fees: your sector ministry, construction, architecture, urban plan, environment, electricity, water…
It ends with the last brick laid down and certification to start your project is approved by fire dept and other stakeholders.
Vinpearl is the cradle of 13 Vingroup hospitality projects, actually the flagship amusement park of the island or city of: Nha Trang, Phu Quoc, Hoi An, Halong and Danang
A picture is worth a thousand words
Vinhomes in HCMC was the military Ba Son shipyards on the picture at a fraction per square meter on the ground. See picture black plot land attribution. To put this in perspective, Hochiminh City is the economic capital of Vietnam, the Vinhomes projects blackened on the Map; if we took the map of Paris capital of France, it would be like granting half of Paris about 6km of the Seine riverbanks (from the Notre dame Cathedral to the Eiffel tower) + 2km into the land, clear it to 1-one real estate project developer who can build on 40 floors.
And for Vinpearl, Google maps shows us it is difficult to spot Nha Trang city overwhelmed by Vingroup hospitality.
For the fast and unstoppable rise of the Vingroup empire the FT 2019 article hinted at power from above the people and the party
Vinhomes and Vinpearl and its 18 brands eco-system, including Vinfast
The Vinhomes have their Vinmec hospital, Vinschool, VinUniversity, Vincom retail, Vinfast etc… as part of the package to the Vietnamese residents in the vinhomes apartments all so conveniently at hand. The Vinhomes apartments are an easy sale with regards to the pragmatism of the Vietnamese new rich. Vinpearl holidays package are perfect escape from crammed city centers making 100Mio of potential happy customers.
Apart from that, ecosystem profitability is optional. There are some repeat and captive neighboring clients and worse case scenario the business can be sold to a professional operator in Education, Healthcare or retail as the licenses are scarce; foreign investors would say ‘Mission Impossible’.
Apartments sales and hospitality occupancies generated the cash and wealth. The market has dried up over the past 20 years of massive offering, so what is the next ‘cash cow’? Vinfast?
Vingroup – Vinfast and its CEO Pham Nhat Vuong incarnate the new national economy of Vietnam
If we summarize the past 20-years of achievement, regardless of the ever perfect storm of ‘favorable winds behind’ the sails of any Vingroup business.
- A ‘real 21st century’ self financed business empire, far away from the state owned money bleeding corporations or the tiny SME making last century products or subcontractors for export trading offices.
- A national pride in an iconic magnate reinvesting in flagship world-class Landmark 81, Phu Quoc resort island, Vinmec hospitals and Vinfast Vietnam EV going after Tesla, Toyota and EV car leaders market shares
- Reinvestment into the country to produce Vietnam value-added products and services. Vingroup is a massive Jobs machine for the 21st century consumers needs; Vietnamese and foreigners alike.
What Vingroup doing now is 2.0/3.0: Tech vinmec, VinUni… Vs Vinhomes 1.0
It is interesting to observe how Vingroup split its own ‘presentation to the world’:
#1 The Real estate ‘brick and mortar’ Vinhomes, Vinpearl resorts and Vincom retail space and business
#2 https://vingroup.net/en the future with trade and services
Giving so much land -power and money- into the hands of 1-one man, Mr Pham Nhat Vuong, CEO of Vingroup from North to South of Vietnam must serve a national strategic motivation.
What are the main political and economical problems Vietnam government faces?
The national motto will guide us in trying to make sense of Vingroup supremacy since 1993, beyond many successive central communist party rulers. This view is a personal perspective in our attempt to rationalize Vingroup CEO ‘superpowers’:
Độc lập – Tự do – Hạnh phúc (Independence, freedom, happiness)
#1 HAPPINESS: Vietnamese people worship Education and knowledge work, of course the prospect of an ever increasing salary is not far from this Vietnamese mindset. Obviously, if the government wants to cater for that need, that will help keep political stability, it must start ‘now and forcefully’, as the new laws on private enterprise 2003 & 2008 showed the uselessness of most State Owned Enterprises (SOE). Especially, SOE have never contributed to educating performing employees and are well known for being a worse laggard in contributing to the taxes and state coffers. The ‘management’ mission seems cronyism and co-opting a massive number of civil servants for a minimum wage. Venturing at investing into the future was risky and diverting the funds from the Ministry and the State coffers.
#2 INDEPENDENCE: selling the country to Foreign enterprises or funds is not an option. All the national painful wars were not aiming at leaving the economy to the most capitalist offer, at cheap prices.
#3 FREEDOM: The 21st century is about knowledge and technology to produce value, higher incomes and freedom to decide the future of Vietnam. In short, a factory worker has less freedom of choice than a computer engineer. Vietnam does not see the future of all its citizen producing garment or planting rice.
Vingroup an almighty conglomerate to move Vietnam economy forcefully and quickly into the 21st century knowledge economy
Creating Value from mostly improductive resources:
Obviously creating a full modern ‘Vinhome or Vinpearl district ex-nihilo in 48 cities prime locations in 5-year max for each project involves some skills: power, decisiveness, money generation, employee engagement (literally whatever it costs), planning and relentless focus on goals. Working for a Vingroup gives pride to the Vietnamese and a sense of accomplishment. Subcontractors and suppliers are paid in full in time. To put this into perspective, the Hochiminh city underground trains started back in 2008, as I write, some tests are being made. It caused the closing of Le loi street city center to cars, causing traffic jams in the CBD and pavement unusable for 10 long years.
Vincom retail, Vinmec hospitals, Vinschool, Vinfast scooters-cars-buses have now put Vietnam on the world competitive map. Vingroup companies made it from third world to first world, inside Vietnam Asean. Vietnam has made a champion conglomerate
From 2.0 to 3.0 with Vingroup.net
As mentioned above, the 2.0 real estate, hospitality and Vin Commerce is part of the history.
With Vingroup the brands started in the past 8 years are non equivocal: VinSmart, Vinfast EV, VinUniversity, VinFuture, VinAI, VinBigData, VinCyberSecurity, VinBrain, VinBioCare etc…
The bar is high, but Vietnamese people have shown their can-do attitude and their ‘Vietnam invincible’ mindset.
CONCLUSION: what is next stage? The world!
With Vinfast, Mr Vuong CEO ambitions to become a world EV car producer in the USA is a real time and case make or break for 2023 and beyond. By aiming at a share of Tesla, Elon Musk market share, everywhere in the world, the set of rules have extended in a big way. The big shark in the small pond of Vietnam is now in open waters with different people and rules: national, continental and worldwide where money is not the only measure of success.
Already Vinfast, quitting the opacity and controlled Vietnamese sea, has faced the wide ocean, its local and global cultural and regulatory compliance of international business and trades.
Staffing, Nasdaq stock market access, EV EU/USA car industries compliances have caused delays.
Mr Pham Nhat Vuong, announced on 13 feb 2023 that he would not invest more personal money into Vinfast development worldwide, and 72-days later, on 27 apr 2023, Mr Vuong announces additional capital commitment of US$2.5Bnm into Vinfast.
Vinfast: Buckle up for the world wild ride!
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