Chun Sang Yung, Head of the Global Business Department at Shinhan Card, tells VET about the company’s expansion plans in Vietnam’s booming consumer market.
South Korean firms have been expressing great interest in Vietnam over recent years. How would you comment on the investment wave from South Korea into the country?
The relationship between Vietnam and South Korea is very special. Since the beginning of diplomatic relations, in 1992, there has not only been flourishing economic exchanges but also profound cultural ties, encouraging the two to come together.
South Korea is Vietnam’s fourth-largest export partner and second-largest import partner. Vietnam is South Korea’s largest trading partner in Asean. Since 1992, when diplomatic relations started, trade has increased 120 times, exceeding $64 billion in 2017. The South Korean government declared its “New Southern Policy” in the same year, a blueprint for expanding trade with Vietnam to $100 billion by 2020. Economic ties between the two counties are now at their strongest.
From an economic perspective, many economists have said that Asean countries will carry the global economy and we believe that Vietnam will play a pivotal role in this. Its economic growth has stood at around 7 per cent annually over the last decade and its large and young population creates a strong domestic market. Many South Korean companies view Vietnam’s economy as being strong and possessing substantial potential. I think this is why many have invested and will invest further in the country.
Why did you decide to fully acquire Prudential Finance recently? What are your expectations in Vietnam’s booming consumer finance market?
We still have a lot more to study in the market, but we have been operating a credit card business since 2011 through Shinhan Bank Vietnam. As experience in the credit card business was accumulated, we also gained the confidence to run a consumer finance business. Since this market has been growing steadily and has huge potential, Shinhan Card has been trying seek opportunities to enter into Vietnam’s finance market and finally succeeded through the acquisition of Prudential Finance.
Shinhan Card, a leading multi-finance company in South Korea with a long-term perspective, plans to expand its product portfolio from existing credit loans to financial products including consumer goods loans, auto instalment plans, and the credit card business, incorporating the business know-how of the Seoul head office.
According to Kotra, Vietnam is entering a fourth investment wave, with a raft of South Korean investors expecting to set up or expand their investment in the local information technology (IT) and financial sectors and Shinhan seems to be a pioneer. What opportunities do you see in Vietnam?
Shinhan is actively making its transition to Industry 4.0 through the adoption of big data, fintech, and AI. Shinhan Card is a leading multi-finance company with advanced financial business capabilities, including highly-effective marketing techniques and pre-emptive risk management systems.
Shinhan Card offers various digital and AI-based hyper-personalised marketing through the number 1 life-financial platform “Shinhan Pay FAN”. We plan to bring a new wave to the Vietnamese market by introducing digital technology from the Seoul head office.
We have major interest in Vietnam’s IT market as well, so are open to partnership opportunities with local platforms and payment gateway (PG) providers.
What criteria are the most important in Shinhan Card’s investment decisions? How is the investment rate of return in Vietnam compared to other countries in the region?
Vietnam has a population of over 96 million, which is close to 150 per cent of South Korea’s population. The economic population, aged between 20 and 49, is about half of the total population and the middle-class is expected to increase to 40 per cent by 2020. The highly positive outlook for and stability of Vietnam’s consumer finance market and the overall economy are the most important criteria in our investment decisions.
With ongoing annual economic growth of nearly 7 per cent, the consumer finance market has also grown around 30 to 40 per cent every year. We expect that the rapid expansion of Vietnam’s consumer finance market will help us, compared to other countries, achieve a relatively larger return on investment.
No Shinhan Financial Group subsidiaries in Vietnam, which started with Shinhan Bank Vietnam in 1993, have paid dividends out of Vietnam but have continued to reinvest in the domestic financial market. This shows Shinhan’s dedication and commitment to the Vietnam market and we plan to continue to do likewise in the future.
What challenges has Shinhan Card had to address while investing in Vietnam? How have these been overcome?
Although Shinhan initially planned to complete the acquisition of Prudential Finance within a year of signing a Sales Purchase Agreement, additional studies of the consumer finance market and a profound analysis of the approval application nonetheless had to be conducted. Moreover, we faced a few difficulties in meeting requirements, such as interpreting regulations and understanding local business practices during the acquisition process.
Despite the delays, the full support of the State Bank of Vietnam (SBV) and other financial supervisory services helped us overcome the various complications. Shinhan Financial Group would like to take this opportunity to express our gratitude to the SBV and the Ministry of Planning and Investment for the successful acquisition of Prudential Finance and the launch of the new Shinhan Vietnam Finance Company.
