South Korean President Visits Vietnam Boosting Various Cooperation Events
On June 22-24, 2023, President of South Korea Yoon Suk-yeol and his wife arrived in Hanoi, commencing a state visit to Vietnam upon the invitation of President Vo Van Thuong.
During his speech at the meeting with the Korean diaspora on June 22nd, President Yoon stated that Vietnam is a key partner of South Korea in building the Free and Open Indo-Pacific region, characterized by peace and prosperity. He also emphasized that this visit will mark the beginning of the next 30 years of bilateral relations between the two countries.
President Yoon Suk-yeol and his wife disembarked from the special aircraft at Noi Bai Airport on the morning of June 22nd. Photo: Giang Huy
Chairpersons Of Leading South Korean Corporations Visit Vietnam Together With President Yoon Suk-yeol
Chairpersons of top conglomerates such as Samsung Electronics, SK, Hyundai Motor, LG, and Lotte are part of the delegation accompanying President Yoon Suk-yeol during his visit to Vietnam.
According to Yonhap, the business delegation accompanying President Yoon Suk-yeol consists of 205 members from various fields such as finance, law, healthcare, information technology, and services. The delegation is considered the largest under the current administration and includes CEO Lee Jae-yong of Samsung Electronics, Chairman Chey Tae-won of SK Group, and Chairman Euisun Chung of Hyundai Motor Group. The delegation may sign several memoranda of understanding for cooperation as leading Korean exporters seek to expand their supply chains and exports.
On the afternoon of June 22nd, at the “Vietnam-Korea Cooperation: Korea-Vietnam Partnership Fair,” President Yoon Suk-yeol visited exhibition booths and met with several businesses. The conference saw the participation of 120 companies, including major economic conglomerates such as Samsung, LG, Hyundai Motor, and Hyosung.
“A total of 100 Korean businesses and 300 Vietnamese businesses have registered for trade connections. We expect about 1,000 business transactions between companies from both sides,” said a representative from the Korea Trade-Investment Promotion Agency (KOTRA).
Vietnam And South Korea Cooperate In Technology Transfer And Innovation
During this time, the Agency for Technology Application and Development (SATI) signed cooperation agreements with the Korea Institute for Advancement of Technology (KIAT) on promoting industrial technology and innovation, and the Korea Evaluation Institute of Industrial Technology (KEIT) on strategic cooperation in advanced industrial technology between Vietnam and South Korea.
Under these agreements, KIAT will facilitate and create conditions for Vietnamese businesses to receive technology transfer and support collaborative research, innovation in priority technology fields. The institute will continue to implement the Global Commercialization Consultancy (GCC) project, establish ODA projects for technology consultancy and support, support and participate in the joint research and innovation network Eureka Network through the Globalstars and Network Projects programs, and participate in the Horizon Europe program as a supporting partner.
Deputy Minister of Science and Technology, Mr. Le Xuan Dinh (second from the right), witnessed the signing ceremony of SATI and KIAT. Photo: Xuan Binh
The Comprehensive Strategic Partnership Between Vietnam And South Korea
Vietnam and South Korea established diplomatic relations in December 1992 and upgraded to a Strategic Cooperative Partnership in October 2009. The two countries elevated their relationship to a Comprehensive Strategic Partnership in December 2022.
South Korea is one of Vietnam’s top important partners, ranking first in terms of investment, second in official development assistance (ODA), and third in trade. The bilateral trade turnover in 2022 reached $87 billion, representing an increase of 11.4% compared to 2021.
As of April 2023, South Korea has more than 9,500 ongoing investment projects with a total registered capital of nearly $82 billion. South Korea provided $1.2 billion in concessional loans from the Economic Development Cooperation Fund (EDCF) during the 2012-2015 phase, and both sides extended the Framework Credit Agreement between Vietnam and South Korea for the 2016-2020 period with a scale of $1.5 billion.
Vietnam Has Become A “Research And Development (R&D) Hub” For Samsung And LG
The presence of major Korean companies in Vietnam is significant. The KOTRA Hanoi Trade Center plays a crucial role in facilitating trade and investment between the two countries
Vietnam has surpassed its role as a global manufacturing hub for Samsung and LG and has become a research and development (R&D) center in preparation for the future.
Other companies are also accelerating their penetration into Vietnam, the third-largest trading partner after China and the United States, and the country with the largest trade surplus last year.
Samsung generated revenue of $73.7 billion in Vietnam last year, with exports reaching $65 billion, accounting for 18% of Vietnam’s total export turnover. Vietnam has become a major production base for Samsung’s global exports.
Notably, the activities of Samsung Electronics subsidiaries stand out. The companies operating in the market include Samsung Electronics, Samsung Display, Samsung Electro-Mechanics, Samsung SDI, and Samsung SDS.
They operate six manufacturing subsidiaries and one sales subsidiary in Bac Ninh, Thai Nguyen, Ho Chi Minh City, and Hanoi.
Mobile phones are being produced in Vietnam, including mid-range and affordable products as well as premium foldable phones. Vietnam also produces consumer electronics such as TVs and refrigerators, fifth-generation communication (5G) devices, displays, batteries, and camera modules.
The number of Samsung employees in the country has exceeded 100,000. The total investment amount has reached $20 billion.
A Samsung official stated, “Vietnam is a global manufacturing base where major products with significant capital investment are produced in large quantities.”
Last year, LG produced 15% of its global sets and components in the ‘Hai Phong Cluster,’ where its electronics subsidiaries, including LG Electronics, LG Display, and LG Innotek, are located.
As of April, approximately 24,000 employees are working locally, and the annual output has increased to $12 billion, accounting for 3% of Vietnam’s Gross Domestic Product (GDP).
Moreover, both Samsung and LG are expanding their research and development (R&D) investments.
In March, LG Electronics upgraded its electric vehicle (EV) R&D center operating in Vietnam to an official corporation. This center is responsible for software development and verification of in-car entertainment systems. It plans to increase the development workforce at LG R&D VS Vietnam, which currently has approximately 750 employees, by over 30% to 1,000 people next year.
Samsung established an R&D center in the capital city of Hanoi in December of last year. The building has 16 above-ground floors and 3 underground floors, housing 2,200 researchers developing mobile, network, and software devices. This project cost $220 million and involved an average of 1,300 workers per day, even during the spread of Covid-19.
Other subsidiaries of Samsung and LG also have a presence in Vietnam. Financial companies such as Samsung Life Insurance (2008) and Samsung Fire & Marine Insurance (2002), Cheil Worldwide (2011), Samsung C&T Construction (2013) and Fashion (2014) divisions, Hotel Shilla (2015), Welstory (2015-2017), Samsung S1 (2017), etc… are operating.
Chemical subsidiaries like LG Chem and LG Household & Health Care manufacture engineering plastics (EP) and display materials for the Information Technology (IT) and home appliance customers in Hai Phong and Ho Chi Minh City, as well as versatile chemical products like polyvinyl chloride (PVC) and polyethylene (PE).
President Yoon’s visit with an economic delegation of 205 people, the largest in the current administration, is due to Vietnam’s significant market value. Trade between the two countries has increased 161 times in the past 30 years since 1992, and the trade volume reached a record high of $87.7 billion last year. The trade surplus with Vietnam was also $34.3 billion, the largest trade surplus with any country.
Hyundai Motor Group is also actively seeking to capture the growing Vietnamese market. After establishing Hyundai Thanh Cong Manufacturing Joint Stock Company (HTMV) in 2017 and Hyundai Thanh Cong Sales Joint Stock Company (HTV) in 2021 with Thanh Cong Group, the second HTMV plant has been completed. SK Group has also acquired a 16.3% stake in VinCommerce, a subsidiary of Masan Group, the largest distribution and consumer goods company in Vietnam, this year. SK Group has also invested in the distribution company of Masan Group, CrownX.
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