SMC-SUMMIT Joint Venture: A Bridge for Vietnam - Japan Economic Relations

Sumitomo Corporation is a leading conglomerate in Japan. Its key business is general trade. Sumitomo has invested in industry, steel, logistics, electricity, chemical, plastics and telecommunications in Vietnam. The Japanese group has interests in many steel projects in the country, particularly joint venture steel projects with Vietnam Steel Corporation (VNSteel) like Phuong Nam corrugated iron-plated plant and SGC coil centre. In other fields, the firm has invested in infrastructure development projects, including Thang Long Industrial Park. It has recently signed a contract to design and build the first route of Metro subway system, the first of its kind in Vietnam.

 

Meanwhile, SMC is currently a leading steel distributor and producer in Vietnam with more than 5 percent of market share. In 2011, SMC raked in revenue of VND8,940 billion from sales of 560,000 tonnes of steel and paid more than VND130 billion to the State Budget. After more than 23 years of operation, SMC has built an extensive distribution network with six member companies and a branch. The company is running two coil centres (processing post-steel products) in Phu My 1 Industrial Park, Tan Thanh district, Ba Ria - Vung Tau province and is starting construction on another one in Quang Minh Industrial Park, Me Linh district, Hanoi. Once this facility comes into operation, the firm will raise its sales to some 600,000 tonnes a year.

 

From 2011 to 2015, SMC will rent 4 - 5 ha of land to build new facilities, including 22,000 to 25,000 square metres of warehouses to ensure the system storage of 100,000 tonnes. By boosting up the production of steel sheets, galvanised steel and hot rolled steel, SMC plans to raise the proportion of flat steel to 25 percent of its sales by 2015. In addition, the company will expand its partnerships with other firms to promote its steel business, brand name and reputation. And, the partnership with Sumitomo Corporation is one of SMC’s carefully considered preludes for the implementation of long-term strategy.

 

SMC - SUMMIT, with a total registered capital of US$4 million, is engaged in engineering; metal processing and coating; and export, import and distribution of steel. The firm will manufacture reinforcing bars, screw rebars, pile foundation pipes and other steel building materials with an annual output of 30,000 tonnes in the first phase, which is planned to be raised to 100,000 tonnes in the second phase. The joint venture gives priority to developing new products for Vinakyoei Steel Joint Venture Company. The products include prefabricated steel like couplers for construction industry. SMC - SUMMIT will supply, import, export and trade more steel products such as hot rolled carbon (HRC) steel and cold rolled carbon (CRC) steel to meet the market demand and customer requirements. Apart from domestic market, the company also plans to export to regional markets, especially Japan and South Korea, by the use of Sumitomo’s reputation and experience in steel production.

 

Citing the powerful strengths of both stakeholders, Nguyen Ngoc Anh, Chairman and CEO of SMC, said: “SMC-SUMMIT has a very good start backed by high-profiled Sumitomo and SMC, which have soon asserted their footholds and reputations on the market. Once SMC-SUMMIT starts operation, I am confident that it will be a leading processor and distributor of steel products in Vietnam and will serve as a bridge for Vietnam - Japan economic relations. Through the joint venture with Sumitomo, SMC will have opportunity to study, learn and apply good points in relations, management, operation and market research to its business operations, thus placing another stepping stone for SMC to reach higher development, be more advanced and be more professional in the future.”

 

In praise of SMC’s high regard to him, Kazuhisa Togashi, General Manager of Metal Products Business Unit of Sumitomo Corporation, said the cooperation with SMC brings many benefits and opportunities to Sumitomo because SMC now possesses a very smooth operating apparatus, clearly defines strategic objectives, has transparent governance, and particularly has a broad customer base in all business aspects. He stressed: "SMC - SUMMIT will enjoy many advantages as it combines Sumitomo Corporation’s strengths with SMC’s in-depth experience and expertise in construction steel business which has been robustly developed under the adept leadership of CEO Nguyen Ngoc Anh. By synergising the strengths of the two companies, we strive to elevate SMC - SUMMIT to a new plane of development and we will work hard to maintain this strong relationship for the years to come. I am committed that SMC - SUMMIT will have enough capacity to meet the demand of burgeoning building materials industry, thus contributing to the development of Vietnam at our highest ability.”

 

 The formation of SMC - SUMMIT is a vivid illustration investors’ resolves to hold hands with the locality to boost production and business and support socioeconomic development. I believe that, with the experience and reputation of the stakeholders and the dynamism of its management and staff, SMC - SUMMIT will carry out its steel fabrication project in Phu My 1 Industrial Park in a quick and safe manner. It will produce high-quality, competitive and environment-friendly products.