SMC: Ready For A New Race

In Japan on September 8, SMC Trading Investment JSC inked a deal with its two partners, namely Toami Corp. and Hanwa Co. Ltd., to establish a joint venture called SMC Toami Co. Ltd. This partnership will enable SMC to look to further enhance its competitiveness via improved product quality and material supply stability.

 Having a charter capital of US$3 million, SMC Toami’s key operations will be manufacturing and processing of welded wire mesh, and import, export and distribution of steel products. Of the charter capital, SMC and Hanwa each contributes 25%, while Toami accounts for the rest. The headquarters and also production plant of Toami SMC is located in Phu My 1 Industrial Park in Tan Thanh District, Ba Ria-Vung Tau Province.
According to Nguyen Ngoc Anh, chairman and general director of SMC, Hanwa has been a major shareholder of SMC since 2012, currently offering SMC valuable assistance in management experience, production technology and business partnership programs. Also, via Hanwa, SMC has been able to form a partnership with Toami and the establishment of a joint venture company.
Currently, welded wire mesh has yet to be popular in Vietnam. However, SMC forecasts the demand for this product will increase in the future. SMC’s partnership with Toami and Hanwa is to anticipate market opportunities.
Anh said each partner in SMC Toami has its own competitive advantages, thus the joint venture will have very effective competitiveness. Specifically, Toami’s strengths are production technology and management, so it will support SMC Toami in research and production of high-quality welded wire mesh. “Toami is among Japan’s leading manufacturers of various kinds of welded wire mesh with modern technology and a professional production system which contributes to high labor productivity and excellent product quality. This partner is committed to transferring its latest production technology to the joint venture,” said Ngoc Anh.

Meanwhile, Hanwa will help SMC Toami with stable and reasonably-priced material supply with which the joint venture can compete effectively on the market. In addition, projects of Japanese companies will be recommended to SMC Toami by Hanwa so that the joint venture can increase the chance of winning product supply contracts.

Strengthening the foothold
SMC is a producer of iron and steel with a 25-year-plus corporate history, currently among the market leaders. In recent years, the company has always achieved a growth rate of around 10%. SMC’s network consists of four plants which process all kinds of hot rolled steel, cold rolled steel and galvanized steel with a combined capacity of 300,000 tons per year, along with six member companies and a joint venture with Japan’s Sumitomo.
This year, the company aims for a sales volume of about 800,000 tons, including construction steel, hot rolled steel, cold rolled steel, galvanized steel and steel structures. However, its performance in the first six months of the year was not as high as expected. Total production reached 414,500 tons and sales totaled some VND5.5 trillion, but net profit was VND9.6 billion, or 19.2% of the target for the whole year.

SMC expects, nevertheless, the rest of the year will be more favorable. The ground for such expectation is that Vietnam’s macro-economy is turning stable, allowing many businesses to set up new projects or re-launch those they have abandoned before. On top of that, the real estate and construction industries have witnessed more positive signals. “For the second half of 2014, SMC looks to sell about 380,000 tons of steel and achieve an after-tax profit of at least VND20 billion to create a momentum for stable business in the following years. Such a figure is not large but it is reasonable in the current difficult context,” Anh said.
Currently, welded wire mesh accounts for only 0.7% of the total sales of SMC. Anh hoped the partnership with Hanwa and Toami will help his company strengthen its foothold in the market and have an opportunity to go ahead of its rivals at home and abroad in the future. With modern technology and stable material supply provided by the Japanese partners, SMC Toami will offer products with higher quality and more stable prices.

By VnEconomy



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