Electrolux sets sight on Sunhouse to dominate household appliance market

Vietnam's household appliances market is valued at $15 billion, 80 per cent of which is made up by domestic brands

Rumours without confirmation

A rumor that all five founding shareholders of Sunhouse Group JSC has divested all their capital in the group boosted the household appliance market as it is seen as preparation for the merger and acquisition (M&A) between Sunhouse and Electrolux Group (Sweden).

Nguyen Xuan Phu, chairman of the Management Board of Sunhouse Group, denied this rumour and confirmed that Sunhouse has been transferring all their shares to the parent company Sunhouse Invest. Sunhouse Invest was established in 2016 to prepare for initial public offering (IPO). Phu owns 50 per cent of the total shares, while his brother Nguyen Xuan Cuong 10 per cent, and Nguyen Dai Thang 40 per cent.

However, certain sources claimed that Sunhouse and Electrolux have already met and negotiated a business deal. There are many ways for a multinational corporation to set foot in a market, such as direct investment, joint venture and M&A. M&A is a good way to promote the advantages of both sides in line with international practices.

The Vietnamese market has been growing on the back of the 94-million population, it has yet to reach a sufficient size for the corporation to become directly involved.

Besides Electrolux, Haier (China), Muji, and Zojirushi (Japan) have been paying attention to Sunhouse. Three years earlier, Haier spent $5.4 billion acquiring the household appliance business of General Electric (GE from the US), which Electrolux targeted at the time. In 2011, Haier acquired the washing machine, fridge, and other consumer electronic products arm in Vietnam and some Southeast Asian markets of Sanyo Electric.

Currently, there are 60 sub-brands of Electrolux worldwide related to consumer goods and household appliances. Electrolux has been focusing on the US market and spent $135 million acquiring Anova Precision Cooker (US), the world's top-selling sous vide machine.

Sunhouse—a Vietnamese powerhouse

Sunhouse Group was established 17 years ago as Phu Thang Co., Ltd. with VND500 billion ($22 million) of charter capital. In 2004, Phu Thang established a joint venture with Sunhouse Korea Co., Ltd. to establish Sunhouse Vietnam Co., Ltd. and build a factory producing household appliances.

Currently, this giant is a million-dollar enterprise, owning seven subsidiary companies and six factories based on a total area of over 40 hectares. According to unofficial statistics, Sunhouse’s 2017 revenue is estimated at VND2 trillion ($88 million), ranking second in the market behind Kangaroo ($96.7 million). However, Sunhouse has made up the largest proportion of the household appliances market.

Additionally, Sunhouse has conquered many difficult markets. With a market of over 500 distributors, over 450 groups of essential household products, Sunhouse's products have appeared in almost all super markets, trade centres, and traditional stores all over Vietnam.

Sunhouse has set foot in overseas markets such as Cambodia, Laos, Myanmar, Egypt, and Turkey, even in difficult markets like Hong Kong, Brazil, Canada, and Mexico.

"Sunhouse will become the No.1 brand in the ASEAN within the next five years and one of the leading brands over the world. I wish Sunhouse would grow as large and strong as Samsung and LG from Korea or Sony from Japan," Nguyen Xuan Phu shared his dream.

At first, Sunhouse set the goal of obtaining over VND5 trillion ($220 million) in revenue by 2020, expanding its market to 350 million people, confirming its brand name on the international household appliances market by achieving an export turnover of $10 million.

With this goal in mind, Sunhouse needs a multinational strategic partner to co-operate and break open international markets, improve product quality, transfer technology, and held develop new products.

Nguyen Xuan Phu, chairman of Sunhouse

M&A is the choice to evolve

Talking about Sunhouse, Phu said: "Everyone is a patriot, I myself also want to do something for my country, such as develop a made-in-Vietnam brand."

But it is said that Phu welcomes M&A deals. "M&A is the best choice to evolve an enterprise quickly," he said.

Specifically, he acquired Saigon Maritime JSC (SHC), a subsidiary of Vietnam National Shipping Lines (Vinalines) at the end of 2011. He spent triple the market price of SHC—a company on the downtrend at the time—to complete commodity circulation from seaports to warehouses and from warehouses to distribution points.

At the end of 2013, Phu spent approximately $340 million buying over 2.6 million shares of Son Ha International JSC (SHI). This company also produces household appliances for Sunhouse. Recently, SHI has acquired Toan My Group and Truong Tuyen Manufacturing Industrial Co., Ltd. (stainless steel tank production) to jump in the high-level stainless tank market in the south.

As of yet there is no definitive news whether the deal will go through or not. However, it is sure that both sides are doing their utmost to find a strategic partner aligning with their objectives.

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