54 Business
proximity matters. At the very least, it 5m new Indian white­collar jobs—and po­
means being in the same time zone as your
client. Infosys and tcs now operate in
more than 40 countries. Infosys has more
than 30 outposts across America and is
building a new $245m campus in Indiana­
polis. The firm plans to add 10,000 Ameri­
can workers in the next few years, bringing
the total to 35,000. “We needed capacity
closer to the customers,” explains Ravi Ku­
mar, who oversees Infosys’s global services
business. Mr Kumar’s own job has relocat­
ed from Bengaluru to New York.
Still, India accounts for the bulk of its it
firms’ workforce. Although the companies
are cagey about where their employees are
based, securities filings by Infosys and
Cognizant show that, give or take, three­
quarters of staff are based in India. If In­
dia’s entire it industry grew at the same
rate as tcs, more or less doubling its work­
force this decade, that could mean nearly
Asian conglomerates
Born to Vin
SINGAPO RE
Vietnam’s Vingroup is making a bold leap into global markets. Too bold?
I n the heyday of Vietnam’s communist
economy,  comrades  could  expect  their
health care, education, housing and enter­
tainment  to  be  provided  by  the  govern­
ment. In the freeish­market Vietnam of to­
day, those necessities are still purveyed by
one  dominant  entity,  albeit  a  capitalist
one.  Vingroup,  the  country’s  biggest  con­
glomerate, and its two listed subsidiaries,
Vinhomes (a property developer) and Vin­
com Retail (which offers other real­estate
services), jointly make up 28% of free­float
shares  in  Vietnam’s  stockmarket  index
(see chart). Their revenues are equivalent
to nearly 2% of Vietnamese gdp.  In the vinguard
Having made Vingroup into a dominant
force  at  home,  its  founder  and  chairman,
Pham  Nhat  Vuong,  now  wants  to  turn  it
into a household name abroad. In Decem­
ber the group announced plans to list Vin­
Fast,  its  electric­car  division,  in  America
this  year,  to  open  showrooms  across  the
West,  and  to  sell  42,000  electric  vehicles
(evs) globally in 2022, up from a previous
goal of 15,000. On March 29th, in the most
audacious move yet, VinFast said it would
invest $2bn in its first foreign factory, to be
built  in  North  Carolina  with  capacity  to
make 150,000 evs a year.  South­East Asia. Wall Street’s enthusiasm
That is quite a ride for a firm that began
life in 1993 making instant noodles in Uk­
raine, where Mr Vuong found himself after
studying geological engineering in the So­
viet Union. He subsequently expanded op­
012
tentially 5m fewer in the West.
This points to a final hurdle. Amid sup­
ply­chain disruptions from the pandemic,
now compounded by Russia’s war in Uk­
raine, and a geostrategic contest with Chi­
na, the West is in a protectionist mood (see
Schumpeter). Few politicians would relish
millions of well­paid positions moving to
India on their watch. Critical visas that
once allowed the Indian firms to send star
employees abroad to work directly with
clients have already grown harder to come
by, forcing these positions to be filled lo­
cally. Although data can in theory be stored
and analysed anywhere, governments are
increasingly keen to limit cross­border in­
formation flows, often invoking national
security. By building a few more campuses
in Western countries India’s it titans may
alleviate some of those concerns. They are
unlikely to make them disappear. n
erations to his home country and in 2010
sold the Ukrainian business to Nestlé, a
Swiss food giant, for a reported $150m. The
Vietnamese arm became Vingroup. It has
been accruing business lines ever since,
turning Mr Vuong, who retains a majority
stake in the parent company, into Viet­
nam’s richest man.
Between 2011 and 2021 Vingroup’s rev­
enues exploded nearly 50­fold, to more
than $5bn. Gross operating profit has bal­
looned ten­fold in the past decade, to
Top companies in MSCI Vietnam index
Market capitalisation, Mar 31st 2022, $bn
% of index*
0 5 10 15
Vietcombank
Vinhomes
Vingroup
Hoa Phat Group
Masan Group
Vietnam Dairy Products
No Va Land Investment Group
Vietjet Aviation
Vincom Retail
Thaiholdings
Sources: Bloomberg; MSCI *Based on free float
The Economist April 2nd 2022
around $800m. Vingroup’s share price is
also 50 times what it was at its initial pub­
lic offering in 2007. It spun off Vincom Re­
tail in 2017 and Vinhomes a year later, re­
taining majority stakes in both. These lu­
crative property businesses generate most
of the parent company’s profits.
Now Vingroup wants more to come
from techier sectors, says Le Thi Thu Thuy,
Mr Vuong’s deputy at Vingroup and ceo of
VinFast. In particular, the company is eye­
ing evs. To that end, the group is rejigging
its industrial divisions. Last year it wound
down VinSmart, an unlisted subsidiary
that had grabbed just over 10% of the do­
mestic smartphone market with its own
models, and launched two new ev­focused
high­tech ventures: Vines, a battery­mak­
ing subsidiary, and Vinai, a machine­
learning arm which is led by a former re­
searcher at DeepMind, Google’s artificial­
intelligence unit, and whose task is to de­
velop self­driving technology. As part of
the electric shift VinFast will also stop
making petrol­driven vehicles by the end
of this year.
The plan is to conquer the global ev
market with snazzy new models—and a
crafty new business model. VinFast will
sell cars while leasing their batteries,
which account for a large chunk of an ev’s
cost. That lowers the sticker price, as well
as alleviating concerns about long­term
decline in range as batteries degrade (the
company will replace those which no lon­
ger recharge adequately). VinFast’s $41,000
vf8 is one of the cheapest electric suvs
around, even after you factor in the $100 or
so monthly battery payments.
Vietnam’s president, Nguyen Xuan
Phuc, whom Mr Vuong took for a spin in a
vf8 at VinFast’s factory in Haiphong earlier
this year, certainly looked impressed.
Afterwards Mr Phuc reiterated just how
Vingroup’s business objectives dovetail
with the government’s economic goals.
These include the creation of large, inter­
nationally competitive conglomerates in
the mould of South Korean chaebol such as
Samsung. No Vietnamese company fits the
bill better than Vingroup.
Ambition does not, though, guarantee
success. Vingroup’s industrial businesses,
20
of which carmaking is by far the biggest,
6
recorded a net loss of about $1bn last year.
12.7 Chris Robinson of Lux Research, an analy­
11 sis firm, is sceptical about VinFast’s ability
to compete with established carmakers
15.6
like Volkswagen, which is ploughing bil­
9.7 lions into affordable evs, or Tesla, the in­
8.6 dustry superstar. He reckons VinFast will
7.7 struggle to win a big market share outside
3.4
for upstart ev firms has chilled of late in
4.7 America, which could dash VinFast’s
4.5 hopes for a blockbuster New York listing.
The world’s motorists and investors may
prove harder to impress than Mr Phuc. n