CMC Corporation, Vietnam’s second-largest technology company by market share, is looking to set up a subsidiary in South Korea as it plans to expand its global footprint, said a senior company executive.
The development comes after the Hanoi-based company clinched a strategic investment from Samsung SDS in July, selling a 25 per cent stake to the latter for VND750 billion ($32.3 million).
Samsung SDS is the system developer unit of Samsung Electronics.
“CMC’s strategy is to target developed countries’ markets to provide high-quality products and services. In Northeast Asia, we established a company in Japan and are now eyeing South Korea,” Nguyen Trung Chinh, Chairman of CMC Corporation told DealStreetAsia in an interview.
“Meanwhile, we target top four countries in Southeast Asia and plan to open an office in Singapore within next five years,” he added.
Going forward, CMC has set a tall target to become a billion-dollar company over the next five years and has been actively focusing on the strategic overseas expansion route to achieve it.
Its expansion in South Korea will be bolstered by the funding it got from Samsung – pegged as one of the largest deals in any Vietnamese IT-related company by any foreign company.
As part its global expansion plan, CMC will focus on areas pertaining to app development, corporate governance, data transformation, industry solutions, cloud, big data, robotics, artificial intelligence (AI) and information security.
Chinh said as a result of the partnership with Samsung, CMC will consolidate its technology and merge the latest solutions of the South Korean giant into the company’s business network. This, he said, will help promote the company’s business in Southeast Asia where the digital economy is forecast to triple in size and reach $240 billion over the next seven years, according to Google’s third “e-Conomy SEA” report.
“The partnership with Samsung SDS will help the group get closer to the goal of $1 billion in revenue over the next five years,” he added.
In the business of Smart Factory, Samsung SDS and CMC will first focus on Korean factories in Vietnam and then expand to Vietnamese companies.
To date, CMC has a partnership with 26 countries across the world. The 26-year-old-technology company targets revenue from its overseas operations to reach VND5 trillion ($215 million) by 2023.
Before the partnership with South Korean technology giant Samsung, the Ho Chi Minh City-listed tech major also sold a 25 per cent stake in its telecom unit (CMC Telecom) to TIME dotCom Berhad, a leading fixed-line telecommunications provider in Malaysia in 2015.
This handshake doubled CMC’s profit after three years from VND77.5 billion in 2015 to VND142 billion in 2018 and helped CMC build Vietnam’s first cloud ecosystem CMC Cloud, Chinh said.
Creating a global data centre
The partnership with Samsung SDS will help CMC become a global data and maintenance centre operating out of Southeast Asia, wherein it will act as the main partner of Samsung SDS in its business operations.
Going forward, the global data centre will prompt CMC to spruce up its investments in innovative startups through its innovation fund launched in 2017. “CMC will pour more money and may look to enlarge its innovation fund which focuses on cloud, IoT, robotics, big data and AI,” Chinh said.
The fund, called CMC Innovation Fund (CIF), has an initial capital of VND50 billion ($2.2 million). To date, CIF has deployed over VND20 billion for its investments since its inception.
Through innovative startup organisations, the fund approached 476 startups in Vietnam, South Korea and Japan, of which the fund advised more than 30 projects in the areas of corporate governance, finance, education.
This year, CIF is preparing to close two investments in two technology startups, said Chinh, without giving further details. “Next year, the group will spend 10 per cent of pre-tax profit to supplement capital for the fund,” he added.
CIF is one of three investment funds established by IT majors in Vietnam. Before CIF, FPT Corporation also launched $3 million FPT Venture while Vietnam’s state-owned network operator Viettel established a venture capital fund that would potentially facilitate US startups.
Technology giant FPT, telecommunications giant Viettel and online gaming giant VNG in recent years have been developing and coming up with solutions to apply AI, blockchain, big data in real life. Vingroup, on its part, has also announced that it would establish an AI research institute as part of its technology arm VinTech.
“The establishment of innovation funds is inevitable fact as the business and the company diversifies for new growth. Startups need to connect with technology professionals at technology corporations to form an innovative ecosystem. In the long term, CMC will boost capital support as well as share experiences for domestic technology startups,” Chinh said.