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Food company in northern Vietnam to branch out into electric vehicles

The Cencon Vietnam Company, known for frozen foods and consumer goods, has announced it intends to branch out into electric vehicles, The Leader is reporting. A new company will be established–the Cencon Electric Car Company–with start-up capital of VND 80 billion (US$3.3 million). The article suggests this new company will work with China’s Chery, reportedly China’s largest electric vehicle exporter, though this is unconfirmed.

Why it matters: Firstly, electric vehicle manufacturing is trending at the moment after shares in Vietnam’s Vinfast on the Nasdaq skyrocketed the nascent automaker to at one point become the third largest EV marker in the world. This meteoric rise was reported on ad nauseam in the domestic press. The subsequent rapid fall, however, was not so much which may be contributing to a false sense of confidence in the sector.

Secondly, Vietnam’s economy has been struggling over the last year or so, which can be traced to rising fuel prices, several high-profile arrests, and lower demand in its key export markets; however, one of the big underlying problems that all of these events brought to the fore, was that Vietnamese firms were overleveraged and had become so as they expanded into markets outside of their core businesses. For example, FLC, a real estate firm, started an airline and Vingroup, also a real estate firm, started to make electric cars.

On that note, Cencon Vietnam, which gets 90 percent of its revenue from its food and consumer goods business, had already expanded into real estate and jewelry before this latest announcement though neither jewelry nor real estate has contributed all that much to its bottom line.

The point being, that the problems that have made the downturn worse than it needed to be look likely to continue moving forward.

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