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Business

Yamato bringing chilled delivery to Vietnam's sizzling market

Japanese logistics giant to chart growth in Asia with new mindset

Making inroads into Asian markets has been a challenge for over a decade for Yamato.   © Getty Images

HO CHI MINH CITY -- Delivery company Yamato Holdings will launch its flagship temperature-controlled service in Vietnam, where competition is heating up amid a new generation of players.

Tokyo-based Yamato said Tuesday it will start offering its refrigerated delivery service in the Southeast Asian nation next month, first working with restaurants and other businesses before moving on to consumers.

"Vietnam's growth rate of over 6% makes the country a particularly attractive market," President Masaki Yamauchi told a news conference here. 

Yamato is looking outward now that Japan, long a reliable business foundation, is suffering from a crippling labor shortage. The company has teamed with a local partner to form joint venture Yamato 365 Express, setting up a logistics center in Ho Chi Minh City's Tan Binh district.

Yamato Holdings President Masaki Yamauchi, far right, expressed high hopes for the company's future in Vietnam in a Tuesday news conference in Ho Chi Minh City.

Tough nut to crack

For Yamato, cultivating the Asian market has been a challenge for more than a decade. It launched a door-to-door parcel delivery service in Taiwan back in 2000 and has since branched out to Shanghai, Malaysia and beyond. Still, the company has yet to become a household name in many parts of Asia, like it is in Japan. Foreign sales apparently make up less than 10% of the total, a far cry from the company's goal of generating more than 20% of sales outside its home market in the year ending March 2020. The company will set a new target in its medium-term business plan due out at the end of September, Yamauchi said.

Workers at Yamato's Ho Chi Minh City distribution center are gearing up for the operation start next month.

The reason Yamato has not had much success is a stubborn insistence on quality and self-reliance. Determined to provide the same level of service as in Japan, the company previously used only drivers and fleets of wholly owned subsidiaries. But consumers in many parts of Asia do not necessarily want top-notch service. And as Yamato invested the time required to train workers up to its exacting standards, it found that the market had changed rapidly.

The company finally relented last year, switching its policy to focus on developing overseas businesses through operational or capital partnerships with local players.

Eyeing e-commerce

As with other markets in Asia, the number of smartphone users in Vietnam is rising rapidly, and they are using their gadgets to shop online. They are mostly buying cosmetics and durable goods now, but are expected to eventually start snapping up such products as sweets and frozen food -- which require refrigerated delivery services, Yamato's area of expertise.

The industry is already starting to get crowded with many entrants anticipating market growth. One of the leading players is GiaoHangNhanh, a Ho Chi Minh City-based startup with a customer-friendly app similar to Uber's.

In Vietnam, motorbikes are widely used for home deliveries due to narrow streets in residential areas. But motorbike drivers have a bad reputation, and many shoppers say they "don't buy pricey goods online because delivery guys might steal them," in the words of a local female shopper.

GiaoHangNhanh, which means "speedy deliveries," solves this problem. Its app allows customers to pick a driver using its rating system and track the location of the motorbike on a smartphone screen. Yamato will be competing directly with these emerging players boasting services quite different from those of traditional logistics companies.

Japan's high-quality services still enjoy the trust of the affluent in Asia. Yamato will bolster its global operations "with a main focus on small-lot refrigerated delivery services," Yamauchi said. The company's expansion in Vietnam will test whether and how it will beat the intensifying competition with a new breed of rivals while striking a balance between speed and quality.

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