SK Group, South Korea’s the country’s third-largest conglomerate, is investing in the largest retail chain in Vietnam to gain greater access to the fast-growing Southeast Asian market.

The Korean firm paid $410 million for a 16.3% stake in VinCommerce on April 6, an SK spokesperson said. It bought the shares from Vietnamese conglomerate Masan Group, which has a controlling stake in VinCommerce as well as a 3-year-old strategic partnership with SK, the spokesperson said in an emailed statement. SK Group has held a 9.5% stake in Masan since 2018.

“SK Group has been actively investing in Vietnam for several years because of the high growth potential of the market,” the spokesperson says. “SK Group sees strong opportunities in Southeast Asia as the economies continue to expand.”

Vietnam’s economy grew 2.9% in 2020 despite a pandemic-induced slowdown, and the International Monetary Fund expects it to expand a further 6.5% this year on “strong economic fundamentals.” Retail has boomed in Vietnam over the past decade as export manufacturing creates jobs and fosters a middle class among the 96.5 million population.

VinCommerce represents “a unique opportunity” with control over half of Vietnam’s retail market, the SK Group spokesperson said. Specifically, VinCommerce operates 2,300 convenience stores and supermarkets—and that’s just offline. 

“SK Group invested in VinCommerce because of its expected growth as an omni-channel operator, serving customers through both traditional bricks-and-mortar stores and emerging online channels to deliver new value to the market,” the spokesperson says. “We expect VinCommerce to grow into an omni-channel business that combines online and offline like an Alibaba and Amazon in the future.”

In 2018, SK Group established its SK Southeast Asia Investment arm to look for growth opportunities in the subregion of 655 million people. Today it owns a 6.1% stake in Vietnam’s biggest conglomerate Vingroup, and subsidiary SK Energy has a 5.23% stake in PetroVietnam Oil. Last year SK Group acquired a 24.9% stake in Vietnam-based pharmaceutical firm Imexpharm.

SK Group is a family-controlled chaebol second only to Samsung and Hyundai in terms of revenue. Its subsidiaries work largely in energy, chemicals, semiconductors, telecommunications and biotech.

Chaebols have been “rushing to invest into Southeast Asia” because of the relatively limited domestic market size, says Tim Hwang, CEO of Washington-based data and media company FiscalNote. And it’s a logical fit. “Because their growth and history has come primarily from rapid development and industrialization, they are very comfortable doing it again effectively in the Southeast Asian market,” he says.

Samsung, for example, in 2019 picked Vietnam for its third Samsung Showcase, a store that displays the electronics-led firm’s latest gear.

Korean companies have been encouraged to venture into Southeast Asia under Korean President Moon Jae-in’s “New Southern Policy”—a plan to have the country deepen its ties with Southeast Asian nations and reduce their reliance on China and the U.S. South Korea was Vietnam’s fifth-largest foreign investment source as of 2019.

“With the South Korean economy facing slowing long-term consumer spending growth due to demographic aging, this new investment in Vietnam gives SK Group a strategic positioning in one of the world’s fastest growing emerging markets,” says Rajiv Biswas, Asia Pacific chief economist with market research firm IHS Markit.

Masan Group’s Chairman Nguyen Dang Quang rejoined the ranks of the world’s billionaires this month with a net worth of $1.2 billion. He last qualified for the list in 2019. His company, with sales of $1.7 billion, has interests in a wide range of consumer and food product businesses, ranging from animal feeds to food processing.

SK Group, chaired by billionaire Chey Tae-won, has 95 subsidiaries and earned $88.94 billion in 2019 revenue. Chey is a nephew of SK Group founder Chey Jong-gun, who started the conglomerate with a textile company called Sunkyong.