MWG Ventures: Will History Repeat Itself?

(SGI) - After a less-than-successful foray into the financial sector with F88, Mobile World Joint Stock Company (MWG) is once again making strides in the financial field, a realm that demands considerable strategic thinking compared to its core retail sector. The question on everyone's mind is whether this comeback will infuse a "breath of fresh air" into MWG's endeavors.

MWG Ventures: Will History Repeat Itself?

A Second Roll of the Dice?

On December 4, MWG revealed its collaboration with Viettel to offer money transfer services to bank accounts at over 2,200 Mobile World and Dien May Xanh stores across the country. Customers can avail of this service at any time, be it during business hours, outside them, on weekends, or holidays, with transactions accepted by 40 banks.

According to MWG's announcement, customers will experience swift service at stores without the need for ticketing or waiting in line. The service facilitates both depositing money and transferring funds to accounts in over 40 Vietnamese banks, significantly saving time. Previously, customers were required to visit banks for payments, but now they can conveniently settle their transactions at any Mobile World or Dien May Xanh store, with the funds reflecting in their accounts within 5 minutes.

MWG had earlier declared a partnership with PVI Insurance Corporation to extend voluntary social insurance and household health insurance fee collection points. Starting from November 22, customers could register for new participation or renewals at the sales points of Mobile World and Dien May Xanh store chains in Ho Chi Minh City. The plan outlines an expansion of this service to all 63 provinces and cities nationwide by the first quarter of 2024.

Investors view this move as a new "gamble" by MWG, especially considering that the technology retail business has moved past its phase of rapid growth. The prior gamble, the Bach Hoa Xanh chain, has not proven to be the anticipated source of profit, burdening MWG instead. With MWG facing setbacks in newly opened business segments, this latest venture may be perceived as the company's final "gamble" to sustain the hot growth of the past. Whether history will repeat itself remains to be seen as MWG navigates this critical phase in its strategic plan.

Is MWG Following in F88's Footsteps?

It's evident that MWG's recent moves bear a striking resemblance to the business model employed by the F88 financial service system chain. The leadership at MWG pursuing this model is entirely understandable, given the high-profit potential in this business field. Economic experts assert that collection services represent a promising source of income and have the capacity to attract significant capital inflows from foreign funds. Notably, F88 itself had garnered numerous investments and collaboration proposals from foreign funds, including MWG.

In a specific instance, at the close of 2021, F88 entered into a collaboration with MWG. During this period, the partnership raised eyebrows within the public domain due to their involvement in lending money at notably high costs. Subsequently, following an investigation into F88's practices, MWG temporarily suspended the collaboration, seeking clarification from partners on the related issues. According to MWG's clarification, in the collaborative agreement with F88, their role was limited to serving as an intermediary between F88 and the borrower. All aspects of the loan process, including procedures, approval, interest rates, and repayment terms, were exclusively managed by F88.

Tough Choices: Store Closures and Workforce Reductions

As part of its strategy to venture into the financial sector, Mobile World Group's (MWG) Board of Directors recently made a surprising announcement, revealing plans to evaluate and potentially close 200 stores that are deemed ineffective in terms of revenue and profit in the fourth quarter. The closure plan will be subject to close monitoring, with MWG prepared to make adjustments as needed.

This decision to close 200 stores has sent shockwaves, particularly among the workforce, as MWG has earned a reputation as an assertive business when it comes to paying Tet bonuses. In pre-Covid years, MWG was recognized for offering relatively high and stable salaries. For instance, in 2016, sales staff at Mobile World received a Tet bonus equivalent to 2.5 months of income, while management was rewarded with shares. From 2020 to 2021, based on employee rankings, bonuses reportedly reached a maximum of 6-9 months' salary. The supermarket management group was considered for the RBL ("Ra Biển Lớn" - "Out to the Big Sea") bonus, with an average bonus of around VND 250-300 million per person. This generous compensation contributed to MWG ranking 12th in the "Top 100 Best Places to Work in Vietnam 2020" and securing a spot on the list of Top 50 Vietnamese businesses with attractive employer brands.

However, in the past two years, as business performance declined, MWG intensified staff reduction efforts. By the end of March, the company's workforce had decreased by nearly 6,000 people compared to the beginning of 2023. This marks the second consecutive quarter of substantial employee cuts amid the weak purchasing power in the retail market. In the consolidated financial report for the fourth quarter of 2022, MWG's staff size had already been reduced to over 73,200 employees. In just three months, MWG cut over 7,000 employees, equivalent to 4% of its staff. Over two quarters, the company's workforce has diminished by nearly 13,000 people, bringing it to a level equivalent to the end of 2021. With the impending closure of 200 more stores, concerns are rising among employees, many fearing potential job losses as the Lunar New Year approaches.

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