• Robust economy. GDP growth of 5.3% in 2009 topped the ASEAN league even in the face of the global economic woes, thanks to its relatively good trade performance and expanding domestic market. Vietnam’s exports fell 9.7% in 2009, far lower than the double-digit decline of its ASEAN neighbours, an indication of the competitiveness of many Vietnamese products in the international market.
• Rising consumerism. With a fast growing economy and gradual liberalisation of the retail market following World Trade Organisation (WTO) accession in 2007, Vietnam has been experiencing rapid retail market growth, with an average annual growth rate of more than 8% from 2005-2009, outpacing the country’s economic growth. As a retail market, Vietnam is attractive given many positive fundamental factors, which include a young population, accelerating urbanisation, increasing brand awareness and demand for better-quality products.
• Modernisation of retail channels. Consumer preference is fast changing along with higher incomes and improving living standards. Modern and stylish department stores and shopping malls better suit the needs of many Vietname consumers, gradually replacing the traditional retail channels. The modern retail channels now account for 20% of the market, with the share expected to keep rising rapidly to drive Vietnam’s overall retail industry growth.
• Awareness of Hong Kong. Vietnamese consumers generally regard Hong Kong products as affordable with good quality, meeting their value-for-money spending philosophy, especially among Vietnam’s middle-income class. Many Hong Kong brands, including typical fashion icons like Bossini, Crocodile, Esprit and Giordano, are present in Vietnam’s consumer market and have established chain stores for selling their products.
• Alternative production base. Vietnam is one of the major exporters of footwear and garments for the globe supply chain. Its strengths as a production base lies in its relatively cheaper labour cost and low cost of land use. With 60% of the 87 million population under the age of 25, Vietnam has a large pool of young workers to give it an advantage as a base for labour-intensive production.
Vietnam is one of the brightest emerging markets in Southeast Asia. Its economy remained sturdy with 5.3% growth in 2009 despite the financial tsunami. Key drivers of the country‘s economic growth include a strong export engine supported by the abundance of young labour at relatively low-cost, growing buying power of consumers, and geographic advantage with proximity to China. As Vietnam gradually opens its economy according to its WTO commitments, new business opportunities emerge.
To read the full version, please click here.