Trade Promotion and Advertising in Vietnam

An Expert's View about Business Practices in Vietnam

Last updated: 4 Mar 2011

Advertising has been permitted in Vietnam only since 1990, but the industry has grown by 30 percent per annum over the past few years. The 2008 estimate for advertising turnover was approximately $1 billion U.S. dollars. The largest share of this went to foreign-invested advertising firms. Foreign companies hold a near monopoly in this market due to better sources of capital, technology, creativity, and professional expertise as compared to local firms.

 

Regulation: Advertising remains heavily regulated by the Vietnamese Government. In principle, only companies licensed in Vietnam may place advertisements. Advertisements for tobacco and liquor (excluding beverages with alcohol content below 15 percent by volume) are prohibited in the mass media. Advertising for pharmaceuticals, agrichemicals, cosmetics and toiletries require registration and approval from the appropriate ministries before being run, while the Ministry of Culture, Sports and Tourism must approve all advertising content. Arbitrary enforcement and interpretation of the regulations continue to hinder the development of the advertising industry. Limits on advertising and promotional expenditures exist and are tied to a percentage of total sales. The Government’s current regulations essentially prevent domestic enterprises from investing more than 10 per cent of their total spending on advertising programs.

 

Foreign Ad Agencies in Vietnam: The country now has more than 1,000 domestic ad companies, of which about 700 are operating in HCM City. Vietnam hosts over 30 representative offices of the world’s leading advertising companies, including J. Walter Thompson, Dentsu, Sattchi & Sattchi and McCann.

 

Foreign advertising firms are generally not permitted to directly sign contracts with local media agencies. Instead they must go through local advertising companies to implement ad campaigns in newspapers or TV commercials.

 

The majority of foreign advertising firms are likely to remain as representative offices for the foreseeable future. Many foreign firms work closely with Vietnamese advertising companies in order to support their international client. Under the Bilateral Trade Agreement that came into effect in 2001, American companies were allowed to enter into joint ventures with Vietnamese firms to offer advertising services, although the U.S. firm was limited to a 51 percent share in such a venture. As of the beginning of 2009, U.S. advertising firms are to be allowed to open branch offices in Vietnam, although how this new rule will be implemented remains to be seen. While some highly sophisticated advertising production may take place offshore, most production for the multinational ad agencies takes place within Vietnam, primarily in Ho Chi Minh City. Foreign advertising executives note that a large proportion of advertising activities are in Ho Chi Minh City and the surrounding provinces as this area leads the nation in disposable income, familiarity with foreign trends and brands, quality of broadcast programming and print media, and production skills.

 

Clients: While multinational corporations in Vietnam continue to provide the majority of business for foreign advertising firms, successful local companies are expanding their advertising campaigns and increasing advertising spending. Currently, the leading categories of TV ads are cosmetics/toiletries, pharmaceuticals, electrical appliances, vehicles (primarily motorcycles), household products, soft drinks, and foods. The leading print ad buyers are firms marketing soft drinks, toiletries/cosmetics, vehicles (primarily motorcycles), pharmaceuticals, and transport/tourism services.

 

Television: Many foreign brand managers make heavy investments in television advertising campaigns. Over 90 percent of Vietnam’s urban population own televisions. These viewers watch an average of three hours per day, mainly during the peak time of 6-9 p.m. Household television ownership is estimated to be 92 percent in HCMC and 96 percent in Hanoi. Nation-wide penetration is approximately 87%. There are 64 local and one national broadcaster (VTV). With the emergence of satellite dishes and cable networks, many households also watch international networks (CNBC, CNN, StarTV).

 

Print Media: While spending on TV advertising continues to increase substantially, print advertising has really exploded, with annual growth rates of around 30 percent in recent years. A high literacy rate, a surge in new publications, and increased print media circulation all support the print media’s growing popularity as an effective channel for advertising. Regulations place limits on space allocated for advertisements. There are over 400 newspapers and other publications in Vietnam, but few have nationwide circulation. Among the more popular publications are “Thanh Nien” (Young Adult), “Nhan Dan” (The People), “Tuoi Tre” (Youth), “Saigon Giai Phong” (Saigon Liberation) and “Lao Dong” (Labor). In recent years, quite a few international quality publications have begun circulation, including "Nha Dep" (Beautiful Home), "Dinh Cao" (Sports & Fitness), "M" (Fashion) and "Phu Nu The Gioi" (Woman's World), Gia Dinh & Tiep Thi (Family & Marketing). These latest publications are setting new standards for the quality of publishing in Vietnam. English newspapers and publications include the Saigon Times Daily, Vietnam News, Vietnam Economic Times, Thanh Nien English News, and Vietnam Investment Review.

 

Outdoor Advertising: Outdoor advertising ranges from billboards and signboards to public transport, building walls, bus stations, and wash and service stations, among others. Many placements are illegal, so firms should confirm that the advertising agency has proper permits to lease the space.

 

Under Decree 24/2003/ND-CP dated 12/2/2003 governing many aspects of advertising, large outdoor advertising billboards that are not suitable to urban planning, social safety, aesthetics and the environment will be restricted in urban areas. For example, billboard advertising in Ho Chi Minh City is restricted to the vicinity of the airport. Advertising on articles such as umbrellas, scooters, booths and roofs does not require a permit; however, it must comply with advertising regulations.

 

Radio: Radio advertising is not yet widely used for product promotion, but radio ad volume is growing. This is largely due to improvements in programming, such as the inclusion of English lessons and international music along with the standard selection of Vietnamese pop music, which in turn increases the appeal of radio programs to advertisers. Today, the audience represents a cross-section of the population with increasing buying power. There are many local and one national broadcaster, Voice of Vietnam (VOV). The cost per thousand listeners is relatively inexpensive. Although radio is not as popular as TV and print media for advertising, radio ad expenditures should continue to expand, especially as more and more drivers take to the road in Vietnam.

 

Trade Fairs: Trade fairs are numerous and cover a broad range of sectors, but generally do not provide venues of an international standard for product promotion. Many are cosponsored by Government ministries, SOEs, and industry associations. Common venues are the Giang Vo Exhibition Center, the National Convention Center and the Viet-Xo Cultural House in Hanoi. In Ho Chi Minh City, the Reunification Palace, international hotels, the Ho Chi Minh City International Exhibition and Convention Center and the newly opened Saigon Exhibition & Convention Centre (SECC) are the common locations.

 

 

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Posted: 08 July 2010, last updated 4 March 2011

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