Vietnam’s consumer market is consistently evolving, driven by changing consumer lifestyles, income, and behavior. The country has experienced a gentle progression of income in recent years, which may be seen in its rapid climb of total consumer expenditure from US$80 billion to US$171 billion between 2010 and 2018.
This shows that Vietnamese consumers have extra money to spend. In fact, within the primary nine months of 2018, the country experienced an 11.3 percent of increased spending. This growth in consumer activity has undoubtedly created openings for businesses to supply new services and products that are available for consumers.
Evolution of the consumer market in Vietnam
The steady flow of foreign investment into Vietnam has, and can still, propel the economic process. This growth has significantly increased local spending power, with a rise within the expenditure for both urban and rural consumers.
Vietnam’s consumer base may be a young demographic between the ages of 25 and 54 years old, accounting for 45.56 percent of the population in 2017. Vietnam’s consumer demographic is analogous to other countries within the region, like Singapore with 50.53 percent of its population within the age range of 25-54 years old in 2017. However, it’s still relatively younger than developed markets, like Japan, which has 37.5 percent of its population between 25-54 years in 2017.
Assessing industry opportunities
Consumer spending in Vietnam has seen growth in numerous industries, which has changed the market. For example, there is a growing demand for high-quality education; students enrolled in higher education went from 16 percent in 2005 to 29 percent in 2015. The needs of Vietnamese people are changing and may be seen in their demand for higher standards across not only education but health and leisure, to call a couple of.
In 2017, Vietnam’s healthcare expenditure was approximately US$16.1 billion and is projected to grow by US$22.7 billion by 2021. Further, the Ministry of Industry and Trade predicts Vietnam is going to be among the very best three countries in Asia for the highest rate of growth of the food and beverage industry by 2020. This shows people are more willing to enjoys simple everyday pleasures.
Evaluating locations for investment in Consumer Market
Investors should consider a mess of things when surveying a possible investment site. Spending habits are influenced by region due to various levels of wealth and income, also as cultures and preferences in each area. Ho Chi Minh City, for instance, is formed from seven urban districts, all with varying demographics.
Role of e-commerce
The rising role of e-commerce in Vietnam is reshaping consumption – with the amount of internet users rising, people are turning to online retailers. Currently, of Vietnam’s 92 million population and 55.19 million internet users, 35.4 million people use e-commerce as a way of shopping. The total revenue for e-commerce transactions has reached US$2.2 billion and is predicted to succeed in US$4 billion by 2021.
Doing business in Vietnam about Consumer Market
The urbanization of Vietnam’s population has generated greater spending power within the country. However, there are a couple of key factors that pose a challenge when doing business in Vietnam. It is important to know cultural barriers that affect contract negotiations and enforcement, conducting appropriate partner vetting within opaque operating conditions, and being mindful of your time delays when transporting goods due to infrastructure difficulties.
Source: Vietnam-briefing
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