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Curious about bringing your brand or business to Vietnam? Get to know what makes this booming Southeast Asian economy tick…
Take a look at the chart below. Before COVID-19 turned the world upside down, you can see that Vietnam was the country with the highest growth rate in Southeast Asia.
Thanks to its exemplary early pandemic response, Vietnam was one of just a handful of countries to maintain economic growth through all of 2020.
As Western economies began opening up in early 2021, researchers unanimously anticipated bullish prospects for the Vietnamese market, with HSBC projecting no less than a 7.1% growth in GDP.
Unfortunately, in late April, 2021, Vietnam was hit by a fourth wave of COVID-19, marked by the highly virulent Delta variant.
The ensuing lockdowns and travel restrictions have had a severe impact on the entire country.
As of Q4, 2021, a robust national vaccination programme is well underway in Vietnam, with nearly 100 million vaccines already administered and over 80% of residents in Hanoi and Ho Chi Minh City fully inoculated.
The Vietnamese government has continuously affirmed its commitment to a rapid economic comeback, embracing a suite of business friendly policies benefiting foreign companies.
Supply chain challenges have also already begun to subside with all signs pointing to pre-pandemic levels of exports and production in 2022.
The pandemic has also dramatically accelerated Vietnam’s digital transformation, creating unprecedented opportunities for e-commerce companies, payment processors and teleconferencing operations, among others.
As Vietnam emerges from it’s pandemic slump, the nation’s robust fundamentals are once again generating bullish forecasts for 2022.
So what was inducing Vietnam’s rapid development pre COVID-19, and what makes it such a promising post-pandemic investment destination?
For starters, FDI (Foreign Direct Investment) flows in manufacturing activities and exports, and the US-China trade war have opened up chances for Vietnamese goods to replace Chinese equivalents in the US market. Not to mention the steady growth of domestic brands in this vast country of 96 million people.
After years of doing content marketing for brands and businesses in Vietnam, we have come to know the consumer market. And now we’re eager to share with you our observations.
Vietnam is rearing to get back to the way it was before the pandemic. We hope its exemplary response will mean “business as usual” quicker than other countries in the region.
This is still a great place to do business, and getting to know the big spenders will help your brand or business play here.
What’s the consumer profile?
Vietnam’s population reached 96 million in 2019.
37% of the population is living in urban areas. Hanoi is the capital city with 7.5 million residents, while the economy hub - Ho Chi Minh City - is home to 8.6 million.
The population of Vietnam is considered young as more than 45% of the population is between the age of 25-54 years old. Gen X and Millennials are the majority of the workforce and consumer market.
Meanwhile, there are more than 29 million Gen Z-ers in Vietnam, who make up 30% of the population. They are rapidly emerging as the next wave of influencers and consumers.
Vietnamese consumers are generally ethnocentric. They support local brands and products, with 71% believing that local products are of high quality.
Some of the largest Vietnamese corporations are Vin Group (real estate, technology, automobiles etc.), Masan Group (F&B) and VietJet Air (Airlines). Even Starbucks has been struggling in this $1B coffee market, and McDonalds is said to have flopped in Vietnam.
Of course there’s still plenty of room for foreign brands in Vietnamese consumers’ hearts, especially when it comes to sports and leisure.
Vietnam has been cultivating a long distance love affair with foreign football for quite some time, and in the wake of the national U23 team’s headline-grabbing wins in 2018, domestic interest in the sport remains at an all time high. All this presents a golden opportunity for global football brands.
Spending behaviour
Annual disposable income of Vietnamese people is on the rise along with consumerism. According to Kantar’s WorldPanel Insight Handbook 2019, key areas of pre-pandemic expenditure were fresh food & FMCG, education, eating and drinking out, entertainment and travelling, etc.
Vietnamese’s spending on housing and household utilities makes up for 11% of their monthly spending. This is relatively low compared to that of an Indonesian, which is 25.3%; equal to that of a Thai; and a bit higher than a Philippine’s. Thanks to this, the Vietnamese enjoy an abundant percentage of disposable income.
And after months of lockdown, Vietnam’s upwardly mobile middle class is eager to get out there and get spending once again.
Changes are also happening within each industry as Vietnamese consumers are moving up Maslow's hierarchy of needs. They look for convenience in each product/service. The following five changes are also noted in the same handbook by Kantar’s WorldPanel:
Consumer trends
As Vietnam integrates into the global market, drastic changes are happening. So what are the trends leading the changes?
Convenience stores
In recent years, convenience stores have made their way to every corner in Vietnam, taking market shares from local traditional markets.
VinMart & VinMart+ top the game with 1100+ stores nationwide. Circle K, Family Mart, B’s Mart are also developing their ecosystem.
Penetration of mini marts and convenience stores reached 53% by 2018. This isn’t surprising as 76% of Vietnamese choose a store because it’s near their home. And like 7 Eleven in Thailand, this new breed of stores in Vietnam are popping up one street at a time and rapidly.
Purchasing experiences
Earlier generations spent their money on gathering assets, possessions and savings. Now, it’s about experiences, such as vacations, trips or idol concerts. Spending on education is increasing rapidly, especially for extra classes, private schools and studying abroad.
The tourism sector has grown rapidly too, and Vietnamese now spend more money on holiday trips. More than 1 million Vietnamese tourists visited Thailand in 2018, which is double the number of 2012.
Of course, Vietnam’s tourism and hospitality industries were hit particularly hard in 2021, but thanks to generous government stimulus and support packages, both domestic and international travel sectors are primed for steady post-pandemic comebacks.
The Vietnam National Administration of Tourism expects cultural and environmental tourism destinations to surge in popularity in 2022, as domestic travelers reprioritize “wellness, safety, nature and authentic experiences[,]” after months of intense travel restrictions.
Health and Wellness
Before the global pandemic, cases of food poisoning and reports of restaurants using unqualified and toxic materials were already prompting consumer trends towards health and wellness.
COVID-19 has bolstered these trends considerably, with hang-ups over health and safety now firmly fixed as top-of-mind concerns.
Vietnamese consumers now need to be informed about the origin of the food and drinks that they purchase.
Supermarkets and mini marts are taking this as their competitive advantage over traditional wet markets, many of which were closed during the 2021 pandemic lockdown.
Fitness and wellness is also trending among Vietnamese people. After many long months of home cooking, Vietnamese consumers are eagerly adopting healthier diets to reduce weight and avoid disease, while likewise exercising to keep themselves fit and healthy.
Digital landscape
Vietnam has been officially connected to the internet since 1997. Ever since it has kept up with global digital innovations.
COVID-19 has also dramatically accelerated Vietnam’s digital transformation, stimulating a huge push towards contactless payment, mobile-based delivery services, and remote working platforms.
But how are Vietnamese people using the internet? And what you should know about the digital landscape here?
Digital use
According to Digital 2021 Vietnam, the country is highly connected to the internet, with 70.3% penetration. Whether it is rural or urban, you will find people using smartphones all the time. It’s no surprise that digital marketing is booming.
In 2019 it was reported that 91% of smartphone users in Vietnam are active on messenger, 95% of users are watching videos on mobile, 84% of users are playing mobile games, 50% of users are making use of mobile banking apps, and 80% of users are using mobile map services.
In late 2020, Vietnam’s three major mobile service providers, Viettel, VNPT and MobiFone, began providing 5G in the big cities (Hanoi, Ho Chi Minh City, Da Nang and Hai Phong), paving the way for all kinds of fast-transmission digital services, including IoT.
So, it’s worth considering using social media marketing, messenger marketing, video marketing, display ads, mobile banking and connecting your business on Google to increase the chances of finding potential customers in Vietnam.
