18 Aug 2010
Vietnam: Booming Retail Market and Production Alternative
HKTDC Research Report Sees Opportunities in Robust Economy
19 August 2010 – Interest in Hong Kong products is expected to grow among Vietnamese middle-class consumers keen to upgrade their living standards, according to a new survey by the Hong Kong Trade Development Council (HKTDC).
The survey, detailed in the HKTDC report “Vietnam – A Fast Growing market in ASEAN,” also found that high-quality imported goods such as food, beauty and healthcare products, fashion and consumer electronics are in great demand among the nation’s expanding middle class.
HKTDC Assistant Chief Economist Dickson Ho said Hong Kong companies hoping to target the Vietnamese market should take advantage of the country’s modern and stylish department stores.
“Given the growth of the middle-class population, increasing brand awareness and demand for quality products among consumers, as well as a strong motivation for consumption, Vietnam is turning into a promising market for Hong Kong products, which are well-designed and reasonably priced,” said Mr Ho.
Nearly all Vietnamese department stores recorded good sales performances last year, he said, noting that many of the outlets offer a high-quality shopping experience to relatively affluent consumers, organising entertainment events to sustain customer traffic.
The HKTDC report found the Vietnamese economy to be thriving and robust, despite the impact of the global financial crisis. In 2009, Vietnam’s economy recorded 5.3 per cent growth, the fastest among the 10 ASEAN countries.
Growth momentum persisted in the first quarter, and both the International Monetary Fund and the Vietnamese government are optimistic about the economic outlook for the rest of the country this year.
Promising economic prospects and gradual liberalisation of Vietnam’s retail market following its accession to the World Trade Organization (WTO) in 2007 have set the stage for continued expansion of the Vietnamese consumer market. Since 2005, the market has grown at an average annual rate of more than eight per cent, a trend expected to continue into the next decade.
The HKTDC survey revealed that Hong Kong products, in particular household items, are popular among Vietnamese consumers, especially those in the middle-class. Consumers generally perceive Hong Kong products as being affordable, with good quality control, product safety and innovative features.
The research also found that web-based activities are increasingly popular among Vietnam’s young population, suggesting that Hong Kong companies should consider tapping into the market through online shopping. While online payment and product delivery services have yet to mature in Vietnam, they may serve as a channel for small deals and market testing.
In addition to the booming consumer market for Hong Kong products, Vietnam is emerging as an alternative production base. The HKTDC survey indicates that Hong Kong manufacturers should look at Vietnam’s abundant supply of young workers and relatively low labour costs, which could be an advantage for labour-intensive production.
“For Hong Kong companies facing an upsurge in production costs on the Chinese mainland, Vietnam can provide an option for them to relocate part of their production process,” said Mr Ho. “This could ultimately facilitate a closer economic relationship between Hong Kong and Vietnam.”
Mr Ho also reminded Hong Kong companies to carefully consider the challenges ahead for Vietnam. “As the business environment in Vietnam is quite different from that in Hong Kong, Hong Kong companies should seek professional advice on operations, investment and other business issues,” he said.
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About the HKTDC
A statutory body established in 1966, the Hong Kong Trade Development Council (HKTDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers. With more than 40 global offices, including 11 on the Chinese mainland, the HKTDC promotes Hong Kong as a platform for doing business with China and throughout Asia. The HKTDC also organises trade fairs and business missions to connect companies with opportunities in Hong Kong and on the mainland, while providing information via trade publications, research reports and online. For more information, please visit: www.hktdc.com