Few countries have developed as rapidly as Vietnam has over the last decade – its growth has averaged 7.5 percent per year since 2000. But the economic downturn has affected almost all countries to some degree. Will the global recession derail the extraordinary progress Vietnam has made? Nielsen has prepared a study “Boom or Doom in Vietnam in 2009?” to look at this very question.
Success has bred confidence: Vietnamese are the 9th most confident consumers in the world. And opportunities clearly remain, with AT Kearney rating Vietnam as the most attractive retail market in the world, ahead of larger countries such as Russia, India and China. In 2008, Vietnam attracted 1,171 new foreign direct investment projects with a value of $60.2 billion – triple that of 2007.
Household income is growing, with the average household now claiming a monthly income of US$300, while households with incomes of more than 4 million VND (about US$ 229) have grown from 20 percent in 2002 to over 80 percent in 2008. Internet penetration is surprisingly higher in Vietnam than other developing nations, with 23 percent having internet access compared to 22 percent in China and just 7 percent in India. And perhaps most remarkably, Vietnam leads all other countries in Asia Pacific – even Japan and Korea – in spend on new technology.
But even Vietnam is not immune to global trends. Food price inflation hit a record high of 28.3 percent in August 2008, although it has since moderated to 14.8 percent in February 2009. GDP growth is predicted by the International Monetary Fund to slow to 5 percent, and the Vietnamese government is preparing a $6 billion package to stimulate the economy.
From a consumer standpoint, the biggest concern is inflation. While most categories’ growth has slowed somewhat, they remain stronger than most other countries. Areas where Vietnamese consumers say they will cut back are:
- Fast food
- Carbonated soft drinks
- Eating out
- Going out to bars and coffee shops
Despite expressing some concern, Vietnamese consumers remain quite positive. Significant growth opportunities remain in the country in most consumer goods categories, and companies that continue to invest and innovate will secure a strong long-term future once the economy improves. Vietnam is country that remains highly attractive to companies, as growth opportunities are abundant. Half of the population is under age 30, which means labor costs are lower and consumption demand is high. Tourism continues to grow strongly – up 7 percent in 2008 – as more people discover the energy, beauty and culture Vietnam has to offer.
Read the full report here.