The hidden champion Vietnam has developed into Asia’s growth pearl without almost anyone noticing. While the global focus is mainly on China and India, the smaller country of Vietnam enjoys many advantages. For example, the government ensures orderly participation in global economic affairs and invests substantially in infrastructure. The country is politically stable and benefits from a young and tech-savvy population. We shall report from our own firsthand experience about what companies should know about Vietnam and what you should keep in mind when entering the Vietnamese market.
Vietnam expects to have improved its position again among the ASEAN States when the World Bank publishes its annual “ease of doing business” index in a short while. Vietnam has occupied a leading position among the group of ten Southeast Asian countries for several years, which is a member of the Association of Southeast Asian Nations. The World Bank is thereby confirming that it is relatively easy to gain a foothold in Vietnam compared to other Asian growth markets, especially for foreign companies. While countries like the Philippines and Indonesia can also show off attractive growth prospects, Vietnam offers stability – something, which the other countries only can to a lesser extent.
On the Way to Becoming an Industrialized Country With 6 Percent GDP Growth
This was one of many reasons to intensify our involvement in the Vietnamese market. We have recently formed a joint venture with Digiworld, one of the largest wholesalers for electronic products in Vietnam, meaning we can support global providers of smartphones, wearables and IoT devices when they enter the Vietnamese market. At the same time, we have expanded our global partnership with Samsung and are now operating some of Samsung’s largest Customer Service Plazas, in which Vietnamese Samsung customers receive quick help if they have questions about their smartphone, tablet or other electronic devices, or if they need repairs. By the way, you can view the entire story in our new video. Like no other country in the Asia-Pacific, Vietnam has stood out for many years with a stable economy and GDP growth rates that have ranged from 5.2 percent to 7.1 percent since 2007. This means that Vietnam is growing more than the average in the Asia-Pacific, with growth rates of 5.5 percent predicted for this year. The Vietnamese government is paving the way to become an industrialized country through opening up to global markets and foreign investors. The share of the industrial and service industry is meanwhile more than 60 percent. As a result, Vietnam clearly stands out from its neighboring countries, where agriculture and fishing still dominate economic activity.
The Journey From Being Underdog, to Hidden Champion to Growth Pearl
Vietnam is still regarded by many as the underdog of Asia. The country appears to be too small in comparison to China or India, though appearances are deceptive. With 96 million inhabitants, Vietnam ranks among the ten largest of the 50 countries in Asia and ranks 15th worldwide. What’s more, the Vietnamese population, with an average age of just 30, is younger than average and is very open to innovation and new technologies. “The small China” or “New India” is likely to emerge as one of the most attractive growth markets in the world, especially for globally active providers of mobile and IoT devices. To date, smartphones have only reached 26.4 percent of the population. The need to catch up is enormous, yet thanks to huge investment in infrastructure and network expansion, the Vietnamese government is creating the conditions for a rapid digitalization of society and the working world. Chinese and Korean providers have particularly recognized this potential and have been expanding in Vietnam for some time now. While Samsung and OPPO clearly dominate the market with shares of 28 percent and 25 percent respectively, Apple comes in at 7 percent. While the demand for Western technologies and brands is higher than ever, Vietnamese consumers are pragmatic and seek to get good value for money. People prefer to buy in a retail shop on-site. Due to climatic conditions, Vietnam is a country with a fast growing footprint of shopping malls. Shopping is an experience and buying behavior is impulsive – it’s all about touching and trying. Once the decision has been made, the device must be ready for use immediately. The selfie culture is very strong in Vietnam and that first selfie with the new purchased smartphone has a very high priority. With the climatic conditions and the sometimes-extreme use of electronic devices, service requirements are high and growing for manufacturers. Repair rates are 30% higher than Western countries. At the same time, consumers expect rapid help if there is a device fault. The repair takes place within an hour at the Samsung Customer Service Plazas, which we operate. As is the case with shopping, the service becomes an experience: During the waiting period, customers can try out the latest device models, or watch the repair process of their device. In the best sense of the word, people are curious in Vietnam, which is what makes the current market so exciting – there is hardly another one like it!
Summary: Vietnam is one of the most stable growth markets in Asia, something which has long been undiscovered with China and India in the limelight. Manufacturers of electronic devices that want to enter the Vietnamese market should cooperate closely with Vietnamese specialists in the country. From our own experience, we know that local empowerment from day one promises the greatest chances of success. Provide room for maneuver and freedom of choice for your teams and partners. Then Vietnam could become a success story for you as well!
Stefan Gyarfas is Director of Strategic Projects at B2X.