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Eyes on Vietnam

Foreign & domestic investment is heating up in 2013.
2013 may be a landslide year for Vietnam’s retail market growth. With a population of 90 million people and growing, Vietnam shows clear signs that doors are open to multinational and domestic companies for investment and expansion opportunities.

Vietnam has seen 10 years of average annual growth of about 7 percent. This number is projected to grow in the coming years as infrastructure is strengthened and market entry becomes easier.

Just this month Starbucks announced its plans to open a store in Ho Chi Minh City as part of its strategy to expand across Asia, and plans to add more shops throughout the country. A very ambitious goal considering Vietnam’s established coffee drinking culture adopted from the French.

The middle-class, much like China, is really beginning to pull apart and stand out on its own. With newfound financial flexibility and ambitions, the middle-class will be the focus target for retailers.

Andrew Stevens, CNN World Business Today Anchor, says, “To say Vietnam is open for business is an understatement – and this Southeast Asian growing powerhouse is deadly serious about drawing foreign business.”

He goes on to say that Prime Minister Nguyen Tan Dung is spending considerable time chatting up the opportunities. He wants Vietnam to be Asia’s manufacturing base of choice after China. Samsung and Canon are both investing heavily in electronics manufacturing and service bases.

Our Thoughts

These are really exciting times as Vietnam seems to be experiencing the growth and development pattern that China began years ago (and still is).

It’s not only western retailers that have their eyes on Vietnam, supermarket/hypermarket brands Big C, Metro, Lotte Mart, and S.Mart have all announced plans for heavy investment and expansion throughout the market.

Today there are about 636 supermarkets, 120 shopping centers, and more than 1,000 convenience stores, but experts think this nowhere near reaches market demand.

It’s estimated that modern retail currently accounts for only about 20 percent of the country’s potential. According to the Association of Viet Nam Retailers general secretary Dinh Thi My Loan, that percentage will likely grow to 45 percent in the next 7 years.

Reasons for choosing Vietnam are fairly simple.
It’s cheaper (labor costs are roughly 60 percent of China’s), its geographic location allows it to reach many neighboring markets, there’s little state intervention, and it’s growing middle-class will represent a valid consumer target for retailers hoping to capture new potential.

Information prepared by getchee, with sources: Viet Nam NewsCNN Business 360

By Joshua Roberts 
  Creative Director

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