Over a generation, urban Vietnam has emerged from post-war austerity into a fast growing consumer society, a trend set to speed up as WTO membership attracts more foreign companies, analysts say. The government may still be communist but a growing middle class is hungry for everything from Western fashion to beauty products and plasma TVs, say market watchers now rating the emerging economy as a goldmine.
As the World Trade Organization's 150th member, Vietnam is set for rapid change as it opens its domestic market to multi-nationals eager to sell their goods and services. "Today Vietnamese incomes are at a level where over 50% of the urban population is considered to be middle class, the main target of most of these companies," said Ralf Matthaes, head of market research group TNS Vietnam.
Consumer confidence is sky-high, according to a recent Gallup survey of 56 countries that found Vietnam to be the world's most hopeful country, with 94% of respondents optimistic about their country's future.
"A number of things are very striking, including the rate of change, the rate of acceptance and of an understanding of new goods and services," said Chris Morley, managing director of market research company ACNielsen Vietnam. "The rate of change means that in some product categories, whole normal evolution cycles are skipped. In 1995, there was virtually nil mobile phone ownership and today in Ho Chi Minh and Hanoi most families have at least one."
Big-ticket sales are also growing in a country where household incomes may be larger than previously thought because many people are thought to under-report what they earn to both the taxman and their own families. In the cities, Matthaes said, eight out of 10 households now have DVD players and other expensive purchases set for mass growth include plasma and flat screen TVs and modern banking services.
Matthaes of TNS said Vietnamese are also "more and more likely to buy premium indulgent products" such as aromatherapy shampoos and personal care products that promise to energize, detox or whiten skin. "Products with an emotional component are crucial to satisfy the rising need for pampering oneself," he said, pointing out that the number of skincare products on sale has almost doubled in three years to 940 in 2006.
An ever-faster lifestyle is also reflected in the rise of new consumer goods, with instant coffee and tea bags growing by over 30% last year and slowly replacing the traditional drip coffee and slowly brewed tea.
In a country where uniformity and drabness in fashion and on shop shelves ruled until recently, goods that reflect wealth and status are becoming ever more popular. "People are buying premium brands," Morley said. "It may be a mobile phone or a premium beer, or a credit card that suggests the owner travels internationally. Vietnamese consumers are now punching above their weight."
Copyright Agence France-Presse, 2007
